Dividing Partnership Income

Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $360,000 and that Shannon is to invest $120,000. 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 $96,000 to Black and $168,000 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 $276,000 and (2) net income of $480,000. Round answers to the nearest whole dollar.

Dividing Partnership Income Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $360,000 and that Shannon is to invest $120,000. 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 $96,000 to Black and $160,000 to Shannon, and the remainder equally f. Plan (o), 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 $276.000 and (2) net income of $180,000. Round answers to the nearest whole dollar. (1) (2) $276,000 5480,000 Plan Black Shannon Black Shannon 138,000 1:38,000 240,000 240,000 D C Dividing Partnership Income Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $360,000 and that Shannon is to invest $120,000. 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 596,000 to Black and 5168,000 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 $276.000 and (2) net income of $480,000. Round answers to the nearest whole dollar. (1) (2) $276,000 5180,000 Plan Black Black Shannon Shannon 138,000 138,000 240,000 240,000 D