Dividing partnership income Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is toinvest $267,000 and that Westhoff is to invest $89, 000. Dahl is to devote one-half time to the business, and Westhoff isto devote full time. The following plans for the division of income are being considered: Equal division. In the ratio oforiginal investments. In the ratio of time devoted to the business. Interest of 6% on original investments and theremainder equally. Interest of 6% on original investments, salary allowances of $45,000 to Dahl and $85,000 to Westhoff,and the remainder equally. Plan (e), except that Westhoff is also to be allowed a bonus of $25,000 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 $166,000 and (2) net income of $205,000. Round answers to the nearest whole dollar.

Partnership is the relation between two or more person, It has the following characteristicsThey…

$100,000. Required: For each plan, determine the division of the net income under each of the following assumption: (1) net income of $166,000 and (2) net income of $205, 000. Round answers to the nearest whole dollar.

$100,000. Required: For each plan, determine the division of the net income under each of the following assumption: (1) net income of $166,000 and (2) net income of $205, 000. Round answers to the nearest whole dollar.

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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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Dividing partnership income Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to
invest $267,000 and that Westhoff is to invest $89, 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: Equal division. In the ratio of
original investments. In the ratio of time devoted to the business. Interest of 6% on original investments and the
remainder equally. Interest of 6% on original investments, salary allowances of $45,000 to Dahl and $85,000 to Westhoff,
and the remainder equally. Plan (e), except that Westhoff is also to be allowed a bonus of $25,000 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 $166,000 and (2) net income of $205,000. Round answers to the nearest whole dollar.

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