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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:

  1. Equal division.
  2. In the ratio of original investments.
  3. In the ratio of time devoted to the business.
  4. Interest of 5% on original investments and the remainder equally.
  5. Interest of 5% on original investments, salary allowances of $60,000 to Black and $80,000 to Shannon, and the remainder equally.
  6. 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.

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