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Question - dividing partnership income

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Question - Dividing Partnership Income

Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $291,000 and that Greene is to invest $97,000. Morrison is to devote one-half time to the business, and Greene is to devote full time. The following plans for the division of income are being considered:

1. Equal division.

2. In the ratio of original investments.

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

4. Interest of 5% on original investments and the remainder equally

5. Interest of 5% on original investments, salary allowances of $55,000 to Morrison and $75,000 to Greene, and the remainder equally

6. Plan (e), except that Greene 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 $136,000 and (2) net income of $245,000. Round answers to the nearest whole dollar.

Reference no: EM132537353

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