Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership,
ID: 2544954 • Letter: D
Question
Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $384,000 and $192,000, respectively. Determine their participation in the year's net income of $312,000 under each of the following independent assumptions: a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. c. Interest at the rate of 18% allowed on original investments and the remainder divided in the ratio of 23. d. Salary allowances of $91,000 and $125,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 18% on original investments, salary allowances of $91,000 and $125,000, respectively, and the remainder divided equally Hawes Albright (b) $ (d) $Explanation / Answer
Investing ratio = hawes : albright = 2:1 a) No agreement, equally distributed, so Hawes=312000*1/2=$156000 and Albright=$156000 b) In capital investment, so Hawes=312000*2/3=$208000 and Albright=312000*1/3=$104000 c) hawas albright Total Interest 69120 34560 103680 sharing 2:3 83328 124992 208320 total 152448 159552 312000 d) hawas albright Total salary 91000 125000 216000 sharing 1:1 48000 48000 96000 total 139000 173000 312000 e) hawas albright Total Interest 18% 69120 34560 103680 salary 91000 125000 216000 total 160120 159560 319680 net income 312000 deficiency in profit and sharing 1:1 -3840 -3840 -7680 Final Total 156280 155720 312000