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30 July, 15:38

Christie and Jergens formed a partnership with capital contributions of $390,000 and $490,000, respectively. Their partnership agreement calls for Christie to receive a $69,000 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 $163,000, then Christie and Jergens's respective shares are:

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  1. 30 July, 19:18
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    Christie 's share = $ 37759.09

    Jergens Share = $ 47,441

    Explanation:

    Partner's Profit share are calculated after the deduction of salary or any other interest incomes.

    Profit for the current year = $ 163,000

    Christie' s Salary $ 69,000

    Christie Interest Income $ 3900

    10 % 0f $ 390,000

    Jergens Interest Income $ 4900

    10 % 0f $ 490,000

    Profit Balance $ 85,200

    Profit Sharing Ratio

    Christie : Jergens

    390,000: 490,000

    39: 49

    Christie 's share = $ 85,200 * 39/88 = $ 37759.09

    Jergens Share = $ 85,200 * 49/88 = 47440.9 = $ 47,441
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