Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $200,000 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 15% allowed on original investments and the remainder divided in the ratio of 2:3 (2/5 to Holly and 3/5 to Luke) Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally; Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally
Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $200,000 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 15% allowed on original investments and the remainder divided in the ratio of 2:3 (2/5 to Holly and 3/5 to Luke) Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally; Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally
Chapter11: Partnerships: Distributions, Transfer Of Interests, And Terminations
Section: Chapter Questions
Problem 31P
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Holly and Luke formed a
- No agreement concerning division of net income;
- Divided in the ratio of original capital investment;
- Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3 (2/5 to Holly and 3/5 to Luke)
- Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally;
- Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally.
| Holly | Luke | Total | |
| a. | $fill in the blank 1 | $fill in the blank 2 | $fill in the blank 3 |
| b. | $fill in the blank 4 | $fill in the blank 5 | $fill in the blank 6 |
| c. | $fill in the blank 7 | $fill in the blank 8 | $fill in the blank 9 |
| d. | $fill in the blank 10 | $fill in the blank 11 | $fill in the blank 12 |
| e. | $fill in the blank 13 | $fill in the blank 14 | $fill in the blank 15 |
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