Question 885237: 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:.
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 $28,000 to Lawford and $60,000 to Delgado, and the remainder equally.
f.Plan (e), except that Delgado is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances.
(1) (2)
$90,000 $135,000
Plan Lawford Delgado Lawford Delgado
a. $ $ $ $
b. $ $ $ $
c. $ $ $ $
d. $ $ $ $
e. $ $ $ $
f. $ $ $ $
Answer by urka(1)   (Show Source):
You can put this solution on YOUR website! $90,000 $135,000
Plan Lawford Delgado Lawford Delgado
a. .................................................... $54,000 $54,000 $ 75,000 $ 75,000
b. .................................................... 81,000 27,000 112,500 37,500
c. .................................................... 36,000 72,000 50,000 100,000
d. .................................................... 58,800 49,200 79,800 70,200
e. .................................................... 42,800 65,200 63,800 86,200
f. .................................................... 41,600 66,400 58,400 91,600
Details
$108,000 $150,000
Dyer Salinas Dyer Salinas
a. Net income (1:1) ........................ $54,000 $54,000 $ 75,000 $ 75,000
b. Net income (3:1) ........................ $81,000 $27,000 $112,500 $ 37,500
c. Net income (1:2) ........................ $36,000 $72,000 $ 50,000 $100,000
d. Interest allowance ..................... $14,400 $ 4,800 $ 14,400 $ 4,800
Remaining Income (1:1)............ 44,400 44,400 65,400 65,400
Net income................................. $58,800 $49,200 $ 79,800 $ 70,200
e. Interest allowance ..................... $14,400 $ 4,800 $ 14,400 $ 4,800
Salary allowance ....................... 32,000 64,000 32,000 64,000
Excess of allowances over
income (1:1) ........................... (3,600) (3,600)
Remaining income (1:1)............ 17,400 17,400
Net income................................. $42,800 $65,200 $ 63,800 $ 86,200
f. Interest allowance ..................... $14,400 $ 4,800 $ 14,400 $ 4,800
Salary allowance ....................... 32,000 64,000 32,000 64,000
Bonus allowance....................... 2,4001
10,8002
Excess of allowances over
income (1:1) ........................... (4,800) (4,800)
Remaining income (1:1)............ 12,000 12,000
Net income................................. $41,600 $66,400 $ 58,400 $ 91,600
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