Question
Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $288,000 and that Shannon is to invest $96,000.
Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $288,000 and that Shannon is to invest $96,000. 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: Equal division. In the ratio of original investments. In the ratio of time devoted to the business. Interest of 5% on original investments and the remainder equally. The interest of 5% on original investments, salary allowances of $55,000 to Black and $75,000 to Shannon, and the remainder equally. 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 $145,000 and (2) net income of $225,000. Round answers to the nearest whole dollar.
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