I'm so confused, someone please help !!
M and C are partners. At the beginning of the current year, M's capital account is $ 30,000
an C's is $ 50,000. M and C decided to allocate income with 10% interest on capital balances at the beginning of the period and divide the balance equally. Net income for the current year is $ 80,000. Each partner withdrew $ 15,000 for personal use during the year. Determine the amount of income that will be allocated to each partner.
A. M $30,000: C, $50,000
B. M $32,000: C, $32,500
C. M $35,000: C, $37,500
D. M $39,000: C, $41,000
Pleas tell me how to solve this problem, you don't have to give me the answer just explain how to figure it out, Thank You !!!

MaggieMouse

This is to test you the difference between income and return of capital in a partnership. Partners withdraw cash for personal use is return of capital, has nothing to do with income allocation, therefore, don't do anything with it.

Income is $80, M gets 10% of $30, C gets 10% of $50, that left $72, they split 50/50, each gets $36. Now add up for each, M-$36+$3, I guess you can figure out what C gets.

jahubb

Maggie Mouse, Thank You !!