Journal entry

Hammond and Saxby have decided to form a partnership. They have agreed that Hammond is to invest $10,000 and that Saxby is to invest $90,000. Hammond is to devote one half time to the business while Saxby is to devote full time. The following plans for the division of net income are being considered. Each is a different choice. For this year, the partnership earned $210,000 (a) Equal division because they could not agree (b) In the ratio of their original investments (c) In the ratio of time devoted to the business (d) Pretend interest of 12% on original investments and the remainder equally. (e) Pretend interest of 10% on original investments, pretend salary of $40,000 and $20,000 respectively, and the remainder 7:3