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Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac
Edition 26ISBN: 978-1285743615Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac
Edition 26ISBN: 978-1285743615 Exercise 1
Dividing partnership income
Morrison and Amato have decided to form a partnership. They have agreed that Morrison is to invest $150,000 and that Amato is to invest $50,000. Morrison is to devote one-half time to the business and Amato 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 12% on original investments and the remainder equally.
e. Interest of 12% on original investments, salary allowances of $30,000 to Morrison and $64,000 to Amato, and the remainder equally.
f. Plan (e), except that Amato is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances.
Instructions
For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $105,000 and (2) net income of $180,000. Present the data in tabular form, using the following columnar headings:
Morrison and Amato have decided to form a partnership. They have agreed that Morrison is to invest $150,000 and that Amato is to invest $50,000. Morrison is to devote one-half time to the business and Amato 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 12% on original investments and the remainder equally.
e. Interest of 12% on original investments, salary allowances of $30,000 to Morrison and $64,000 to Amato, and the remainder equally.
f. Plan (e), except that Amato is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances.
Instructions
For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $105,000 and (2) net income of $180,000. Present the data in tabular form, using the following columnar headings:
Explanation
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Determine the division of net income und...
Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac
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