Question

Tyler Hawes and Piper Albright formed a partnership, investing $67,500 and $202,500, respectively. Determine their participation in the year's net income of $300,000 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 6% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $34,000 and $50,000, respectively, and the balance divided equally. Allowance of interest at the rate of 6% on original investments, salary allowances of $34,000 and $50,000, respectively, and the remainder divided equally.

Hawes Albright

(a) $ $

(b) $ $

(c) $ $

(d) $ $

(e) $ $

Answer 1

				($67,500)	($202,500)
Plan	Workings			Tyler	Piper
a)	Equally		(1:1)	$ 150,000.00	$ 150,000.00
b)	Original capital		(1:3)	$   75,000.00	$ 225,000.00
c)	Interest Allowance			$     4,050.00	$   12,150.00
	Balance		(2:3)	$ 113,520.00	$ 170,280.00
				$ 117,570.00	$ 182,430.00
d)	Salary Allowance			$   34,000.00	$   50,000.00
	Balance		(1:1)	$ 108,000.00	$ 108,000.00
				$ 142,000.00	$ 158,000.00
e)	Interest Allowance			$     4,050.00	$   12,150.00
	Salary Allowance			$   34,000.00	$   50,000.00
	Balance		(1:1)	$   99,900.00	$   99,900.00
				$ 137,950.00	$ 162,050.00