Dividing Partnership IncomeMorrison and Greene have decided to form a partnership. Theyhave agreed that...Dividing...

Free

50.1K

Verified Solution

Question

Accounting

Dividing Partnership Income
Morrison and Greene have decided to form a partnership. Theyhave agreed that Morrison is to invest $150,000 and that Greene isto invest $50,000. Morrison is to devote one-half time to thebusiness, and Greene is to devote full time. The following plansfor the division of income are being considered:
Equal division.
In the ratio of original investments.
In the ratio of time devoted to the business.
Interest of 6% on original investments and the remainderequally
Interest of 6% on original investments, salary allowances of$50,000 to Morrison and $70,000 to Greene, and the remainderequally
Plan (e), except that Greene is also to be allowed a bonusequal to 20% of the amount by which net income exceeds the totalsalary allowances
Required:
For each plan, determine the division of the net income undereach of the following assumptions: (1) net income of $118,000 and(2) net income of $255,000. Round answers to the nearest wholedollar.
(1) (2)
$118,000 $255,000
Plan Morrison Greene Morrison Greene
a. $ $ $ $
b. $ $ $ $
c. $ $ $ $
d. $ $ $ $
e. $ $ $ $
f. $ $ $ $

Answer & Explanation Solved by verified expert

3.8 Ratings (434 Votes)

	118,000.00		255,000.00
	Morrison	Greene	Morrison	Greene
a	59,000.00	59,000.00	127,500.00	127,500.00

b	88,500.00	29,500.00	191,250.00	63,750.00

c	39,333.33	78,666.67	85,000.00	170,000.00

d	10,260.00	3,420.00	10,260.00	3,420.00
	52,160.00	52,160.00	120,660.00	120,660.00
Total	62,420.00	55,580.00	130,920.00	124,080.00

e	10,260.00	3,420.00	10,260.00	3,420.00
	50,000.00	90,000.00	50,000.00	90,000.00
	- 17,840.00	- 17,840.00	50,660.00	50,660.00
Total	42,420.00	75,580.00	110,920.00	144,080.00

f	10,260.00	3,420.00	10,260.00	3,420.00
	50,000.00	90,000.00	50,000.00	90,000.00
				23,000.00
	- 17,840.00	- 17,840.00	39,160.00	39,160.00
Total	42,420.00	75,580.00	99,420.00	155,580.00

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingDividing Partnership IncomeMorrison and Greene have decided to form a partnership. Theyhave agreed that...Dividing Partnership IncomeMorrison and Greene have decided to form a partnership. Theyhave agreed that Morrison is to invest $150,000 and that Greene isto invest $50,000. Morrison is to devote one-half time to thebusiness, and Greene is to devote full time. The following plansfor the division of income are being considered:Equal division.In the ratio of original investments.In the ratio of time devoted to the business.Interest of 6% on original investments and the remainderequallyInterest of 6% on original investments, salary allowances of$50,000 to Morrison and $70,000 to Greene, and the remainderequallyPlan (e), except that Greene is also to be allowed a bonusequal to 20% of the amount by which net income exceeds the totalsalary allowancesRequired:For each plan, determine the division of the net income undereach of the following assumptions: (1) net income of $118,000 and(2) net income of $255,000. Round answers to the nearest wholedollar.(1)(2)$118,000$255,000PlanMorrisonGreeneMorrisonGreenea.$$$$b.$$$$c.$$$$d.$$$$e.$$$$f.$$$$

	(1)			(2)
	$118,000			$255,000
Plan		Morrison	Greene		Morrison	Greene
a.		$	$		$	$
b.		$	$		$	$
c.		$	$		$	$
d.		$	$		$	$
e.		$	$		$	$
f.		$	$		$	$