Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $234,000 and that Greene is to invest $78,000. 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 6% on original investments and the remainder equally Interest of 6% on original investments, salary allowances of $45,000 to Morrison and $70,000 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 $121,000 and (2) net income of $230,000. Round answers to the nearest whole dollar.
Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $234,000 and that Greene is to invest $78,000. 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 6% on original investments and the remainder equally Interest of 6% on original investments, salary allowances of $45,000 to Morrison and $70,000 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 $121,000 and (2) net income of $230,000. Round answers to the nearest whole dollar.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dividing Partnership Income
Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $234,000 and that Greene is to invest $78,000. 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 6% on original investments and the remainder equally
- Interest of 6% on original investments, salary allowances of $45,000 to Morrison and $70,000 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 $121,000 and (2) net income of $230,000. Round answers to the nearest whole dollar.
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