Christie and Jergens formed a partnership with capital contributions of $300,000 and $400,000,respectively.Their partnership agreement calls for Christie to receive a $60,000 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 $135,000,then Christie and Jergens's respective shares are:
A)$67,500;$67,500.
B)$92,500;$42,500.
C)$57,857;$77,143.
D)$90,000;$40,000.
E)$35,000;$100,000.

Question

Quizplus · Accepted Answer

Christie's share: $60,000 salary + $30,000 interest (10% of $300,000) + $2,500 (remaining income split equally) = $92,500.  Jergens's share: $40,000 interest (10% of $400,000) + $2,500 (remaining income split equally) = $42,500.

Christie and Jergens Formed a Partnership with Capital Contributions of $300,000