Question

Dividing Partnership Income

Tyler Hawes and Piper Albright formed a partnership, investing $180,000 and $60,000, respectively.

Determine their participation in the year's net income of $270,000 under each of the following independent assumptions:

1. No agreement concerning division of net income.
2. Divided in the ratio of original capital investment.
3. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.
4. Salary allowances of $40,000 and $46,000, respectively, and the balance divided equally.
5. Allowance of interest at the rate of 5% on original investments, salary allowances of $40,000 and $46,000, respectively, and the remainder divided equally.

	Hawes	Albright
(a)	$	$
(b)	$	$
(c)	$	$
(d)	$	$
(e)	$	$

Answer 1

970000 Answer- 1.10 agreement concerning division of met income is provided then net incord is divided between partners equally Division of income for each of the partners is shown below Hawes ( 270,000 X 507.) $135,000 Albright (270,000507.) $ 135,000 calculation of division of income blow Postners in the ratio of capital invested Hawes (2 76000x 180,000) $ 180000 270,000 Albright (21000060,000) . $ 60000 @ calculation of divi Sion ofincome - Howes Albright Total Net income $270,000 ley: Interest on Capital 9000 $3000 $ 19,000 K180,000 XGY) (60,000NG%) Available net income 5258,000 Allocation of net income 103,200 154,800 (55.000 x3) (258,000x3) Total income allocated $12,200 $157,800 $270000 di Calculation of division of income Net income $ 270,000 Less: Salary pair $ 86,000 (4008+46,000) 000 Remaining net income Balance or urlly divided (1841000/2) Hawes Albright Salary $40,000 $46,000 Net income allocated $92,000 $92,000 Total income divided $132,000 $ 138,000 $18 $ 92,000

Interest on Capital Hawes Albright 9000 3000 (180000 x 5%) (60,000X57) 49000 46000 $ 49,000 $49,000 $98,000 Salary Total income distributed Balance income available $179,000 (270000 - 98,000) Balance income divided $86,000 (1721600/2) Interest on capital Salary Balance income dividend Total income allocated Hawes $ 9000 $40,000 $86,000 $135,000 Albright $3000 $46,000 $86,000 $135,000