Apply the Interest Allowance Method; Each Partner Earns Interest on Their

question 128

Multiple Choice

Apply the interest allowance method; each partner earns interest on their capital investment at a rate of 10%. Compute Julie and Jennifer's share of net income if Julie invested $52,000 and Jennifer invested $38,000. The remainder after distribution on interest on capital is to be divided equally. Net income was $12,000.

• A) Julie $5,200; Jennifer $3,800
• B) Julie $6,700; Jennifer $5,300
• C) Julie $6,000; Jennifer $6,000
• D) None of these answers is correct.

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Definitions:

Coil Springs

Mechanical devices that can compress or extend to absorb impact or maintain force between contacting surfaces.

Hub Carriers

Component of a vehicle's suspension system that holds the wheel bearing and is mounted on the suspension.

Damper

A device used to dampen or inhibit the oscillation of mechanical energy, often seen in vehicle suspension systems.

Torsion Bar

A length of steel bar fastened to a control arm at one point and the vehicle’s frame at another. Movement of the control arm imparts twist on the torsion bar. The absorption of the twist is the spring action of the torsion bar.