Larson and Alvarez have decided to form a partnership. They have agreed that Larson is to invest
Question:
a. Equal division.
b. In the ratio of original investments.
c. In the ratio of time devoted to the business.
d. Interest of 12% on original investments and the remainder equally.
e. Interest of 12% on original investments, salary allowances of $32,000 to Larson and $64,000 to Alvarez, and the remainder equally.
f. Plan (e), except that Alvarez is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the salary allowances.
Instructions
For each plan, determine the division of the net income under each of the following assumptions:
(1) Net income of $105,000 and
(2) Net income of $180,000. Present the data in tabular form, using the following columnarheadings:
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Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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