Determine the division of the net income

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Reference no: EM131204438

Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $27,300 and that Wilkins is to invest $63,700. 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 $61,800 to Drury and $30,900 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. Required: For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $273,000 and (2) net income of $120,000.

Reference no: EM131204438

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