Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $195,000 and that Greene is to invest $65,000.

Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $195,000 and that Greene is to invest $65,000. 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:

  1. Equal division.
  2. In the ratio of original investments.
  3. In the ratio of time devoted to the business.
  4. Interest of 5% on original investments and the remainder equally
  5. Interest of 5% on original investments, salary allowances of $40,000 to Morrison and $70,000 to Greene, and the remainder equally
  6. 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 $172,000 and (2) net income of $220,000. Round answers to the nearest whole dollar.

(1) (2)
$172,000 $220,000
Plan Morrison Greene Morrison Greene
a. $ $ $ $
b. $ $ $ $
c. $ $ $ $
d. $ $ $ $
e. $ $ $ $
f. $ $ $ $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bookkeeping And Accounting

Authors: Greg Shields

1st Edition

1983673536, 978-1983673535

More Books

Students also viewed these Accounting questions

Question

Explain the relationship between language and culture

Answered: 1 week ago

Question

Compare and contrast elaborated and restricted codes

Answered: 1 week ago