Tyler Hawes and Piper Albright formed a partnership, investing $210,000 and $70,
ID: 2529286 • Letter: T
Question
Tyler Hawes and Piper Albright formed a partnership, investing $210,000 and $70,000, respectively.
Determine their participation in the year's net income of $104,000 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 5% allowed on original investments and the remainder divided in the ratio of 2:3.
Salary allowances of $36,000 and $45,000, respectively, and the balance divided equally.
Allowance of interest at the rate of 5% on original investments, salary allowances of $36,000 and $45,000, respectively, and the remainder divided equally.
Hawes Albright (a) $ $ (b) $ $ (c) $ $ (d) $ $ (e) $ $Explanation / Answer
SOLUTION
(A) Net Income = $104,000
Hawes = $104,000 / 2 = $52,000
Albright = $104,000 / 2 = $52,000
(B) Ratio = 3:1
Hawes = $104,000 * 3/ 4 = $78,000
Albright = $104,000 * 1/ 4 = $26,000
(C) Interest-
Hawes = $210,000 * 5% = $10,500
Albright = $70,000 * 5% = $3,500
Balance = $104,000 - $10,500 - $3,500 = $90,000
Hawes = $90,000 * 2/5 = $36,000
Albright = $90,000 * 3/5 = $54,000
Hawes total = $10,500 + $36,000 = $46,500
Albright total = $3,500 + $54,000 = $57,500
(D)
(E)
Hawes Albright Salary 36,000 45,000 Balance- equally 11,500 11,500 Total 47,500 56,500Related Questions
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