During 2010,Carpenter invested $75,000 and DiAngelo invested $90,000 in a partnership.They agreed to share incomes and losses by allowing a $40,000 per year salary allowance to Carpenter and a $42,000 per year salary allowance to DiAngelo,plus an interest allowance on the partners' beginning-year capital investments at 8%,with the balance to be shared equally.Under this agreement,if the partnership earns net income of $300,000 during 2010 the income allocated to each partner is:
A)$40,000 to Carpenter; $42,000 to DiAngelo
B)$148,400 to Carpenter; $151,600 to DiAngelo
C)$43,200 to Carpenter; $45,360 to DiAngelo
D)$150,000 to Carpenter; $150,000 to DiAngelo
E)$105,720 to Carpenter; $105,720 to DiAngelo

Question

Quizplus · Accepted Answer

First, we need to calculate the interest allowance for each partner:

- Carpenter: $75,000 × 8% = $6,000
- DiAngelo: $90,000 × 8% = $7,200

Now we can calculate the total salary allowances:

- Carpenter: $40,000 salary + $6,000 interest = $46,000
- DiAngelo: $42,000 salary + $7,200 interest = $49,200

The remaining income to be shared equally is:

$300,000 - $46,000 - $49,200 = $204,800

Half of this amount goes to each partner:

- Carpenter: $102,400 + $46,000 = $148,400
- DiAngelo: $102,400 + $49,200 = $151,600

Therefore, the income allocated to each partner is $148,400 for Carpenter and $151,600 for DiAngelo. The correct answer is B.

During 2010,Carpenter Invested $75,000 and DiAngelo Invested $90,000 in a Partnership.They