Reference no: EM132466992

Question Problem 1: Aikman (beginning capital, $60,000) and Rory (beginning capital $90,000) are partners. During 2012, the partnership earned net income of $70,000, and Aikman made drawings of $18,000 while Rory made drawings of $24,000.
Which of the following income-sharing agreements would Rory prefer if given the foresight? Choose the letter of your answer.

a. The partnership income-sharing agreement calls for income to be divided 45% to Aikman and 55% to Rory.

b. The partnership income-sharing agreement calls for income to be divided with a salary of $30,000 to Aikman and $25,000 to Rory, with the remainder divided 45% to Aikman and 55% to Rory.

c. The partnership income-sharing agreement calls for income to be divided with a salary of $40,000 to Aikman and $35,000 to Rory, interest of 10% on beginning capital, and the remainder divided 50%-50%.