Partners A and B are subject to the following agreement for the sharing of profits/losses:
|
a. |
Annual salary allocations are allowed as follows: $12,000 to A, $14,000 to B. |
|
b. |
Interest at 10 per cent is paid each year on original capital contributions of $100,000 from A, and $70,000 from B. |
|
c. |
Any remainder is to be split in the ratio of 3:2 (A:B). |
Required: How much net income must be earned by the partnership in the fiscal year for A to be allocated a total of $47,000? (Hint: use a schedule of profit allocation.)
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