4. Humbolt Hardware Company is a partnership with net income of $84,000 and needs to split this between partners Ethel Hardachre and Dave Vader. As Ethel Hardachre works full-time in the business, they have an annual salary of $38,000 and contributed 1,092 of hours of work. The other partner, Dave Vader, put in 454.5 hours of work and has an annual salary of $29,250. The partners split $12,100 of the net income as additional salary based upon the ratio of hours of work. The partners invested $20,500 (Ethel Hardachre) and $14,625 (Dave Vader). Each partner will receive 5% on their invested capital. Any residual net income or loss will be split based upon the ratio of invested capital. Prepare a schedule (showing calculations) of the split of net income or loss amongst the partners.
4. Humbolt Hardware Company is a partnership with net income of $84,000 and needs to split this between partners Ethel Hardachre and Dave Vader. As Ethel Hardachre works full-time in the business, they have an annual salary of $38,000 and contributed 1,092 of hours of work. The other partner, Dave Vader, put in 454.5 hours of work and has an annual salary of $29,250. The partners split $12,100 of the net income as additional salary based upon the ratio of hours of work. The partners invested $20,500 (Ethel Hardachre) and $14,625 (Dave Vader). Each partner will receive 5% on their invested capital. Any residual net income or loss will be split based upon the ratio of invested capital. Prepare a schedule (showing calculations) of the split of net income or loss amongst the partners.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4. Humbolt Hardware Company is a partnership with net income of $84,000 and needs to split this
between partners Ethel Hardachre and Dave Vader. As Ethel Hardachre works full-time in the
business, they have an annual salary of $38,000 and contributed 1,092 of hours of work. The other
partner, Dave Vader, put in 454.5 hours of work and has an annual salary of $29,250. The partners
split $12,100 of the net income as additional salary based upon the ratio of hours of work. The
partners invested $20,500 (Ethel Hardachre) and $14,625 (Dave Vader). Each partner will receive 5%
on their invested capital. Any residual net income or loss will be split based upon the ratio of
invested capital. Prepare a schedule (showing calculations) of the split of net income or loss amongst
the partners.
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