Question

Beau Dawson and Willow McDonald formed a partnership, investing $96,000 and $144,000, respectively.

Determine their participation in the year's net income of $290,000 under each of the following independent assumptions:

a. No agreement concerning division of net income.
b. Divided in the ratio of original capital investment.
c. Interest at the rate of 6% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $36,000 and $50,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 6% on original investments, salary allowances of $36,000 and $50,000, respectively, and the remainder divided equally.

	Dawson	McDonald
a.	$fill in the blank 1	$fill in the blank 2
b.	$fill in the blank 3	$fill in the blank 4
c.	$fill in the blank 5	$fill in the blank 6
d.	$fill in the blank 7	$fill in the blank 8
e.	$fill in the blank 9	$fill in the blank 10

Lynn Carpenter and Matthew Fredrick formed a partnership in which the partnership agreement provided for salary allowances of $50,000 and $44,000, respectively.

Determine the division of a $25,000 net loss for the current year, assuming that remaining income or losses are shared equally by the two partners. Use the minus sign to indicate any deductions or deficiencies.

	Lynn Carpenter		Matthew Fredrick		Total
Salary Allowance	$fill in the blank 1		$fill in the blank 2		$fill in the blank 3
Remainder	$fill in the blank 4		$fill in the blank 5		$fill in the blank 6
Net Loss	$fill in the blank 7		$fill in the blank 8		$fill in the blank 9

Answer 1

1.
a.

	Dawson	McDonald	Total
Net Income	$         145,000	$         145,000	$            290,000

b.

	Dawson	McDonald	Total
Net Income	$         116,000	$         174,000	$            290,000

c.

	Dawson	McDonald	Total
Net Income			$            290,000
Salary Allowance	$             5,760	$              8,640	$              14,400
Balance of Income			$            275,600
Balance of Income allocated	$         110,240	$         165,360	$            275,600
Income of each partner	$        116,000	$         174,000	$           290,000

d.

	Dawson	McDonald	Total
Net Income			$            290,000
Salary Allowance	$           36,000	$           50,000	$              86,000
Balance of Income			$            204,000
Balance of Income allocated	$         102,000	$         102,000	$            204,000
Income of each partner	$        138,000	$         152,000	$           290,000

e.

	Dawson	McDonald	Total
Net Income			$            290,000
Salary Allowance	$           36,000	$           50,000	$              86,000
Interest Allowance	$             5,760	$              8,640	$              14,400
Total Salaries and Interest	$           41,760	$           58,640	$            100,400
Balance of Income			$            189,600
Balance of Income allocated	$           94,800	$           94,800	$            189,600
Income of each partner	$        136,560	$         153,440	$           290,000

2.

	Lynn	Mathhew	Total
Net Income (Loss)			$            (25,000)
Salary Allowance	$           50,000	$           44,000	$              94,000
Balance of Income (Loss)			$          (119,000)
Balance of Income allocated	$         (59,500)	$          (59,500)	$          (119,000)
Loss of each partner	$           (9,500)	$         (15,500)	$            (25,000)