Homework 2

Problem 2 Jackson and Campbell have capital balances of $100,000 and $300,000 respectively. Jackson devotes full time and Campbell one-half time to the business. Determine the division of $120,000 of net income under each of the following assumptions: (a) No agreement as to division of net income. (b) In ratio of capital balances. (c) In ratio of time devoted to business. (d) Interest of 10% on capital balances, salaries of $40,000 to Jackson and $20,000 to Campbell, and the remainder equally. Answer: Jackson share ($) Campbell Share (S) case A Case B Case C Case D Division of Net Income table Jackson Campbell Total income to be divided 20,000