Problem
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence:
• Jones, the managing partner, receives a bonus equal to 20 percent of the business's profit.
• Each partner receives 11 percent interest on average capital investment.
• Any residual profit or loss is divided equally.
The average capital investments for 2015 were as follows:
Jones $ 195,000
King 390,000
Lane 585,000
How much of the $90,000 partnership profit for 2015 should be assigned to each partner?