Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 12, Problem 2PB
To determine
Determine division of net income of $420,000and $150,000under different plans.
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Dividing partnership income
Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $400,000 and that Westhoff is to invest $100,000. Dahl is to devote one-third time to the business, and Westhoff is to
devote two-thirds 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 5% on original investments and the remainder equally
e. Interest of 5% on original investments, salary allowances of $80,000 to Dahl and $160,000 to Westhoff, and the remainder equally
f. Plan (e), except that Westhoff is also to be allowed a bonus of $50,000 if net income exceeds $200,000
Required:
For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $300,000 and (2) net income of $750,000. Round answers to the nearest whole dollar.
(2) $750,000
(1) $300,000
Westhoff
(2)…
Dividing Partnership Income
Dylan Howell and Demond Nickles have decided to form a partnership. They have agreed that Howell is to invest $50,000 and that Nickles is to invest
$75,000. Howell is to devote full time to the business, and Nickles is to devote one-half 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 10% on original investments and the remainder in the ratio of 3:2.
e. Interest of 10% on original investments, salary allowances of $38,000 to Howell and $19,000 to Nickles, and the remainder equally.
f. Plan (e), except that Howell is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances.
Required:
For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $420,000 and (2) net income of
$150,000.
(1)
(2)
$420,000…
Dividing partnership income
Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $153,000 and that Westhoff is to invest $51,000.
Dahl is to devote one-half time to the business, and Westhoff 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 6% on original investments and the remainder equally.
e. Interest of 6% on original investments, salary allowances of $45,000 to Dahl and $80,000 to Westhoff, and the remainder equally.
f. Plan (e), except that Westhoff is also to be allowed a bonus of $29,000 if net income exceeds $100,000.
Required:
For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $178,000 and (2) net income of
$245,000. Round answers to the nearest whole dollar.
Plan
a.
b.
C.
d.
e.
f.
(1) $178,000
Dahl
$
$
$
$…
Chapter 12 Solutions
Financial Accounting
Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 1PEACh. 12 - Prob. 1PEBCh. 12 - Prob. 2PEACh. 12 - Prob. 2PEBCh. 12 - Prob. 3PEACh. 12 - Prob. 3PEBCh. 12 - Prob. 4PEACh. 12 - Prob. 4PEBCh. 12 - Prior to liquidating their partnership, Parker and...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Prob. 6PEACh. 12 - Prob. 6PEBCh. 12 - Prob. 7PEACh. 12 - Eclipse Architects earned 1,800,000 during 2016...Ch. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Marvel Media, LLC, has three members: WLKT...Ch. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Prob. 17ECh. 12 - The statement of members equity for Bonanza, LLC,...Ch. 12 - Distribution of cash upon liquidation Hewitt and...Ch. 12 - Distribution of cash upon liquidation David Oliver...Ch. 12 - Liquidating partnershipscapital deficiency Lewis,...Ch. 12 - Prob. 22ECh. 12 - Prob. 23ECh. 12 - Statement of partnership liquidation After closing...Ch. 12 - Prob. 25ECh. 12 - Prob. 26ECh. 12 - The accounting firm of Deloitte Touche is the...Ch. 12 - Prob. 28ECh. 12 - Prob. 1PACh. 12 - Prob. 2PACh. 12 - Prob. 3PACh. 12 - Prob. 4PACh. 12 - Statement of partnership liquidation After the...Ch. 12 - Prob. 6PACh. 12 - Prob. 1PBCh. 12 - Prob. 2PBCh. 12 - Prob. 3PBCh. 12 - Prob. 4PBCh. 12 - Statement of partnership liquidation After the...Ch. 12 - On August 3, the firm of Chapelle, Rock, and Pryor...Ch. 12 - Prob. 1CPCh. 12 - Prob. 2CPCh. 12 - Prob. 3CPCh. 12 - Prob. 4CP
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