Dividing Partnership Income Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $201,000 and that Shannon is to invest $67,000. Black 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 $80,000 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 $160,000 and (2) net income of $205,000. Round answers to the nearest whole dollar. (1) (2) $160,000 $205,000 Plan Black Shannon Black Shannon a. $ $ $ $ b. $ $ $ $ c. $ $ $ $ d. $ $ $ $ e. $ $ $ $ f. $ $
Dividing
Black and Shannon have decided to form a partnership. They have agreed that Black is to invest $201,000 and that Shannon is to invest $67,000. Black 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 $80,000 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 $160,000 and (2) net income of $205,000. Round answers to the nearest whole dollar.
| (1) | (2) |
| $160,000 | $205,000 |
| Plan | Black | Shannon | Black | Shannon |
a. $ $ $ $
b. $ $ $ $
c. $ $ $ $
d. $ $ $ $
e. $ $ $ $
f. $ $ $ $
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