[Anonymous]

The partnership agreement of A, B, &C provides for the year-end allocation of net income in the following order:

1. First, A is to receive 10% of net income up to $100,000 and 20% over 100,000

2. Second, B & C each are to receive 5% of the remaining over $150,000

3. The balance of income is to be allocated equally among the three partners.

The partnership’s Net income was $250,000 before any allocations to partners. What amount should be allocated to A?

Answer: $108,000

Explanation:

10% x 100,000 =10,000

20% x 150,000 =30,000

NI 250,000-30,000=210,000

5% x $60,000 = 3,000 for B&C

Where did this $60,000 come from?

[Anonymous]

The $60,000 is what is the profit left above $150,000 after distribution to A

A receives

10% of first 100,000 = $10,000

20% of profit over 100,000 = [250,000-100,000] * 20% = 30,000

so far A has been allocated $40,000[$10,000 + $30,000]

B & C receive 5% what the amount of what is left of A's allocation [so far] in execess of $150,000

That is the amout above $150,000 that is left after A's allocation

$250,000- $150,000= $100,000[execess over 150,000]

$100,000-$60,000[allocated to A so far] = $60,000

Hope this helps.

God bless!!!

[Anonymous]

Thanks so much! I see it now.

God bless

[Author]

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