Reference no: EM133180739

Question - Pragmatic Supplies has net income of $119,000, and needs to divide this between partners Mary Smith and Martin Jones.  As Mary Smith works full time in the business, she has an annual salary of $46,400 and put in 1,116 hours of time, while Martin Jones worked 495 hours and gets a $18,750 salary.  The partners will split $14,700 of the net income as additional salary based upon hours worked.   The partners have invested Capital into the business, $25,250 (Mary Smith) and $14,500 (Martin Jones).  Each partner will receive 5% on their invested capital. Any residual net income or loss will be split based upon the ratio of invested capital. Prepare, in good form, the allocation of net income between the two partners.