Problem:
Jamison and Blue form a partnership with capital contributions of $600,000 and $800,000, respectively. Their partnership agreement calls for Jamison to receive $120,000 per year in salary. Also, each partner is to receive an interest allowance equal to 10% of the partner's beginning capital contributions with any remaining income or loss divided equally.
Required:
If net income for its initial year is $270,000, then Jamison's and Blue's respective shares are:
- 135,000; 135,000
- 154,286; 115;714
- 120,000; 150,000
- 185,000; 85,000
- 85,000; 185,000
Note: Be sure to show how you arrived at your answer.