Dividing Partnership Income Candace Hassell and Abby Lawson formed a partnership
ID: 2336661 • Letter: D
Question
Dividing Partnership Income Candace Hassell and Abby Lawson formed a partnership, investing $295,200 and $196,800, respectively. Determine their participation in the year's net income of $258,000, under each of the following independent assumptions. No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 18% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $78,000 and $108,000, respectively, and the balance divided equally. Allowance of interest at the rate of 18% on original investments, salary allowances of $78,000 and $108,000, respectively, and the remainder divided equally.
Explanation / Answer
Solution:
Division of Income S. No. Particulars Total Hassell Lawson 1 No agreement concerning division of net income: Net Income (1:1) $258,000.00 $129,000.00 $129,000.00 2 Division in ratio of original capital investment: Net Income (295200:196800) $258,000.00 $154,800.00 $103,200.00 3 Interest on capital and ramainder in ration of 2:3: Net Income $258,000.00 Interest on capital $88,560.00 $53,136.00 $35,424.00 Balance of income $169,440.00 Remaining income (2:3) $169,440.00 $67,776.00 $101,664.00 Total share of income $258,000.00 $120,912.00 $137,088.00 4 Salary allowance and remaining equally: Net Income $258,000.00 Salary Allowance $186,000.00 $78,000.00 $108,000.00 Balance of income $72,000.00 Remaining income (1:1:1) $72,000.00 $36,000.00 $36,000.00 Total share of income $258,000.00 $114,000.00 $144,000.00 5 Interest on capital, Salary allowance and ramainder equally: Net Income $258,000.00 Interest on capital $88,560.00 $53,136.00 $35,424.00 Balance of income $169,440.00 Salary Allowance $186,000.00 $78,000.00 $108,000.00 Balance of income -$16,560.00 Remaining income (1:1:1) -$16,560.00 -$8,280.00 -$8,280.00 Total share of income $258,000.00 $122,856.00 $135,144.00