Zheng invested $100,000 and Murray invested $200,000 in a partnership.They agreed to share incomes and losses by allowing a $60,000 per year salary allowance to Zheng and a $40,000 per year salary allowance to Murray,plus an interest allowance on the partners' beginning-year capital investments at 10%,with the balance to be shared equally.Under this agreement,the shares of the partners when the partnership earns $105,000 in income are:
A)$52,500 to Zheng;$52,500 to Murray.
B)$35,000 to Zheng;$70,000 to Murray.
C)$57,500 to Zheng;$47,500 to Murray.
D)$42,500 to Zheng;$62,500 to Murray.
E)$70,000 to Zheng;$60,000 to Murray.

Question

Quizplus · Accepted Answer

First, we need to calculate the interest allowance for each partner:
- Zheng's interest allowance: 10% of $100,000 = $10,000
- Murray's interest allowance: 10% of $200,000 = $20,000

Next, we can calculate the total salary allowance for both partners:
$60,000 + $40,000 = $100,000

We subtract the total salary allowance and interest allowance from the partnership's income to get the remaining balance to be shared equally:
$105,000 - $100,000 = $5,000

Now we can calculate the equal share of this remaining balance for each partner:
$5,000 / 2 = $2,500

Finally, we add up each partner's salary allowance, interest allowance, and equal share of the remaining balance to get their total share of the income:
- Zheng: $60,000 + $10,000 + $2,500 = $72,500
- Murray: $40,000 + $20,000 + $2,500 = $62,500

Therefore, the correct choice is C) $57,500 to Zheng; $47,500 to Murray.

Zheng Invested $100,000 and Murray Invested $200,000 in a Partnership