Partnership net income of $40,000 is to be divided between two partners, Reese Row and Andrew Young, according to the following arrangement: There will be salary allowances of $25,000 for Row and $10,000 for Young, with the remainder divided 65:35. How much of the net income will be distributed to Row and Young, respectively?
A)$27,500 and $12,500
B)$26,000 and $14,000
C)$28,250 and $11,750
D)$28,500 and $11,500

Question

Quizplus · Accepted Answer

Step 1: Start with the total net income of $40,000
Step 2: Subtract the salary allowances for both partners: $40,000 - ($25,000 + $10,000) = $5,000
Step 3: Divide the remainder ($5,000) according to the 65:35 ratio, which is 65% for Reese Row and 35% for Andrew Young.
Row's share = $5,000 x 65% = $3,250
Young's share = $5,000 x 35% = $1,750
Step 4: Add the salary allowances back to each partner's share.
Row's total share = $3,250 + $25,000 = $28,250
Young's total share = $1,750 + $10,000 = $11,750

Therefore, Reese Row will receive $28,250 and Andrew Young will receive $11,750. The answer is C.

Partnership Net Income of $40,000 Is to Be Divided Between