Question

Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership investing $225,000 and $75,000, respectively Determine the participation in the year's net 280.000 under each of the following independent assumption No agreement o g division of net income b. Divided in the ratio of original capital investment c. Interest at the rate of 6% allowed on originale ments and the reminder divided in the ratio of 2:3 d. Salary allowance of 538,000 and $48.000, respectively, and the balance divided sually c. Allowance of interest at the rate of o riginal investments, salary allowances of $38,and $40,000, respectively, and the remainder divided equally Albright $ 140,000 $ 140,000

Answer 1

SOLUTION

1. Hawes - $280,000 / 2 = $140,000

Albright - $280,000 / 2 = $140,000

2. Capital investment = 225,000 : 75,000

Ratio = 3:1

Hawes = $280,000 * 3/ 4 = $210,000

Albright = $280,000 * 1/ 4 = $70,000

3. Interest-

Hawes = $225,000 * 6% = $13,500

Albright = $75,000 * 6% = $4,500

Balance = 280,000 - 13,500 - 4,500 = 262,000

Hawes = 262,000 * 2/5 = 104,800

Albright = 262,000 * 3/5 = 157,200

Hawes total = $13,500 + 104,800 = 118,300

Albright total = 4,500 + 157,200 = 161,700

4.

	Hawes	Albright
Salary	38,000	48,000
Balance- equally (280,000-38,000-48,000)	97,000	97,000
Total	135,000	145,000

5.

	Hawes	Albright
Interest	13,500	4,500
Salary	38,000	48,000
Balance- equally	88,000	88,000
Total	139,500	140,500