Dividing Partnership Income Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $279,000 and that Greene is to invest $93,000. Morrison is to devote one-half time to the business, and Greene is to devote full 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 $60,000 to Morrison and $90,000 to Greene, and the remainder equally Plan (e), except that Greene 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 $175,000 and (2) net income of $245,000. Round answers to the nearest whole dollar. (1) (2) $175,000 $245,000 Plan Morrison Greene Morrison Greene a. $ $ $ $ b. $ $ $ $ c. $ $ $ $ d. $ $ $ $ e. $ $ $ $ f. $ $ $
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
Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $279,000 and that Greene is to invest $93,000. Morrison is to devote one-half time to the business, and Greene is to devote full 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 $60,000 to Morrison and $90,000 to Greene, and the remainder equally
- Plan (e), except that Greene 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 $175,000 and (2) net income of $245,000. Round answers to the nearest whole dollar.
| (1) | (2) | |||||||
| $175,000 | $245,000 | |||||||
| Plan | Morrison | Greene | Morrison | Greene | ||||
| a. | $ | $ | $ | $ | ||||
| b. | $ | $ | $ | $ | ||||
| c. | $ | $ | $ | $ | ||||
| d. | $ | $ | $ | $ | ||||
| e. | $ | $ | $ | $ | ||||
| f. | $ | $ | $ |
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