Xavier and Yolanda have original investments of $50,000 and $100,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%, salary allowances of $34,000 and $26,000 respectively, and the remainder equally. How much of the net income of $100,000 is allocated to Yolanda?

Question

Quizplus · Accepted Answer

First, we need to calculate the total interest earned by the partners.

Xavier's interest = $50,000 x 20% = $10,000 
Yolanda's interest = $100,000 x 20% = $20,000

Next, we need to deduct their salary allowances:

Xavier's share = $34,000 + $10,000 = $44,000 
Yolanda's share = $26,000 + $20,000 = $46,000

The remaining net income is $100,000 - $90,000 = $10,000, which is to be divided equally between them:

Xavier's total share = $44,000 + $5,000 = $49,000 
Yolanda's total share = $46,000 + $5,000 = $51,000

Therefore, Yolanda's allocation of the net income is $51,000.

Xavier and Yolanda Have Original Investments of $50,000 and $100,000