Lia chen and martin monroe formed a partnership, dividing income as follows: annual salary allowance to chen of $35,000.interest of 4% on each partner’s capital balance on january 1.any remaining net income divided to chen and monroe, 2: 1.chen and monroe had $90,000 and $140,000, respectively, in their january 1 capital balances. net income for the year was $70,000.required: how much net income should be distributed to chen and monroe?

$55,800  and $14,200

Explanation:

The computation of the distribution of the net income is presented below:

Particulars                                  Chen             Martin             Total

Opening capital balance           $90,000      $140,000         $230,000

Annual salary allowance (A)    $35,000                                $35,000

Interest @4% on

opening capital  (B)                   $3,600         $5,600            $9,200

Remaining income (C)              $17,200         $8,600            $25,800

Net income (A + B + C)           $55,800        $14,200          $70,000

The remaining income would be

= $70,000 - $35,000 - $9,200

= $25,800

And, the remaining income is divided between the partners in 2:1 ratio

answer; schedule c;