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Dividing Partnership Income Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $153,000 and that Shannon is
Dividing Partnership Income
Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $153,000 and that Shannon is to invest $51,000. 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 6% on original investments and the remainder equally.
- Interest of 6% on original investments, salary allowances of $50,000 to Black and $80,000 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 $151,000 and (2) net income of $260,000. Round answers to the nearest whole dollar.
(1) | (2) | |||||||
$151,000 | $260,000 | |||||||
Plan | Black | Shannon | Black | Shannon | ||||
a. | ||||||||
b. | ||||||||
c. | ||||||||
d. | ||||||||
e. | ||||||||
f. |
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