plan e except that salinas is also to be allowed a bonus equal to 20 of the amount b 554347

PR 12-2A Dividing partnership income

Dyer and Salinas have decided to form a partnership. They have agreed that Dyer is to invest $120,000 and that Salinas is to invest $40,000. Dyer is to devote one-half time to the business and Salinas is to devote full 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 12% on original investments and the remainder equally.

e. Interest of 12% on original investments, salary allowances of $32,000 to Dyer and $64,000 to Salinas, and the remainder equally.

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

Instructions

For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $108,000 and (2) net income of $150,000. Present the data in tabular form, using the following columnar headings: