Answered

Welcome to Westonci.ca, your one-stop destination for finding answers to all your questions. Join our expert community now! Get immediate answers to your questions from a wide network of experienced professionals on our Q&A platform. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.

eBook
Dividing Partnership Income
Beau Dawson and Willow McDonald formed a partnership, investing $65,000 and $195,000, respectively.
Determine their participation in the year's net income of $275,000 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 6% allowed on original investments and the remainder divided in the ratio of 2:3.
d. Salary allowances of $34,000 and $49,000, respectively, and the balance divided equally.
e. Allowance of interest at the rate of 6% on original investments, salary allowances of $34,000 and $49,000, respectively, and the remainder divided equally.
Dawson
McDonald
137,500
137,500
$ 68,750 ✓
a.
b.
C.
d.
Show Me How
e.
Feedback
X
$206,250
Check My Work
Set up a column for each partner and a total column.
a. Determine the distribution of income and losses in the absence of a partnership agreement.
h Lise the ratio of the partner's original capital investment to distribute the net income.

Sagot :

anthougo

The distribution of income and losses to the partners is as follows:

                                              Beau Dawson       Willow McDonald    Total

a) No agreement (income or loss

is shared equally)                     $137,500               $137,500       $275,000

b) Ratio of original capital         $68,750              $206,250       $275,000

c) Interest at 6% and the remainder shared equally:

Total income shared                $107,660              $167,340       $275,000

d) Salary Allowances and the remainder shared equally:          

Total income shared              $130,000              $145,000       $275,000

e) Interest at 6%, salary allowances of $34,000 and $49,000, and the remainder shared equally:

Total income shared               $126,100            $148,900        $275,000

How do partners share profits?

Partners share profits and losses according to their partnership agreements.

In the absence of a partnership agreement, profits and losses are distributed equally.

                                   Beau Dawson       Willow McDonald    Total

Capital investment         $65,000               $195,000            $260,000

Profit-sharing ratio (capital) 1              :              3

Sum of ratios = 4

Net income for the year = $275,000

Profit-sharing under these scenarios:

                                              Beau Dawson       Willow McDonald    Total

a) No agreement (income or loss

is shared equally)                     $137,500               $137,500       $275,000

b) Ratio of original capital         $68,750              $206,250       $275,000

c) Interest at 6% and the remainder

in the ratio of 2:3

Interest on capital                     $3,900                  $11,700          $15,600

Income-sharing                     $103,760               $155,640       $259,400

Total income shared            $107,660                $167,340       $275,000

d) Salary Allowances           $34,000                 $49,000          $83,000

Income-sharing (equally)       96,000                   96,000        $192,000

Total income shared          $130,000                $145,000       $275,000

e) Interest at 6%, salary allowances of $34,000 and $49,000, and the remainder shared equally:

Interest on capital                     $3,900                  $11,700          $15,600

Salary Allowances                  $34,000                $49,000         $83,000

Income-sharing (equally)       $88,200                $88,200        $176,400

Total income shared             $126,100              $148,900        $275,000

Learn more about profit distribution among partners at https://brainly.com/question/22693552

#SPJ1

We hope our answers were useful. Return anytime for more information and answers to any other questions you have. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.