Question

Stephanie Barnes and Layla Taylor formed a partnership, Design Pros Imaging, last May. Each person contributed assets to the business and both partners work full-time in the business. The business made a profit in the first year, which ended Dec. 31, but Layla and Stephanie are still discussing how to divide the net income equitably. The following table shows some options that their accountant worked up.

Option	Partner
	Taylor	Barnes
A.	$28,320	$42,480
B.	$47,200	$23,600
C.	$6,600	$9,300
	32,940	21,960
	$39,540	$31,260
D.	$32,000	$28,000
	6,600	9,300
	-1,275	-3,825
	$37,325	$33,475
E.	$32,000	$28,000
		1,620
	4,590	4,590
	$36,590	$34,210
F.	$35,400	$35,400
G.	$6,600	$9,300
	10,620
	11,070	33,210
	$28,290	$42,510

. Assume that Layla and Stephanie have decided to adopt Option D on the Design Pros Imaging panel. They are wondering how the division of net income under Option D will change with the new partner. Assume that income is the same as the prior year. Chad will not have a salary allowance the first year, but any remaining net income will be shared equally among the partners. Using last year’s data as an example, extend Option D to allow for Chad’s participation. What would Chad’s share of the net income be?

Answer 1

Answer

If option D

Particulars	Taylor	Barnes
Ratio is 8:7	$32,000	$28,000
Ratio is 22:31	$6,600	$9,300
Ration is 51:153	-$1275	-$3,825
Net Amount	$37,325	$33,475

Total Amount $37325+33475 =70800

Shares of chad"s is =$70800/3

=$23,600

and admission of Partner.