Division of Net Income Between Partners

Create an Excel worksheet.

At the TOP, enter all of these amounts given:

Ryan's salary: $80,000

Limoli's salary: $60,000

Ryan's beginning capital account: $250,000

Limoli's beginning capital account: $100,000

Interest on beginning capital accounts: 8%

Net income for the year: $150,000

Remainder of net income to be shared 60% to Ryan, 40% to Limoli

Enter each amount in a separate cell and LABEL EVERYTHING.

Don't do any calculations for the top - just enter the information that is given.

Make a clear distinction between the top and the bottom.

At the BOTTOM, create a partial income statement to show the division of the net income between the partners.

A good example to follow for the partial income statement is at the top of page 659. In the example, the second-to-last row says "Balance Equally." Since that isn't true for this lab, you could write "Balance Shared."

It's really important that you follow these instructions for Excel. At the top, I should see only the given amounts and their labels. No formulas. Then, at the bottom, there should be a partial income statement, and only formulas using only cell references, referring to the cells at the top. This way, you can use the worksheet to perform "what-if analysis" - for instance, change the net income, and see what the division would be. Or change the interest rate and see what the division would be.

To make sure that you only used formulas at the bottom, select CTRL+~, and make sure you don't see any numbers - only formulas.

Examples of formulas: =A3+G5 =F4-S3 =B2*B3