Merkel and Putin began a partnership by investing $6,000 and $4,000, respectively. During its first year, the partnership earned $80,000. Show how the $80,000 income is allocated under each separate plan: (1) the partners share income and loss equally; (2) the partners share income and loss in proportion to their initial investments; and (3) the partners share income by giving a $35,000-per-year salary allowance to Merkel, a $13,000-per-year salary allowance to Putin, 20% interest on their initial capital investments, and any remaining balance shared 70% to Merkel and 30% to Putin.
Merkel and Putin began a partnership by investing $6,000 and $4,000, respectively. During its first year, the partnership earned $80,000. Show how the $80,000 income is allocated under each separate plan: (1) the partners share income and loss equally; (2) the partners share income and loss in proportion to their initial investments; and (3) the partners share income by giving a $35,000-per-year salary allowance to Merkel, a $13,000-per-year salary allowance to Putin, 20% interest on their initial capital investments, and any remaining balance shared 70% to Merkel and 30% to Putin.
Chapter21: Partnerships
Section: Chapter Questions
Problem 2BCRQ
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Merkel and Putin began a
the partnership earned $80,000. Show how the $80,000 income is allocated under each separate plan:
(1) the partners share income and loss equally; (2) the partners share income and loss in proportion to their
initial investments; and (3) the partners share income by giving a $35,000-per-year salary allowance to
Merkel, a $13,000-per-year salary allowance to Putin, 20% interest on their initial capital investments, and
any remaining balance shared 70% to Merkel and 30% to Putin.
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