Reference no: EM131779578
Question: Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $14,000 and that Wilkins is to invest $56,000. 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:
Equal division.
In the ratio of original investments.
In the ratio of time devoted to the business.
Interest of 10% on original investments and the remainder in the ratio of 3:2.
Interest of 10% on original investments, salary allowances of $47,600 to Drury and $23,800 to Wilkins, and the remainder equally.
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 $210,000 and
(2) net income of $92,400.
|
(1) |
(2) |
|
$210,000 |
$92,400 |
| Plan |
|
Drury |
|
Wilkins |
|
Drury |
|
Wilkins |
| a. |
$ |
$ |
$ |
$ |
| b. |
$ |
$ |
$ |
$ |
| c. |
$ |
$ |
$ |
$ |
| d. |
$ |
$ |
$ |
$ |
| e. |
$ |
$ |
$ |
$ |
| f. |
$ |
$ |
$ |
$ |