Jagger and Richards formed a partnership, investing $3,200,000 and $2,100,000 re
ID: 2346720 • Letter: J
Question
Jagger and Richards formed a partnership, investing $3,200,000 and $2,100,000 respectively. The partnership agreement calls for a return of 10% interest on their original investment; Richards is to have a salary of $500,000 per year, and Jagger does not draw a salary. The remainder is divided in the ratio of 3:2. Determine the income distribution if the net income of the partnership for the year is $4,200,000.Jagger Richards
Interest return of original investment
Salary
Distribution of the remainder _________ _________
Total income distribution .
Explanation / Answer
Total Income = 4,200,000 Jagger interest = - 320,000 Richard interest = - 210,000 Richard Salary = -500,000 ____________________________ = 3,170,000 Profit distribution ration = 3:2 Jagger share = 3,170,000 / 5 * 3 =1,902,000 Richard share = 3,170,000 / 5 * 2 =1,268,000
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