Alban and Thompson formed a partnership with capital contributions with a fair value of $25,000 and $45,000,respectively.Their partnership agreement calls for Alban to receive a $12,000 annual salary allowance.Also,each partner is to receive a share of earnings equal to a 10% return on capital investments.The remaining income or loss is to be divided equally.If the net income for the year is $48,000,then Alban and Thompson's respective shares are:

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Alban receives a $12,000 salary and both partners receive 10% on their capital ($2,500 for Alban and $4,500 for Thompson). This totals $19,000 for Alban and $4,500 for Thompson. The remaining $24,000 is split equally, giving each $12,000 more. Alban's total is $29,000 and Thompson's is $19,000.

Alban and Thompson Formed a Partnership with Capital Contributions with a Fair