Dividing Partnership Income Dylan Howell and Demond Nickles have decided to form a partnership. They have agreed that Ho

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Dividing Partnership Income Dylan Howell And Demond Nickles Have Decided To Form A Partnership They Have Agreed That Ho 1 (69.88 KiB) Viewed 56 times

Dividing Partnership Income Dylan Howell and Demond Nickles have decided to form a partnership. They have agreed that Howell is to invest $50,000 and that Nickles is to invest $75,000. Howell is to devote full time to the business, and Nickles 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 investments, salary allowances of $38,000 to Howell and $19,000 to Nickles, and the remainder equally. f. Plan (e), except that Howell 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 $420,000 and (2) net income of $150,000. (1) $420,000 Plan a. b. C. d. e. f. Howell $ 210,000 ✓ 315,000 X $ 140,000 X $ 5,000 X 5,000 X Nickles $ 210,000 ✓ $ 105,000 X 280,000 X 7,500 X 7,500 X Howell 75,000 ✓ 112,500 X 50,000 X 5,000 X 5,000 X (2) $150,000 Nickles 75,000 ✓ 37,500 X 100,000 X 7,500 X 7,500 X