Tyler Hawes and Piper Albright formed a partnership, investing $441,000 and $147
ID: 2429880 • Letter: T
Question
Tyler Hawes and Piper Albright formed a partnership, investing $441,000 and $147,000, 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 10% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $93,000 and $129,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 10% on original investments, salary allowances of $93,000 and $129,000, respectively, and the remainder divided equally.
Hawes Albright
(a) $ $
(b) $ $
(c) $ $
(d) $ $
(e) $ $
Explanation / Answer
Statement showing allocation of Income HAWES ALBRIGHT Total Case-A Net income fr the year 324000 To be shared equally in absence of agreement 162000 162000 -324000 Income share 162000 162000 0 Case-B Net Income for the year 324000 To be share in capital ratio i.e. 3:1 243000 81000 -324000 Income share 243000 81000 0 Case-C Net Income for the year 324000 Interest allowance 44100 14700 58800 Remaining Income 265200 Share of income in 3:2 106080 159120 -265200 Income Share 150180 173820 0 Case-D: Net Income for the year 324000 Salary Allowance 93000 129000 222000 Remaining Income 102000 Share divided equally 51000 51000 -102000 Income Share 144000 180000 0 Case-E Net Income for the year 324000 Salary Allowance 93000 129000 222000 Remaining Income 102000 Interest allowance 44100 14700 58800 Remaining Income 43200 Share divided equally 21600 21600 -43200 Income Share 158700 165300 0
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