Dividing Partnership Income Tyler Hawes and Piper Albright f

Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $288,000 and $96,000, respectively Determine their participation in the year\'s net income of $294,000 under each of the following independent assumptions: a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. c. Interest at the rate of 18% allowed on original investments and the remainder divided in the ratio of 23. d. Salary allowances of $60,000 and $84,000, respectively, and the balance divided equally e. Allowance of interest at the rate of 18% on original investments, salary allowances of $60,000 and $84,00 respectively, and the remainder divided equal. Hawes Albright (a (b)5

Solution

Data for Calculations

Net Profit

$ 294,000.00

Tyler Hawes

Piper Albright

Total Capital

Capital Balances

$ 288,000.00

$    96,000.00

$ 384,000.00

Answers

(a)

When There is no agreement then profit is distributed equally

Tyler Hawes

Piper Albright

Total Distribution

Profit Distribution

$ 147,000.00

$ 147,000.00

$ 294,000.00

(b)

Tyler Hawes

Piper Albright

Total Distribution

Profit Distribution

$ 220,500.00

$    73,500.00

$ 294,000.00

(C )

Tyler Hawes

Piper Albright

Total Distribution

Interest

$    51,840.00

$    17,280.00

$    69,120.00

Balance Profit

$    89,952.00

$ 134,928.00

$ 224,880.00

Total Distribution

$ 141,792.00

$ 152,208.00

$ 294,000.00

(d)

Tyler Hawes

Piper Albright

Total Distribution

Salary

$    60,000.00

$    84,000.00

$ 144,000.00

Balance Profit

$    75,000.00

$    75,000.00

$ 150,000.00

Total Distribution

$ 135,000.00

$ 159,000.00

$ 294,000.00

(e)

Tyler Hawes

Piper Albright

Total Distribution

Interest

$    51,840.00

$    17,280.00

$    69,120.00

Salary

$    60,000.00

$    84,000.00

$ 144,000.00

Balance profit

$    40,440.00

$    40,440.00

$    80,880.00

Total Distribution

$ 152,280.00

$ 141,720.00

$ 294,000.00

Data for Calculations
Net Profit	$ 294,000.00
	Tyler Hawes	Piper Albright	Total Capital
Capital Balances	$ 288,000.00	$    96,000.00	$ 384,000.00