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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:
- Equal division.
- In the ratio of original investments.
- In the ratio of time devoted to the business.
- Interest of 5% on original investments and the remainder equally
- Interest of 5% on original investments, salary allowances of $40,000 to Morrison and $70,000 to Greene, and the remainder equally
- 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. | $ | $ | $ | $ |
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