Ann Solton and Susie Bright are partners in a business they

Ann Solton and Susie Bright are partners in a business they started two years ago. The partnership agreement states that Stolton should receive a salary allowance of $15,000 and that Bright should receive a $20,000 salary allowance. Any remaining income or loss is to be shared equally. Determine each partner\'s share of the current year\'s net income of $52,000.

Solution

The partnership agreement states that Ann Stolton should receive a salary allowance of $15,000 and that Susie Bright should receive a $20,000 salary allowance. The current year\'s net income is $52,000. Hence after paying Ann Stolton and Susie Bright the sums of $ 15000 and $ 20000 respectively towards Salary, the amount that remains is $ 52000-(15000+20000) = $52000-35000 = $17000. Since any remaining income or loss is to be shared equally, therefore, Ann Stolton and Susie Bright will get ½*$17000 = $ 8500 each out of the amount of $ 17000 which remains after payment of salary to Ann Stolton and Susie Bright as per the agreement. Thus, in aggregate, Ann Stolton will get $ 15000+$8500 = $23500 and Susie Bright will get $20000+$8500 = $ 28500.