Partnership net income of $132,000 is to be divided between two partners, Jessie Folk and Jessica Stephens, according to the following arrangement: There will be salary allowances of $70,000 for Folk and $30,000 for Stephens, with the remainder divided 55% for Folk and 45% for Stephens. How much of the net income will be distributed to Folk and Stephens, respectively?
A)$72,600 and $59,400
B)$70,000 and $30,000
C)$86,000 and $46,000
D)$87,600 and $44,400

Question

Quizplus · Accepted Answer

To start, we need to calculate the portion of the net income that will be divided based on the 55%/45% split.

Total salary allowances = $70,000 + $30,000 = $100,000 
Net income remaining after salary allowances = $132,000 - $100,000 = $32,000

Portion for Jessie Folk: 55% of $32,000 = $17,600 
Portion for Jessica Stephens: 45% of $32,000 = $14,400

Then, we add in the salary allowances for each partner:

Jessie Folk: $70,000 + $17,600 = $87,600 
Jessica Stephens: $30,000 + $14,400 = $44,400

Therefore, the answer is D) $87,600 and $44,400.

Partnership Net Income of $132,000 Is to Be Divided Between