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Question
Jackson and Campbell have capital balances of $100,000 and $300,000 respectively. Jackson devotes full time and Campbell one-half time to the business. Determine the division of $120,000 of net income under each of the following assumptions:
a. No agreement as to division of net income
b. In ratio of capital balances
c. In ratio of time devoted to business
d. Interest of 10% on capital balances and the remainder divided equally
e. Interest of 10% on capital balances, salaries of $40,000 to Jackson and $20,000 to Campbell, and the remainder divided equally
Answer
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