Question

12.3

2.Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $297,000 and $99,000, respectively. Determine their participation in the year's net income of $270,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 10% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $63,000 and $87,000, respectively, and the balance divided equally. Allowance of interest at the rate of 10% on original investments, salary allowances of $63,000 and $87,000, respectively, and the remainder divided equally.

Hawes    Albright

(a) $    $

(b) $    $

(c) $    $

(d) $                          $

(e) $    $

Answer 1

Statement showing division of Income amongs Partners
					TYLER HAWES		ALBRIGHT		TOTAL
Case-A:
Net income in equal ratio					135000		135000		270000
Case-B: Capital ratio
Net income in the ratio of (297:99)					202500		67500		270000
Case-C: Interest @10% and remaining 2:3
Interest on capital @10%					29700		9900		39600
Remaining profits (270000-39600) in 2:3					92160		138240		230400
Total divisible profits					121860		148140		270000
Case-D: Salary and remaining equally
Salary Allowance					63000		87000		150000
Remaining Profits($270000-150000) in 1:1					60000		60000		120000
Total divisible profits					123000		147000		270000
Case-E Interest 10%, salary and Remaining equally
Interest on capital @10%					29700		9900		39600
Salary Allowance					63000		87000		150000
Remaining Profits ($270000-39600-150000) in 1:1					40200		40200		80400
Total Divisible profits					132900		137100		270000