Question
Dividing Partnership Income Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $44,000 and that
Dividing Partnership Income
Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $44,000 and that Wilkins is to invest $11,000. Drury is to devote full time to the business, and Wilkins is to devote one-half 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 10% on original investments and the remainder in the ratio of 3:2.
Interest of 10% on original investments, salary allowances of $37,400 to Drury and $18,700 to Wilkins, and the remainder equally.
Plan (e), except that Wilkins 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 $165,000 and (2) net income of $72,600.
(1) | (2) | |||||||
$165,000 | $72,600 | |||||||
Plan | Drury | Wilkins | Drury | Wilkins | ||||
a. | $ | $ | $ | $ | ||||
b. | $ | $ | $ | $ | ||||
c. | $ | $ | $ | $ | ||||
d. | $ | $ | $ | $ | ||||
e. | $ | $ | $ | $ | ||||
f. | $ | $ | $ | $ |
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