The partnership agreement of Ashford and Cohen provides for salary allowances of $90000 to Ashford and $70000 to Cohen with the remaining income or loss to be divided equally. During the year Ashford and Cohen each withdraw cash equal to 80% of their salary allowances. If partnership net income is $200000 Ashford's equity in the partnership would

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Ashford's equity increases more than Cohen's because Ashford has a higher salary allowance ($90,000) compared to Cohen ($70,000), and the remaining income is divided equally. After accounting for their withdrawals (80% of their respective salary allowances), Ashford still ends up with a higher net increase in equity due to the higher initial salary allowance.

The Partnership Agreement of Ashford and Cohen Provides for Salary