Question
Dividing Partnership Income Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $273,000 and that Greene is
Dividing Partnership Income
Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $273,000 and that Greene is to invest $91,000. 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 5% on original investments and the remainder equally
-
Interest of 5% on original investments, salary allowances of $55,000 to Morrison and $85,000 to Greene, and the remainder equally
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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 $124,000 and (2) net income of $205,000. Round answers to the nearest whole dollar.
| (1) | (2) | ||||||
| $124,000 | $205,000 | ||||||
Plan |
| Morrison |
| Greene |
| Morrison |
| Greene |
a. |
| $ |
| $ |
| $ |
| $ |
b. |
| $ |
| $ |
| $ |
| $ |
c. |
| $ |
| $ |
| $ |
| $ |
d. |
| $ |
| $ |
| $ |
| $ |
e. |
| $ |
| $ |
| $ |
| $ |
f. |
| $ |
| $ |
| $ |
|
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