Distribution of Income: Salaries and Interest Paul, Vanessa and Henry are partners in Columbia Company. The partnership agreement states that Paul is to receive 8 percent interest on his capital...

Distribution of Income: Salaries and Interest

Paul, Vanessa and Henry are partners in Columbia Company. The
partnership agreement
states that Paul is to receive 8 percent interest on his capital balance at the beginning of the year, Vanessa is to receive a salary of $200,000 a year, and Henry will be paid interest of 6 percent on his average capital balance during the year. Paul, Vanessa and Henry will share any income or loss after salary and interest in a 5:3:2 ratio. Paul’s capital balance at the beginning of the year was $1,200,000, and Henry’s average capital balance for the year was $1,440,000.

Determine each partner's share of income and losses under the following conditions. In each case, the income or loss is stated before the distribution of salary and interest.

1.Income was $311,200.

2.The loss was $113,600.