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Lawford and Delgado have decided to form a partnership. They have agreed that Lawford is to invest $90,000 and that Delgado is to invest $30,000. Lawford is to devote one-half time to the business and Delgado is to devote full time. The following plans for the division of income are being considered.

Equal divison.

In the ratio of original investments.

In the ratio of time devoted to the business.

Interest of 12% on original investments and the remainder equally.

Interest of $12% on original investments, salary allowances of $28,000 to Lawford and $60,000 to Delgado, and the remainder equally.

Plan (e), except that Delgado is also to be allowed a bonus equal to 20% of the amount but 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 $90,00 and (2) net income of $135,000. Present the data in tabular form, using columnar headings:

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9956863

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