Question

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Jyntula AssignmentsessionLo... Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $62,500 and $187,500, respectively. Determine their participation in the year's net income of $285,000 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 $34,000 and $48,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 5% on original investments, salary allowances of $34,000 and $48,000, respectively, and the remainder divided equally. Hawes Albright test ERS

Answer 1

Ans:  

A). if no information given then assume equal ratio for net income distribution=1:1

net income= $285,000

Ratio=1:1

Tyler Hawes= 1/2*285000

= 142,500

Piper Albright= 1/2*285,000

= 142,500

B). divided in the ratio of their original capital investment = 1:3

Tyler Hawes= 1/4*285000

= 71250

Piper Albright= 3/4*285,000

= 213,750

C). Interest at the rate of 5% allowed on original investments and the remainder divided in ratio of 2:3

tyler Hawes= 5/100*62,500= 3125

Piper albright= 5/100*187,500 = 9375

Balance after deduction= $285,000- 3125-9375

= 272,500

Hawes= $272500*2/5

= 109,000

Piper albright= $272,500*3/5

= 163,500

Total net income= for tyler: 109000+3125 = $112,125

Piper albright= 163500+9375 = $172,875

D).

Particulars	Tyler hawes	Piper albright
Salary	$34,000	$48,000
Balance- equally**	$101500	$101500
Total	$135,500	$149,500

net income= $285,000-(34,000+48,000)

=$203,000

Tyler hawes = 1/2*203000

E).

Particulars	Tyler	Piper
Interest	3125	9375
Salary	34000	48000
Balance-equally(195000*1/2)**	97500	97500
Total	$134,625	$154,875

from D).  net income- 203000

less:. interest= 203000-3125-9375= 195,000