The partnership agreement of Jones, King, and Lane
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 10 percent of the business’s profit.
- Each partner receives 10 percent interest on average capital investment.
- Any residual profit or loss is divided equally.
The average capital investments for 2018 were as follows:
Jones $80,000
King $160,000
Lane $240,000
How much of the $40,000 partnership profit for 2018 should be assigned to each partner?
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