In 2013, A. Mernick and L. Gold entered into a partnership to develop real estate projects. Due to their respective roles in the business, the partnership agreement specifies a two- phase profit split. The first $90 000 will be split in a ratio of 1:2 to Mernick and Gold, respectively. All profits over $90 000 will be split equally. During 2013, the following transactions took place:
Total partnership profit was $110 000. Mernick took withdrawals of $32 000. Gold took withdrawals of $50 000.
How much profit was credited to Mernick's capital account?

Question

Quizplus · Accepted Answer

Mernick receives $30,000 from the first $90,000 (1/3 of $90,000) and $10,000 from the remaining $20,000 (half of $20,000), totaling $40,000.