Dividing Partnership Income Morrison and Greene have decided to form a partnersh

Question

Dividing Partnership Income Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $150,000 and that Greene is to invest $50,000. Morrison is to devote one-half time to the business, and Greene is to devote full time. The following plans for the division of income are being considered a. Equal division. b. In the ratio of original investments. c. In the ratio of time devoted to the business. d. Interest of 6% on original investments and the remainder equally e. Interest of 6% on onginal investments, salary allowances of $40,000 to Morrison and $70,000 to Greene, and the remainder equally f. Plan e except that Greene is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances Required: For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $115,000 and (2) net income of $200,000. Round answers to the nearest whole dollar. $115,000 $200,000 Plan Morrison Greene Morrison Greene

Explanation / Answer

Solution:-

Explanation 1:-

Net income is deistributed in 1:1 Ratio.

Explanation 2:-

Net income is deistributed in 15:5 Ratio (On the basis of original investment).

Explanation 3:-

Net income is deistributed in 0.5:1 Ratio (On the basis of time devoted to the business).

Explanation 4:-

Explanation 5:-

Note :- As per Chegg guidlines if mote than four sub part posted than we liable to answer only first four sub-part.

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Plan (1) (2) Explanation $115,000 $200,000 Morrison Greene Morrison Greene a. 57,500 57,500 100,000 100,000 1 b. 86,250 28,750 150,000 50,000 2 c. 38,333 76,667 66,667 133,333 3 d. 60,500 54,500 103,000 97,000 4 e. 45,500 69,500 88,000 112,000 5

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