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i3cengageNOWu2] Online X v2.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker.ass Chapter 12 HWK eBook Show Me How Calculator Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $210,000 and $70,000, respectively. Determine their participation in the year\'s net income of $290,000 under each of the following independ a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. C. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2 d. Salary allowances of $36,000 and $45,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 5% on original investments, salary allowances of $36,000 and $45 Hawes Albright 145,000 tb) 217,500 72,500 (a) 145,000 73,500 X 165,600X 18,000 X Feedbsck Cheek Set up a column for each partner and a total column. a. Determine the distribution of income and losses in the absence of a partnership agreement. b. Use the ratio of the partner\'s original capital investment to distribute the net income c. Use the stated percentage to determine the interest allowance. Distribute the remaining income ba My Work Check My Work

Solution

Answer a. If there is no agreement, profit is distributed equally between partners. Hawes Albright Allocation of Profit - 1:1    145,000.00      145,000.00 Answer b. Hawes Albright Allocation of Profit    217,500.00        72,500.00 allocation of Profit: Hawes - $290,0000 X 21/28    217,500.00 Albright - $290,000 X 7/28      72,500.00 Answer c. Allocation of Partnership Income Hawes   Albright Total Net Income                     -                         -      290,000.00 Interest Allowances      10,500.00          3,500.00      14,000.00 Balance of Income    276,000.00 Balance Allocated - 2:3    110,400.00      165,600.00    276,000.00 Balance of Income                     -   Share of Partners    120,900.00      169,100.00 Interest on Capital Hawes - $210,000 X 5%      10,500.00 Albright - $70,000 X 5%        3,500.00 Answer d. Allocation of Partnership Income Hawes   Albright Total Net Income                     -                         -      290,000.00 Salary Allowances      36,000.00        45,000.00      81,000.00 Balance of Income    209,000.00 Balance Allocated Equally    104,500.00      104,500.00    209,000.00 Balance of Income                     -   Share of Partners    140,500.00      149,500.00 Answer e. Allocation of Partnership Income Hawes   Albright Total Net Income                     -                         -      290,000.00 Interest Allowances      10,500.00          3,500.00      14,000.00 Balance of Income    276,000.00 Salary Allowances      36,000.00        45,000.00      81,000.00 Balance of Income    195,000.00 Balance Allocated Equally      97,500.00        97,500.00    195,000.00 Balance of Income                     -   Share of Partners    144,000.00      146,000.00 Interest on Capital Hawes - $210,000 X 5%      10,500.00 Albright - $70,000 X 5%        3,500.00