EXPERTDividing partnership income

Carmelo Fernandez and Bobby Morett formed a partnership, investing $$120,000$ and $$180,000,$ respectively.

Determine their participation in the year's net income of $$275,000$ under each of the following independent assumptions:

a$.$ No agreement concerning division of net income.

b$.$ Divided in the ratio of original capital investment.

c$.$ Interest at the rate of $6\%$ allowed on original investments and the remainder divided in the ratio of $2$:$3.$

d$.$ Salary allowances of $$40,000$ and $$45,000,$ respectively, and the balance divided equally.

e$.$ Allowance of interest at the rate of $6\%$ on original investments, salary allowances of $$40,000$ and $$45,000,$ respectively, and the remainder divided equally.

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Set up a column for each partner and a total column.

a$.$ Determine the distribution of income and losses in the absence of a partnership agreement.

b$.$ Use the ratio of the partner's original capital investment to distribute the net income.

c$.$ Use the stated percentage to determine the interest allowance. Distribute the remaining income based on the stated ratio.

d$.$ Assign each partner's stated salary allowance. Distribute the remaining income based on the stated ratio.

e$.$ Use the stated percentage to determine the interest allowance. Assign each partner's salary allowance. Distribute the remaining income based on the stated ratio.