Question
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.
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