Dividing partnership income Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $153,000 and that Westhoff is to invest $51,000. Dahl is to devote one-half time to the business, and Westhoff 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 Dahl and $80,000 to Westhoff, and the remainder equally. f. Plan (e), except that Westhoff is also to be allowed a bonus of $29,000 if net income exceeds $100,000. 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 $245,000. Round answers to the nearest whole dollar. Plan a. b. C. d. e. f. (1) $178,000 Dahl $ $ (1) $178,000 Westhoff (2) $245,000 Dahl $ $ (2) $245,000 Westhoff $ $ $ $

Dividing partnership income Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $153,000 and that Westhoff is to invest $51,000. Dahl is to devote one-half time to the business, and Westhoff 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 Dahl and $80,000 to Westhoff, and the remainder equally. f. Plan (e), except that Westhoff is also to be allowed a bonus of $29,000 if net income exceeds $100,000. 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 $245,000. Round answers to the nearest whole dollar. Plan a. b. C. d. e. f. (1) $178,000 Dahl $ $ (1) $178,000 Westhoff (2) $245,000 Dahl $ $ (2) $245,000 Westhoff $ $ $ $

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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