Emmett and Sierra formed a partnership dividing income as follows: Annual salary allowance to Emmett of $39,800 Interest of 8% on each partner's capital balance on January 1 Any remaining net income divided equally. Emmett and Sierra had $38,400 and $126,800, respectively in their January 1 capital balances. Net income for the year was $216,000. How much net income should be distributed to Emmett?
Emmett and Sierra formed a partnership dividing income as follows: Annual salary allowance to Emmett of $39,800 Interest of 8% on each partner's capital balance on January 1 Any remaining net income divided equally. Emmett and Sierra had $38,400 and $126,800, respectively in their January 1 capital balances. Net income for the year was $216,000. How much net income should be distributed to Emmett?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Emmett and Sierra formed a
- Annual salary allowance to Emmett of $39,800
- Interest of 8% on each partner's capital balance on January 1
- Any remaining net income divided equally.
Emmett and Sierra had $38,400 and $126,800, respectively in their January 1 capital balances. Net income for the year was $216,000.
How much net income should be distributed to Emmett?
Expert Solution
Step 1
First we need to prepare the profit distribution schedule to determine the profit to be distributed to each partner.
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