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12.6 Dividing Partnership Income Lawford and Delgado have decided to form a partnership. They have agreed that Lawford is to invest $90,000 and that Delgado

12.6

Dividing Partnership Income

Lawford and Delgado have decided to form a partnership. They have agreed that Lawford is to invest $90,000 and that Delgado is to invest $30,000. Lawford is to devote one-half time to the business and Delgado is to devote full time. The following plans for the division of income are being considered:

Equal division.

In the ratio of original investments.

In the ratio of time devoted to the business.

Interest of 12% on original investments and the remainder equally.

Interest of 12% on original investments, salary allowances of $28,000 to Lawford and $60,000 to Delgado, and the remainder equally.

Plan (e), except that Delgado 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 $90,000 and (2) net income of $135,000.

(1)

(2)

$90,000

$135,000

Plan

Lawford

Delgado

Lawford

Delgado

a.

$

$

$

$

b.

$

$

$

$

c.

$

$

$

$

d.

$

$

$

$

e.

$

$

$

$

f.

$

$

$

$

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