Income Distribution of a Partnership (Appendix)

Kay Katz and Doris Kan are partners in a dry-cleaning business. The partnership agreement specifi es the manner in which income of the business is to be distributed. Kay is to receive a salary of $40,000 for managing the business. Doris is to receive interest at the rate of 10% on her capital balance of $600,000. Remaining income is to be distributed at a 2-to-1 ratio.

Required Determine the amount that should be distributed to each partner assuming the following business net incomes:

1. $30,000 2. $100,000 3. $160,000 AppendixLO1