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Thompson and Smith are partners in a business. Thompson's original capital was $40,000 and Smith's was $60,000. They agree to salary allowances of $12,000
Thompson and Smith are partners in a business. Thompson's original capital was $40,000 and Smith's was $60,000. They agree to salary allowances of $12,000 and $18,000 for Thompson and Smith respectively and 10% interest on original capital. If they agree to share remaining profits and losses on a 3:2 ratio, how much will be Thompson's share of the net income of $15,000 for the year? (Hint: the allowances exceeded the net income) a. $1,000 Ob. $5,600 $9.000 Od. $2,400
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