Question

In: Accounting

Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to...

Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $192,000 and that Greene is to invest $64,000. 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:

  1. Equal division.
  2. In the ratio of original investments.
  3. In the ratio of time devoted to the business.
  4. Interest of 5% on original investments and the remainder equally
  5. Interest of 5% on original investments, salary allowances of $50,000 to Morrison and $85,000 to Greene, and the remainder equally
  6. 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 $139,000 and (2) net income of $210,000. Round answers to the nearest whole dollar.

(1) (2)
$139,000 $210,000
Plan Morrison Greene Morrison Greene
a. $ $ $ $
b. $ $ $ $
c. $ $ $ $
d. $ $ $ $
e. $ $ $ $
f. $ $ $ $

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