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30 August, 01:49

Farmer and Taylor formed a partnership with capital contributions of $200,000 and $250,000, respectively. Their partnership agreement calls for Farmer to receive a $70,000 per year salary. The remaining income or loss is to be divided equally. If the net income for the current year is $135,000, then Farmer and Taylor's respective shares are:

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  1. 30 August, 03:53
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    Farmer and Taylor's respective shares are $102,500 and $32,500

    Explanation:

    For computing their respective shares, first we have to calculate the remaining income of each partner is shown below:

    Remaining income = Net income - received amount

    = $135,000 - $70,000

    = $65,000

    It will be divided equally in 1:1 ratio

    So, the remaining income would be

    Farmer = $32,500

    Taylor = $32,500

    Now, Their shares would be

    Farmer = Salary received + his share of income

    = $70,000 + $32,500

    = $102,500

    And, for Taylor it would be $32,500
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