John prado and ayana nicks formed a partnership, dividing income as follows: annual salary allowance to prado, $10,000 and nicks, $28,000. interest of 5% on each partner's capital balance on january 1. any remaining net income divided equally. prado and nicks had $20,000 and $50,000, respectively, in their january 1 capital balances. net income for the year was $30,000.how much net income should be distributed to prado and nicks?

The net income should be distributed to Prado and Nicks is $5,250 and $24,750 respectively.

Explanation:

The computation of the net income distribution between two partners bet is shown below:

1. For John partner = Annual salary  allowance + interest on capital - remaining loss

where,

Annual salary allowance = $10,000

Interest on capital =  Capital × interest rate = $20,000 × 5% = $1,000

Remaining loss = $5,750

2. For Ayana nicks partner = Annual salary  allowance + interest on capital - remaining loss

where,

Annual salary allowance = $28,000

Remaining loss = $5,750

Interest on capital =  Capital × interest rate = $50,000 × 5% = $2,500

The remaining loss = Net income - both partners annual salary allowance - both partners interest on capital

= $30,000 - $10,000 - $28,000 - $1,000 - $2,500

= - $11,500 The remaining loss should be equally distribute between two partners

Now put these values to the above equation

So, the value would equal to

For John = $10,000 + $1,000 - $5,750 = $5,250

For Ayana =  $28,000 + $2,500 - $5,750 = $24,750

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