Dividing Partnership Income Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $44,700 and that Wilkins is to invest $104,300. Drury is to dev

Dividing Partnership Income

Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $44,700 and that Wilkins is to invest $104,300. Drury is to devote full time to the business, and Wilkins is to devote one-half time. The following plans for the division of income are being considered:

a. Equal division.

b. In the ratio of original investments.

c. In the ratio of time devoted to the business.

d. Interest of 10% on original investments and the remainder in the ratio of 3:2.

e. Interest of 10% on original investments, salary allowances of $101,400 to Drury and $50,700 to

Wilkins, and the remainder equally.

f. Plan (e), except that Wilkins is also to be allowed a bonus equal to 20% of the amount by

which net income exceeds the total salary allowances.

For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $447,000 and (2) net income of $196,800.

(1) Net income of (2) Net income of

$447,000 $196,800

Plan Drury Wilkins Drury Wilkins

a. $ $ $ $

b. $ $ $ $

c. $ $ $ $

d. $ $ $ $

e. $ $ $ $

f. $ $ $ $

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