Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Dividing Partnership Income Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $198,000 and that Shannon is
Dividing Partnership Income
Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $198,000 and that Shannon is to invest $66,000. 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.
- Interest of 5% on original investments, salary allowances of $60,000 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 $133,000 and (2) net income of $240,000. Round answers to the nearest whole dollar.
(1) | (2) | |||||||
$133,000 | $240,000 | |||||||
Plan | Black | Shannon | Black | Shannon | ||||
a. | ||||||||
b. | ||||||||
c. | ||||||||
d. | ||||||||
e. | ||||||||
f. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started