Candace Hassell and Abby Lawson formed a partnership, investing $387,000 and $12
ID: 2524779 • Letter: C
Question
Candace Hassell and Abby Lawson formed a partnership, investing $387,000 and $129,000, respectively.
Determine their participation in the year's net income of $318,000, under each of the following independent assumptions.
No agreement concerning division of net income.
Divided in the ratio of original capital investment.
Interest at the rate of 18% allowed on original investments and the remainder divided in the ratio of 2:3.
Salary allowances of $81,000 and $111,000, respectively, and the balance divided equally.
Allowance of interest at the rate of 18% on original investments, salary allowances of $81,000 and $111,000, respectively, and the remainder divided equally.
Hassell Lawson (a) $ $ (b) $ $ (c) $ $ (d) $ $ (e) $ $Explanation / Answer
Hassell. Lawson
(a) $ 159,000 $ 159,000
(b) $ 238,500. $ 79,500
(c) $ 159708 $ 158,292
(d) $ 144,000. $ 174,000
(e) $ 183,780. $ 134,220
-->> EXPLANATION :-
(A) :- DIVIDED $318,000 IN 1:1 EQUALLY
= 318,000/2 = 159,000 EACH
(B) :- CAPITAL RATIO = 387 : 129 i.e, 3:1
$ 318,000 divided in 3:1
= 318,000 / 4 = 79,500
-->> hasell share = 79,500 x 3 = 238,500
--->> lawson share = 79,500 x 1 = 79,500
(c) :- hassell int = 387,000 x 18% = 69,660
Lawson int. = 129,000 x 18 % = 23,220
Balance amout = 318,000 - 69,660 - 23,220
= 225,120 share in 2:3
Hassell share = 225,120 / 5 x2 + 69,660 = 159,708
Lawson share = 225,120/ 5 x 3 + 23,220 = 158,292
(D) :-profit balance after salary = 318,000 - 81,000 - 111,000
= 126,000
Hassell share = 126000 / 2 + 81000 = 144,000
Lawson share = 126,000 /2 + 111,000 = 174,000
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