Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $204,000 and that Shannon is to invest $68,000. Blac is to devote one-half time to the business, and Shannon is to devote full time. The following plans for the division of income are being considered: a. Equal division. b. In the ratio of original investments. c. In the ratio of time devoted to the business. d. Interest of 6% on original investments and the remainder equally. e. Interest of 6% on original investments, salary allowances of $45,000 to Black and $75,000 to Shannon, and the remainder equally. f. Plan (e), except that Shannon 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 $235,000. Round answers to the nearest whole dollar. (1) (2) $172,000 $235,000 Plan Black Shannon Black Shannon a. b. C. d. e. f. 00

Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $204,000 and that Shannon is to invest $68,000. Blac is to devote one-half time to the business, and Shannon is to devote full time. The following plans for the division of income are being considered: a. Equal division. b. In the ratio of original investments. c. In the ratio of time devoted to the business. d. Interest of 6% on original investments and the remainder equally. e. Interest of 6% on original investments, salary allowances of $45,000 to Black and $75,000 to Shannon, and the remainder equally. f. Plan (e), except that Shannon 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 $235,000. Round answers to the nearest whole dollar. (1) (2) $172,000 $235,000 Plan Black Shannon Black Shannon a. b. C. d. e. f. 00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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