PROBLEM – 3 Dagnachew and Firdu formed a partnership. Dagnachew invested Birr 90,000 and Firdu invested Birr 60,000. Dagnachew is to devote one-half time to the business while Firdu is to devote full time. The following plans for the division of income are being considered: equally in the ratio of original investments in the ratio of time devoted to the business Interest of 12% on original investments and the reminder equally. Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and Birr 20,000 to Firdu, and the remainder equally. The same as in #5 except that Dagnachew is also to be allowed a bonus equal to 25% of the amount by which net income exceeds salary allowances. Required:
PROBLEM – 3
Dagnachew and Firdu formed a
Dagnachew is to devote one-half time to the business while Firdu is to devote full time.
The following plans for the division of income are being considered:
equally
in the ratio of original investments
in the ratio of time devoted to the business
Interest of 12% on original investments and the reminder equally.
Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and Birr 20,000 to Firdu, and the remainder equally.
The same as in #5 except that Dagnachew is also to be allowed a bonus equal to 25% of the amount by which net income exceeds salary allowances.
Required:
Determine the division of income to Dagnachew and Firdu under each plan assuming the partnership of Danagnachew and Firdu earned a net income of: A. Birr 32,000
B. Birr 150,000
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