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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