T U form a partnership with initial investments of 100000 a

T & U form a partnership with initial investments of $100,000 and $200,000 respectively. Their agreement calls for a salary to T of $40,000 and a salary to U for $60,000. Each partner is to receive interest of 10% on their initial investment and they agree the remaining profit or loss is to be divided equally. If the net income for the period is $230,000 show the distribution to each partner:

Solution

Particulars T U Investment 100,000 200,000 Distribution Particulars T U Total Salary 40,000 60,000 100,000 Interest @10% 10000 20000 30,000 ($100,000*10%) ($200,000*10%) Net Income 115000 115000 230,000 ($230000*50%) ($230000*50%) Total distribution 165,000 195,000 360,000