Singer and McMann are partners in a business. Singer's original capital was $38,500 and McMann's was $55,200. They agree to salaries of $13,500 and $18,300 for Singer and McMann, respectively, and 10% interest on original capital. I

f they agree to share the remaining profits and losses in a 3:2 ratio, what will Singer's share of the income be if the income for the year is $63,800?

Question

Singer and McMann are partners in a business. Singer's original capital was $38,500 and McMann's was $55,200. They agree to salaries of $13,500 and $18,300 for Singer and McMann, respectively, and 10% interest on original capital. I

f they agree to share the remaining profits and losses in a 3:2 ratio, what will Singer's share of the income be if the income for the year is $63,800?

BlackTom AI · Accepted Answer

We start by identifying all the fixed allocations and the remaining profits to be shared.
First, note the salaries: Singer gets 13,500 and McMann gets 18,300. These are paid before shared profits.
Next, compute the interest on original capital at 10%: Singer's interest is 0.10 × 38,500 = 3,850; McMann's interest is 0.10 × 55,200 = 5,520.
Now determine the amount of income left to be distributed according to the profit-sharing ratio after salaries and interests are allocated. Subtract salaries from total income: 63,800 − (13,500 + 18,300) = 63,800 − 31,800 = 32,000.
Then subtract the interest allocations: 32,000 − (3,850 + 5,520) = 32,000 − 9,370 = 22,630 remaining to be shared in the 3:2 ratio.
Divide the remaining 22,630 in the 3:2 ratio. The total parts are 3 + 2 = 5 parts, so Singer gets 3/5 of 22,630 = (22,630 × 3) / 5 = 67,890 / 5 = 13,578.
Finally, add Singer’s fixed allocations to his share of the remaining profits to get his total income from the year: salary 13,500 + interest 3,850 + share of remaining profits 13,578 = 30,928.
Thus, Singer's total share of the income for the year is 30,928.0.

Sp25 ACCT D001B 04Y Finan Accountg Ii Midterm 2 - Equity Transactions for Proprietorships, Partnerships, LLCs & Corporate Stockholder's Equity

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