chapter 19

Reese and Cravens are partners. Their partnership agreement provides that, in dividing profits, each is to be allocated interest at 10 percent of her beginning capital balance. The balance of net income or loss after the interest allowances is to be split in the ratio of 70:30 to Reese and Cravens, respectively. The beginning capital balances were Reese, $124,000, and Cravens, $28,000. Net income for the year was $244.000 Required: Compute the amount of net income to be allocated to each partner