Moreau invested $18,000 and Fereday invested $32,000 in a partnership.They agreed to share incomes and losses by allowing a $9,000 per year salary allowance to Moreau and a $12,000 per year salary allowance to Fereday,plus interest on the partners' investments at 8%,with the balance to be shared equally.Under this agreement,the shares of the partners with a $80,000 profit are

Question

Quizplus · Accepted Answer

To calculate the partners' shares, we follow these steps:

1. Calculate the total salary allowance:
  Moreau: $9,000/year
  Fereday: $12,000/year
  Total: $9,000 + $12,000 = $21,000/year

2. Calculate the interest on each partner's investment:
  Moreau: 8% of $18,000 = $1,440/year
  Fereday: 8% of $32,000 = $2,560/year

3. Subtract the total of step 1 and step 2 from the total profit:
  $80,000 - ($21,000 + $1,440 + $2,560) = $54,000

4. Divide the remaining profit equally between the partners:
  $54,000/2 = $27,000 each

5. Add the salary allowance and interest to each partner's share:
  Moreau: $9,000 + $1,440 + $27,000 = $37,440
  Fereday: $12,000 + $2,560 + $27,000 = $41,560

Therefore, the shares are $37,440 for Moreau and $41,560 for Fereday, which corresponds to choice C.

Moreau Invested $18,000 and Fereday Invested $32,000 in a Partnership