Alban and Thompson formed a partnership with capital contributions with a fair value of $25,000 and $45,000, respectively. Their partnership agreement calls for Alban toreceive a $12,000 annual salary allowance. Also, each partner is to receive a share of earnings equal to a 10% return on capital investments. The remaining income or loss is to be divided equally. If the profit for the year is $48,000, then Alban and Thompson's respective shares are:

Question

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Alban's share: $12,000 salary + $2,500 (10% of $25,000) + $6,500 (half of remaining $13,000) = $29,000. Thompson's share: $4,500 (10% of $45,000) + $6,500 (half of remaining $13,000) = $19,000.

Alban and Thompson Formed a Partnership with Capital Contributions with a Fair