Reference no: EM132865074

Question - On April 1, 2019, Larry and Rafi created a partnership to produce software. Larry was a lawyer and would handle all the legal matters, but Rati was the technical whiz and would do all of the production and sales. Because most of the work would be done by Rati, the partnership agreement specified that Larry is to receive a "salary" of $20,000 and Rati is to receive a "salary" of $50,000. In addition, $50,000 is to be allocated according to their original capital contributions to the partnership. The remainder is to be allocated 1:4 respectively. At the beginning, Larry contributed $200,000 and Rati contribute $50,000 to the partnership and made no draws during 2019. At the end of 2019, the partnership earned $115,000 of net income. Allocate the net income to Larry and Rati.