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Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $267,000 and that Greene is to invest $89,000.

Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $267,000 and that Greene is to invest $89,000. 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. Interest of 5% on original investments, salary allowances of $45,000 to Morrison and $75,000 to Greene, and the remainder equally
  2. 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 $178,000 and (2) net income of $225,000. Round answers to the nearest whole dollar.

(1) (2)
$178,000 $225,000
Plan Morrison Greene Morrison Greene

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