Partners Cantor and Dickens have capital balances in a partnership of $160000 and $240000 respectively. They agree to share profits and losses as follows: $\begin{array}{lrr}
& \underline{\text {Cantor}}& \underline{\text {Dickens}}\
\text { As salaries } & \$ 40,000 & \$ 48,000 \
\text { As interest on capital at the beginning of the year } & 10 \% & 10 \% \
\text { Remaining profits or losses } & 50 \% & 50 \%
\end{array}$

If income for the year was $120000 what will be the distribution of income to Cantor?

Question

Partners Cantor and Dickens have capital balances in a partnership of $160000 and $240000 respectively. They agree to share profits and losses as follows: $\begin{array}{lrr}
& \underline{\text {Cantor}}& \underline{\text {Dickens}}\
\text { As salaries } & \$ 40,000 & \$ 48,000 \
\text { As interest on capital at the beginning of the year } & 10 \% & 10 \% \
\text { Remaining profits or losses } & 50 \% & 50 \%
\end{array}$

If income for the year was $120000 what will be the distribution of income to Cantor?

Quizplus · Accepted Answer

Cantor's share: Salary = $40,000, Interest = 10% of $160,000 = $16,000. Total before remaining profit = $56,000. Remaining profit = $120,000 - ($40,000 + $48,000 + $16,000 + $24,000) = $8,000. Cantor's share of remaining profit = 50% of $8,000 = $4,000. Total distribution to Cantor = $56,000 + $4,000 = $52,000.

Partners Cantor and Dickens Have Capital Balances in a Partnership