Dividing Partnership Income Beau Dawson and Willow McDonald formed a partnership, investing $187,500 and $62,500, respectively. Determine their participation in the year's net income of $300,000 under each of the following independent assumptions: a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3. d. Salary allowances of $38,000 and $49,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 5% on original investments, salary allowances of $38,000 and $49,000, respectively, and the remainder divided equally. Dawson McDonald $ $ $ $ $ $ $ $ $ $
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Dividing Partnership Income
Beau Dawson and Willow McDonald formed a partnership, investing $187,500 and $62,500, respectively.
Determine their participation in the year's net income of $300,000 under each of the following independent assumptions:
a. No agreement concerning division of net income.
b. Divided in the ratio of original capital investment.
c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $38,000 and $49,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 5% on original investments, salary allowances of $38,000 and $49,000, respectively, and the remainder divided equally.
| Dawson | McDonald | |
| $ | $ | |
| $ | $ | |
| $ | $ | |
| $ | $ | |
| $ | $ |
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