Dividing Partnership Income

Beau Dawson and Willow McDonald formed a partnership, investing $276,000 and $92,000, respectively.

Determine their participation in the year’s net income of $380,000 under each of the following independent assumptions:

a. No agreement concerning division of net income.
b. Divided in the ratio of original capital investment.
c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $47,000 and $59,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 5% on original investments, salary allowances of $47,000 and $59,000, respectively, and the remainder divided equally.

Dividing Partnership Income

Beau Dawson and Willow McDonald formed a partnership, investing $187,500 and $62,500, respectively.

Determine their participation in the year’s net income of $300,000 under each of the following independent assumptions:

a. No agreement concerning division of net income.
b. Divided in the ratio of original capital investment.
c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $38,000 and $49,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 5% on original investments, salary allowances of $38,000 and $49,000, respectively, and the remainder divided equally.

Dividing Partnership Income

Beau Dawson and Willow McDonald formed a partnership, investing $116,000 and $174,000, respectively.

Determine their participation in the year’s net income of $270,000 under each of the following independent assumptions:

a. No agreement concerning division of net income.
b. Divided in the ratio of original capital investment.
c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $40,000 and $50,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 5% on original investments, salary allowances of $40,000 and $50,000, respectively, and the remainder divided equally.

Dividing Partnership Income

Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $201,000 and that Shannon is to invest $67,000. Black is to devote one-half time to the business, and Shannon is to devote full time. The following plans for the division of income are being considered:

a. Equal division.

b. In the ratio of original investments.

c. In the ratio of time devoted to the business.

d. Interest of 6% on original investments and the remainder equally.

e . Interest of 6% on original investments, salary allowances of $45,000 to Black and $80,000 to Shannon, and the remainder equally.

f. Plan (e), except that Shannon is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances.

Required:

For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $160,000 and (2) net income of $205,000. Round answers to the nearest whole dollar.

a.            $                 $                           $                $

b.           $                 $                           $                 $

c.           $                 $                           $                 $

d.           $                $                            $                $

e.           $                $                             $               $

f.           $                 $                            $                $

I asked this question earlier but they answered as if the net income was $280,000 and not $270,000. Could you possibly help and show me how to do it with a net income of $270,000?

Dividing Partnership Income

Beau Dawson and Willow McDonald formed a partnership, investing $116,000 and $174,000, respectively.

Determine their participation in the year’s net income of $270,000 under each of the following independent assumptions:

a. No agreement concerning division of net income.
b. Divided in the ratio of original capital investment.
c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $40,000 and $50,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 5% on original investments, salary allowances of $40,000 and $50,000, respectively, and the remainder divided equally.