Reference no: EM13349781

Question :

Ty Wilkins and Desmond Drury 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 dedicate full time to the business, and Wilkins is to devote one-half time. The subsequent plans for the division of income are being considered:

a. In the ratio of original investments.

b. Equal division

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

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

e. Interest of 10 percent on original investments, salary allowances of $101,400 to Drury and $50,700 to Wilkins, and the remainder regularly.

f. Plan (e), except that Wilkins is also to be allowed a bonus equal to 20 percent of the amount by which net income exceeds the total salary allowances.

For each plan, evaluate the division of the net income under each of the subsequent assumptions: (1) total income of $447,000 and (2) total 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.             $             $ $ $