I need Page 5 of the question answered

Stephanie Barnes and Layla Taylor formed a partnership, Design Pros Imaging, last May. Each person contributed assets to the business and both partners work full-time in the business. The business made a profit in the first year, which ended Dec. 31, but Layla and Stephanie are still discussing how to divide the net income equitably. The following table shows some options that their accountant worked up.

Option	Partner
	Taylor	Barnes
A.	$27,840	$41,760
B.	$46,400	$23,200
C.	$6,600	$9,300
	32,220	21,480
	$38,820	$30,780
D.	$32,000	$28,000
	6,600	9,300
	-1,575	-4,725
	$37,025	$32,575
E.	$32,000	$28,000
		1,440
	4,080	4,080
	$36,080	$33,520
F.	$34,800	$34,800
G.	$6,600	$9,300
	10,440
	10,815	32,445
	$27,855	$41,745

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Unfortunately, the accountant's notes about each option have been lost. Stephanie remembers that the accountant proposed paying 4% interest yearly on each partner's capital investment at the beginning of the year. Layla asked the accountant to include at least one bonus option. The accountant used last year's results to show how the net income would have been divided under each option.

	Taylor	Barnes
1. What is each partners capital investment?	165000	232500
2. What is each partners proposed salary amount?	32000	28000

	3. What was the net income for Design Pros Imaging last year? 69600
	4. Which option shows how the net income will be split if the partners do not reach an agreement? Option F
	5. In Option D, what do the negative amounts represent?
	6. What is the last item in Option E that is divided between the partners?

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Another designer, Chad Mineart, joined the partnership on January 1, after all assets were adjusted to their market values. He is hoping to work in the business next year. The journal entries to record his admission follow.

PAGE 5

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Jan. 1	Layla Taylor, Capital		16,500.00
2		Stephanie Barnes, Capital		34,875.00
3		Chad Mineart, Capital			51,375.00
4	1	Cash		45,000.00
5		Chad Mineart, Capital			45,000.00

1. How was Chad admitted to the partnership? Check all that apply.

Contribution of service and investment.

Purchase from the existing partners.

Participation through negotiation.

Receipt of partner equity.

Income redistribution to partners.

2. What was the sales price of the equity that Chad purchased?

3. Assume that Layla and Stephanie have decided to adopt Option D on the Design Pros Imaging panel. They are wondering how the division of net income under Option D will change with the new partner. Assume that income is the same as the prior year. Chad will not have a salary allowance the first year, but any remaining net income will be shared equally among the partners. Using last years data as an example, extend Option D to allow for Chads participation. What would Chads share of the net income be?