Reference no: EM13570308

Tim Snyder and Jay Wise have decided to form a partnership. They have agreed that Snyder is to invest $30,000 and that Wise is to invest $40,000. Snyder is to devote full time to the business, and Wise 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 investmetns, salary allowances of $34,000 to Snyder and $17,000 to Wise, and the remainder equally.
f. Same as in (e), except that Snyder is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances.

For each plan, determine the devision of the net income under each of the following assumptions: (1) net income of $210,000 and (2) net income of $84,000.

For plan a. with a net income of $210,000 I got that Snyder is to receive $105,000 and Wise is to receive $105,000. With a net income of $84,000 I got that Snyder is to receive $42,000 and Wise $42,000.

For plan b. with a net income of $210,000 I got that Snyder is to receive $90,000 and Wise is to receive $120,000. With a net income of $84,000 I got that Snyder is to receive $36,000 and Wise $48,000.

For plan c. with a net income of $210,000 I got that Snyder is to receive $140,000 and Wise is to receive $70,000. With a net income of $84,000 I got that Snyder is to receive $56,000 and Wise $28,000.