Dividing partnership income Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $400,000 and that Westhoff is to invest $100,000. Dahl is to devote one-third time to the business, and Westhoff is to devote two-thirds 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 $80,000 to Dahl and $160,000 to Westhoff, and the remainder equally Plan (e), except that Westhoff is also to be allowed a bonus of $50,000 if net income exceeds 200,000. Required: For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $ 300,000 and (2) net income of $750,000. Round answers to the nearest whole dollar. Plan (1) $300,000 Dahl (1) $300,000 Westhoff (2) $750,000 Dahl (2) $750,000 Westhoff a. $$$$b. $$$$c. $$$$d. SS

Dividing partnership income Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $400,000 and that Westhoff is to invest $100,000. Dahl is to devote one-third time to the business, and Westhoff is to devote two-thirds 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 $80,000 to Dahl and $160,000 to Westhoff, and the remainder equally Plan (e), except that Westhoff is also to be allowed a bonus of $50,000 if net income exceeds 200,000. Required: For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $ 300,000 and (2) net income of $750,000. Round answers to the nearest whole dollar. Plan (1) $300,000 Dahl (1) $300,000 Westhoff (2) $750,000 Dahl (2) $750,000 Westhoff a. $$$$b. $$$$c. $$$$d. SS

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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