Dividing Partnership Income Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $140,700 and that Wilkins is to invest $60,300. Drury is to devote full time to the business, and Wilkins is to devote one-half time. The following plans for the division of income are being considered: a.Equal division. b.In the ratio of original investments. c.In the ratio of time devoted to the business. d.Interest of 10% on original investments and the remainder in the ratio of 3:2. e.Interest of 10% on original investments, salary allowances of $136,600 to Drury and $68,300 to Wilkins, and the remainder equally. f.Plan (e), except that Wilkins is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances. For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $603,000 and (2) net income of $265,200.
Dividing Partnership Income Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $140,700 and that Wilkins is to invest $60,300. Drury is to devote full time to the business, and Wilkins is to devote one-half time. The following plans for the division of income are being considered: a.Equal division. b.In the ratio of original investments. c.In the ratio of time devoted to the business. d.Interest of 10% on original investments and the remainder in the ratio of 3:2. e.Interest of 10% on original investments, salary allowances of $136,600 to Drury and $68,300 to Wilkins, and the remainder equally. f.Plan (e), except that Wilkins is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances. For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $603,000 and (2) net income of $265,200.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter19: Accounting For Partnerships
Section: Chapter Questions
Problem 2SEA
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Dividing Partnership Income
Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $140,700 and that Wilkins is to invest $60,300. Drury is to devote full time to the business, and Wilkins is to devote one-half time. The following plans for the division of income are being considered:
a.Equal division.
b.In the ratio of original investments.
c.In the ratio of time devoted to the business.
d.Interest of 10% on original investments and the remainder in the ratio of 3:2.
e.Interest of 10% on original investments, salary allowances of $136,600 to Drury and $68,300 to Wilkins, and the remainder equally.
f.Plan (e), except that Wilkins is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances.
For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $603,000 and (2) net income of $265,200.
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