Garlic, Pepper, and Salt are partners in a plumbing service. The business reported net income of $108,000 for 2017. The partnership agreement provides that profits and losses are to be divided equally after Pepper receives a $60,000 salary, Salt receives a $24,000 salary, and each partner receives 10% interest on his beginning capital balance. Beginning capital balances were $40,000 for Garlic, $48,000 for Pepper, and $32,000 for Salt. Pepper's share of partnership income for 2017 is:

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Pepper's share of partnership income for 2017 is $68,800. This is calculated as follows:Net income: $108,000Less: Pepper's salary: $60,000Less: Salt's salary: $24,000Remaining income: $24,000Pepper's share of remaining income: $24,000 x 1/3 = $8,000Pepper's share of interest on beginning capital balance: $48,000 x 10% = $4,800Pepper's total share of partnership income: $8,000 + $4,800 + $60,000 = $68,800

Garlic, Pepper, and Salt Are Partners in a Plumbing Service