Tyler Hawes and Piper Albright formed a partnership, investing $180,000 and $120
ID: 2608786 • Letter: T
Question
Tyler Hawes and Piper Albright formed a partnership, investing $180,000 and $120,000, respectively.
Determine their participation in the year's net income of $366,000 under each of the following independent assumptions:
No agreement concerning division of net income.
Divided in the ratio of original capital investment.
Interest at the rate of 10% allowed on original investments and the remainder divided in the ratio of 2:3.
Salary allowances of $48,000 and $66,000, respectively, and the balance divided equally.
Allowance of interest at the rate of 10% on original investments, salary allowances of $48,000 and $66,000, respectively, and the remainder divided equally.
Hawes Albright (a) $ $ (b) $ $ (c) $ $ (d) $ $ (e) $ $Explanation / Answer
Assumptions Hawes Albright Total (a) 50% each $ 183,000 $ 183,000 $ 366,000 ($366,000*0.5) ($366,000*0.5) (b) In the ratio of original capital investment. $ 219,600 $ 146,400 $ 366,000 ($366,000*180/300) ($366,000*120/300) Hawes Albright (c ) 10% interest on capital $ 18,000 $ 12,000 $ 30,000 remainder divided in the ratio of 2:3. ($366,000-$30,000= $336,000) $ 134,400 $ 201,600 $ 336,000 (336000*2/5) (336000*3/5) Total sharing $ 152,400 $ 213,600 $ 366,000 (d) Hawes Albright Salary allowances $ 48,000 $ 66,000 $ 114,000 Balance equally (366000-114000) =252000 $ 126,000 $ 126,000 $ 252,000 (252000*0.5) (252000*0.5) Total sharing $ 174,000 $ 192,000 $ 366,000 (e) Hawes Albright 10% interest on capital $ 18,000 $ 12,000 $ 30,000 Salary allowances $ 48,000 $ 66,000 $ 114,000 Balance equally (366000-30000-114000) =222000 $ 111,000 $ 111,000 $ 222,000 Total sharing $ 177,000 $ 189,000 $ 366,000
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