Dividing Partnership Income Candace Hassell and Abby Lawson formed a partnership
ID: 2587693 • Letter: D
Question
Dividing Partnership Income Candace Hassell and Abby Lawson formed a partnership, investing $381,600 and $254,400, respectively. Determine their participation in the year's net income of $324,000 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 2:3. d. Salary allowances of $101,000 and $139,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 18% on original investments, salary allowances of $101,000 and $139,000, respectively, and the remainder divided equally. Hassell Lawson (ba) (bo (e)$Explanation / Answer
Hassell
Lawson
a)
324000*50% = 162000
324000*50% = 162000
b)
324000*(381600/636000) = 194400
324000*(254400/636000) = 129600
c)
Interest to Hassell = 381600*18% = 68688
Interest to Lawson = 254400*18% =45792
Remaining net income = 324000 – 68688-45792 = 209520
Hassell =209520*(2/5) = 83808
209520*3/5 = 125712
d)
Remaining net income after salary = 324000-101000-139000 = 84000
Hassell = 84000*1/2 = 42000
84000*1/2 = 42000
e)
0 (because net income is 0 after interest and salary)
0
Hassell
Lawson
a)
324000*50% = 162000
324000*50% = 162000
b)
324000*(381600/636000) = 194400
324000*(254400/636000) = 129600
c)
Interest to Hassell = 381600*18% = 68688
Interest to Lawson = 254400*18% =45792
Remaining net income = 324000 – 68688-45792 = 209520
Hassell =209520*(2/5) = 83808
209520*3/5 = 125712
d)
Remaining net income after salary = 324000-101000-139000 = 84000
Hassell = 84000*1/2 = 42000
84000*1/2 = 42000
e)
0 (because net income is 0 after interest and salary)
0