Income Distribution of a Partnership (Appendix)

Louise Abbott and Buddie Costello are partners in a comedy club business. The partnership agreement specifi es the manner in which income of the business is to be distributed. Louise is to receive a salary of $20,000 for managing the club. Buddie is to receive interest at the rate of 10% on her capital balance of $300,000. 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. $15,000 2. $50,000 3. $80,000 AppendixLO1