Reference no: EM131125146
Kantor and Freeman began a partnership by investing $104,000 and $156,000 respectively.During the first year of operation, the partnership earned $90,000.Required:Prepare calculations showing how the income should be allocated to the partners undereach of the following plans for sharing net incomes and losses:
(a) The partners failed to agree on a method of sharing income.
(b) The partners agreed to share income by allowing Kantor a $40,000 salary andFreeman a $30,000 salary, and by allocating the balance in the ratio 2:3.
(c) Repeat the calculations for (b) under the assumption that instead of the $90,000income, the partnership experienced a $20,000 loss.
(d) Assume that instead of a partnership, Kantor and Freeman incorporated, with Kantorreceiving 104 shares and Freeman 156 shares. Would a division of earnings betweenKantor and Freeman be necessary at year end? Explain.
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