Fred and Barney started a partnership. Fred invested $17,000 in the business and Barney invested $25,500. The partnership agreement stipulated that profits would be divided as follows: Each partner would receive a 8% return on invested capital with the remaining income being distributed equally between the two partners. Assuming that the partnership earned $38,000 during an accounting period, the amount of income assigned to the two partners would be: $\begin{array}{cc}
&\text { Fred} && \text { Barney } \
\end{array}$
A.$\begin{array}{cc}
\$15,940 & \$15,260 \
\end{array}$

B.$\begin{array}{cc}
\$17,000 & \$21,000 \
\end{array}$

C.$\begin{array}{cc}
\$19,000 & \$19,000 \
\end{array}$

D.$\begin{array}{cc}
\$18,660 & \$19,340\
\end{array}$

Question

Fred and Barney started a partnership. Fred invested $17,000 in the business and Barney invested $25,500. The partnership agreement stipulated that profits would be divided as follows: Each partner would receive a 8% return on invested capital with the remaining income being distributed equally between the two partners. Assuming that the partnership earned $38,000 during an accounting period, the amount of income assigned to the two partners would be: $\begin{array}{cc}
  &\text {  Fred} &&  \text {  Barney } \
\end{array}$
A.$\begin{array}{cc}
  \$15,940 &  \$15,260 \
\end{array}$

B.$\begin{array}{cc}
  \$17,000 &  \$21,000 \
\end{array}$

C.$\begin{array}{cc}
  \$19,000 &  \$19,000 \
\end{array}$

D.$\begin{array}{cc}
  \$18,660 &  \$19,340\
\end{array}$

Quizplus · Accepted Answer

Fred receives 8% of $17,000 = $1,360 and Barney receives 8% of $25,500 = $2,040. The total return on capital is $3,400. The remaining profit is $38,000 - $3,400 = $34,600, which is divided equally: $17,300 each. Fred's total is $1,360 + $17,300 = $18,660 and Barney's total is $2,040 + $17,300 = $19,340.

Fred and Barney Started a Partnership Fred Barney \begin{array}{cc} &\text { Fred} && \text { Barney } \\\end{array}​ Fred​​ Barney ​

Fred and Barney Started a Partnership $\begin{array}{cc} &\text { Fred} && \text { Barney } \\\end{array}$