Dividing Partnership Income Candace Hassell and Abby Lawsonformed a partnership, investing $295,200 and $196,800,respectively....Dividing...
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Dividing Partnership Income Candace Hassell and Abby Lawsonformed a partnership, investing $295,200 and $196,800,respectively. Determine their participation in the year's netincome of $258,000, under each of the following independentassumptions. No agreement concerning division of net income.Divided in the ratio of original capital investment. Interest atthe rate of 18% allowed on original investments and the remainderdivided in the ratio of 2:3. Salary allowances of $78,000 and$108,000, respectively, and the balance divided equally. Allowanceof interest at the rate of 18% on original investments, salaryallowances of $78,000 and $108,000, respectively, and the remainderdivided equally.
Dividing Partnership Income Candace Hassell and Abby Lawsonformed a partnership, investing $295,200 and $196,800,respectively. Determine their participation in the year's netincome of $258,000, under each of the following independentassumptions. No agreement concerning division of net income.Divided in the ratio of original capital investment. Interest atthe rate of 18% allowed on original investments and the remainderdivided in the ratio of 2:3. Salary allowances of $78,000 and$108,000, respectively, and the balance divided equally. Allowanceof interest at the rate of 18% on original investments, salaryallowances of $78,000 and $108,000, respectively, and the remainderdivided equally.
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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 | |
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In: AccountingDividing Partnership Income Candace Hassell and Abby Lawsonformed a partnership, investing $295,200 and $196,800,respectively....Dividing Partnership Income Candace Hassell and Abby Lawsonformed a partnership, investing $295,200 and $196,800,respectively. Determine their participation in the year's netincome of $258,000, under each of the following independentassumptions. No agreement concerning division of net income.Divided in the ratio of original capital investment. Interest atthe rate of 18% allowed on original investments and the remainderdivided in the ratio of 2:3. Salary allowances of $78,000 and$108,000, respectively, and the balance divided equally. Allowanceof interest at the rate of 18% on original investments, salaryallowances of $78,000 and $108,000, respectively, and the remainderdivided equally.
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