Question

Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively. 2. The partners agreed to share income and loss in proportion to their initial investments. Net income is $160,000. (Do not round intermediate calculations.)

Answer 1

Answer:

$64,000 for Ramer and $96,000 for Knox

Explanation:

2. The partners agreed to share income and loss based on the initial investment of the partners. Therefore, we will get first the ratio based on the initial investment that the partners had contributed.  

Ramer $60,000  

Knox $90,000  

Total  $150,000  

Kramer 60,000/150,000 = 40%

Knox 90,000/150,000 = 60%    

After we get the agreed ratio, let's compute the allocation of the income. The share of the partners would be:  

Kramer $160,000 x 40% = $64,000  

Knox $160,000 x 60%) = $96,000