Christie and Jergens formed a partnership with capital contributions of $250,000 and $350,000, respectively. Their partnership agreement calls for Christie to receive a $55,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $119,000, then Christie and Jergens's respective shares are:

Christie and jergen's respective shares are $59,500 and $59,500

Explanation:

Solution

Recall that:

Christie and Jergens created a partnership with capital contributions of = $250,000 and $350,000

The contract terms enables Christie to receive an amount of = $55,000 per salary

An interest allowance is received by both of them equal to = 10%

The net income of the Present year = $119,000

Thus,

We find the respective shares of both partners which is stated as follows:

Christie's net income = $59,500

Jergen's net income = $59, 500

The total for both is = $119,000

Hence, due to their partnership contract terms or agreement the sharing of the profit and loss is dividend equally between them.