Question

Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $75,000 and $225,000, 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 $38,000 and $49,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 5% on original investments, salary allowances of $38,000 and $49,000, respectively, and the remainder divided equally. Hawes Albright

Answer 1

Hawes 145000 72500 Albright 145000 217500 Shared equally Divided in 1:3 ratio 75000 x 5% = 3750, 225000 x 5% = 11250, 290000 - 3750 - 11250 = 275000, 275000 divided in 2:3 ratio 110000 165000 290000 - 38000 - 49000 = 203000, 203000 divided equally 101500 101500 275000 - 38000 - 49000 = 188000, 188000 divided equally 94000 94000