Dividing Partnership Income

Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $186,000 and that Greene is to invest $62,000. Morrison is to devote one-half time to the business, and Greene 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 $40,000 to Morrison and $85,000 to Greene, and the remainder equally

Plan (e), except that Greene 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 $121,000 and (2) net income of $210,000. Round answers to the nearest whole dollar.

$121,000 $210,000 Plan Morrison Greene Morrison Greene a. b. $ C. d. f