Mack and Ruben are partners operating an electronics repair shop. For 2017, net income, after salaries expense of $150,000 was $50,000. Mack and Ruben have salary allowances of $90,000 and $60,000, respectively, and remaining profits and losses are shared 6:4. The division of salaries and profits in total to Mack and Ruben would be:

Question

Quizplus · Accepted Answer

First, allocate the salary allowances: Mack gets $90,000 and Ruben gets $60,000. The remaining profit of $50,000 is then divided according to their profit-sharing ratio of 6:4, which gives Mack an additional $30,000 (60% of $50,000) and Ruben an additional $20,000 (40% of $50,000). Therefore, Mack receives a total of $120,000 ($90,000 + $30,000) and Ruben receives a total of $80,000 ($60,000 + $20,000).

Mack and Ruben Are Partners Operating an Electronics Repair Shop