close solutoin list

Dividing partnership income Tyler Hawes and Piper Albright formed a partnership, investing $210,000 and $70,000, 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 5% allowed on original investments and the remainder divided in the ratio of 2:3; (d) salary allowances of $36,000 and $45,000, respectively, and the balance divided equally; (e) allowance of interest at the rate of 5% on original investments, salary allowances of $36,000 and $45,000, respectively, and the remainder divided equally.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 12, Problem 12.3EX
Textbook Problem

Dividing partnership income

Tyler Hawes and Piper Albright formed a partnership, investing $210,000 and $70,000, 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 5% allowed on original investments and the remainder divided in the ratio of 2:3; (d) salary allowances of $36,000 and $45,000, respectively, and the balance divided equally; (e) allowance of interest at the rate of 5% on original investments, salary allowances of $36,000 and $45,000, respectively, and the remainder divided equally.

Expert Solution
To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

To determine:  The participation of partners in the net income of the year under various independent assumptions.

Explanation of Solution

Working Notes:

Calculations of division of net income under various assumptions are as follows:

H A Total
a  Net income (1:1) $145,000 $145,000 $290,000
b  Net income (3:1)(1) $217,500 $72,500 $290,000
c  Interest allowance                       (A)

$10,500

(2)

$3,500

(2)

$14,000
Remaining income (2:3)               (B) $110,400 $165,600 $276,000
Net income                           (A)+(B) $120,900 $169,100 $290,000
d Salary allowance                          (C) $36,000 $45,000 $81,000
Remaining income (1:1)              (D) $104,500 $104,500 $209,000
Net income                           (C)+(D) $140,500 $149,500

Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution

Chapter 12 Solutions

Accounting
Show all chapter solutions
Ch. 12 - Journalizing partners original investment Holly...Ch. 12 - Journalizing partners original investment Austin...Ch. 12 - Dividing partnership net income Lia Chen and...Ch. 12 - Dividing partnership net income John Prado and...Ch. 12 - Revaluing and contributing assets to a partnership...Ch. 12 - Revaluing and contributing assets to a partnership...Ch. 12 - Partner bonus Gomez, has a capital balance of...Ch. 12 - Partner bonus Hiro has a capital balance of 75,000...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Liquidating partnershipsdeficiency Prior to...Ch. 12 - Liquidating partnershipsdeficiency Prior to...Ch. 12 - Revenue per employee Niles and Cohen, CPAs earned ...Ch. 12 - Revenue per employee Eclipse Architects earned...Ch. 12 - Recording partner's original investment Kimberly...Ch. 12 - Recording partner's original investment Hannah...Ch. 12 - Dividing partnership income Tyler Hawes and Piper...Ch. 12 - Dividing partnership income Using each of the live...Ch. 12 - Dividing partnership net loss Leigh Meadows and...Ch. 12 - Negotiating income-sharing ratio Sixty-year-old...Ch. 12 - Dividing LLC income Martin Farley and Ashley Clark...Ch. 12 - LLC net income and statement of members equity...Ch. 12 - Admitting new partners Myles Eller and Crystal...Ch. 12 - Admitting new partners who buy an interest and...Ch. 12 - Admitting new partner who contributes assets After...Ch. 12 - Admitting new partner with bonus Cody Jenkins and...Ch. 12 - Admitting a new LLC member with bonus Alert...Ch. 12 - Admitting new partner with bonus L. Bowers and V....Ch. 12 - Partner bonuses, statement of partnership equity...Ch. 12 - Withdrawal of partner Lane Stevens is to retire...Ch. 12 - Statement of members' equity, admitting new member...Ch. 12 - Distribution of cash upon liquidation Hewitt and...Ch. 12 - Distribution of cash upon liquidation David Oliver...Ch. 12 - Liquidating partnershipscapital deficiency Lewis,...Ch. 12 - Distribution of cash upon liquidation Bray,...Ch. 12 - Liquidating partnershipscapital deficiency...Ch. 12 - Statement of partnership liquidation After closing...Ch. 12 - Statement of LLC liquidation Lester, Torres, and...Ch. 12 - Partnership entries and statement of partnership...Ch. 12 - Revenue per professional staff The accounting firm...Ch. 12 - Revenue per employee Superior Cleaning Services,...Ch. 12 - Entries and balance sheet for partnership On March...Ch. 12 - Dividing partnership income Morrison and Greene...Ch. 12 - Financial statements for partnership The ledger of...Ch. 12 - Admitting new partner Musa Moshref and Shaniqua...Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - Statement of partnership liquidation On November...Ch. 12 - Entries and balance sheet for partnership On April...Ch. 12 - Dividing partnership income Dylan Howell and...Ch. 12 - Financial statements for partnerships The ledger...Ch. 12 - Admitting new partner Brian Caldwell and Adriana...Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - Statement of partnership liquidation On August 3,...Ch. 12 - Ethics in Action Tayc Barrow, M.D., and James...Ch. 12 - Communication Lindsey Wilson has agreed to invest...Ch. 12 - Dividing partnership income Terry Willard and...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
List and describe four determinants of a countrys productivity.

Brief Principles of Macroeconomics (MindTap Course List)

PREPARE DEPOSIT TICKET Based on the following information, prepare a deposit ticket:

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

CONSTANT GROWTH VALUATION Harmon Clothiers stock currently sells for 20.00 a share. It just paid a dividend of ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Is unemployment typically short-term or long-term? Explain.

Principles of Macroeconomics (MindTap Course List)