1. Dividing Partnership Income
Tyler Hawes and Piper Albright formed a partnership, investing $60,000 and $180,000, respectively.
Determine their participation in the year's net income of $280,000 under each of the following independent assumptions:
Hawes | Albright | |
(a) | $ | $ |
(b) | $ | $ |
(c) | $ | $ |
(d) | $ | $ |
(e) | $ |
$ |
2. Dividing Partnership Income
Tyler Hawes and Piper Albright formed a partnership, investing $120,000 and $180,000, respectively.
Determine their participation in the year's net income of $110,000 under each of the following independent assumptions:
Hawes | Albright | |
(a) | $ | $ |
(b) | $ | $ |
(c) | $ | $ |
(d) | $ | $ |
(e) | $ | $ |
Solution 1:
Division of Income | $280,000 | ||
S. No | Particulars | Hawes | Albright |
a | No agreement concerning division of net income (1:1) | $140,000.00 | $140,000.00 |
b | Divided in the ratio of original capital investment (1:3) | $70,000.00 | $210,000.00 |
c | Interest of 6% on original investment and remainder in ratio 2:3 | ||
Interest Amount (Opening Capital * 6%) Hawes (60000*6%) Albright (180000*6%) |
$3,600.00 | $10,800.00 | |
Distribution of remaining income (2:3) Remainder income= ($280,000 - $3,600 - $10,800) = 265,600 |
$106,240.00 | $159,360.00 | |
Total Share of Income (Interest + Remaining Distribution) | $109,840 | $170,160 | |
d | Salary allowance and balance divided equally | ||
Salary allowances to partner | $34,000.00 | $45,000.00 | |
Distribution of remaining income (1:1) Remainder income= ($280,000 - $34,000 - $45,000) = 201,000 |
$100,500.00 | $100,500.00 | |
Total Share of Income | $134,500 | $145,500 | |
e | Interest of 6% on original investment, Salary Allowances and remainder in the ratio of 1:1 | ||
Interest Amount (Opening Capital * 6%) Hawes (60000*6%) Albright (180000*6%) |
$3,600.00 | $10,800.00 | |
Salary allowances to partner | $34,000.00 | $45,000.00 | |
Distribution of remaining income (1:1) | $93,300.00 | $93,300.00 | |
Total Share of Income (Interest + Salary + Remaining Distribution) | $130,900.00 | $149,100.00 |
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