BUS 208 - Principles of Accounting IIHomework Assignment 1Chapter 12Karen Smith and Abby Jones formed a partnership, investing $250,000 and $125,000, respectively.Determine their participation in the year's net income of $420,000 under each of the followingindependent assumptions. Please show your calculations.a. No agreement concerning division of net income.b. Divided in the ratio of original capital investment.c. Interest at the rate of 4% allowed on original investments and the remainder divided inthe ratio of 4:1.d. Salary allowances of $50,000 and $60,000, respectively, and the remainder dividedequally.e. Allowance of interest at the rate of 5% on original investments, salary allowancesof $40,000 and $80,000 respectively and the remainder divided equally.Show your work.

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Karen Smith and Abby Jones formed a partnership, investing $250,000 and $125,000, respectively. Determine their participation in the year's net income of $420,000 under each of the following independent assumptions. Please show your calculations.

Karen Smith and Abby Jones formed a partnership, investing $250,000 and $125,000, respectively. Determine their participation in the year's net income of $420,000 under each of the following independent assumptions. Please show your calculations.

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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Question

BUS 208 - Principles of Accounting II
Homework Assignment 1
Chapter 12
Karen Smith and Abby Jones formed a partnership, investing $250,000 and $125,000, respectively.
Determine their participation in the year's net income of $420,000 under each of the following
independent assumptions. Please show your calculations.
a. No agreement concerning division of net income.
b. Divided in the ratio of original capital investment.
c. Interest at the rate of 4% allowed on original investments and the remainder divided in
the ratio of 4:1.
d. Salary allowances of $50,000 and $60,000, respectively, and the remainder divided
equally.
e. Allowance of interest at the rate of 5% on original investments, salary allowances
of $40,000 and $80,000 respectively and the remainder divided equally.
Show your work.

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