Question

Chapter 12 1. EX 12 03 EXCEL ALGO eBook Show Me How Office 365 Calculator Dividing partnership Income Beau Dawson and Willow McDonald formed a partnership, Investing $60,000 and $150,000, respectively This information has been collected in the Microsoft Excel Online e Open the spreadsheet, perform the required analysis, and input your answers in the questions below 2. EX 12 18 EXCEL ALGO 3. EX 1208 BLANKSHEETAL... 4. PE 1203A BLANKSHEET 5. EX 12.01.BLANKSHEETAL Open spreadsheet 6. PE 12.01A BLANKSHEET 7. PE 12 DLA B. PE 12043 Determine their participation in the year's net income of $270.000 under each of the following independent sumptions: a. No agreement concerning division of net income b. Divided in the ratio of original capital investment c. Interest at the rate of towed on original investments and the remainder divided in the ratio of 1:3 d. Salary slowances of $30,000 and 546,000, respectively, and the balance vided equally c. Allowance of at the rate of original investments, salary allowances of $36,000 and $46.000, respectively, and the remainder divided equity Dawson McDonald 9. EX1210 BLADSHEETAL... 10. PR 12 03 BLANKSHEETA.. 5 Next Prego

Answer 1

Given, Dawson and McDonald formed a partnership investing $60,000 and $180,000 respectively.

Net Income for the year is $270,000

Their distributions are as follows in the following cases

a) No agreement concerning on division of net income

According to the Partnership Act, all the partners have equal rights. If the partnership deed is silent regarding the distribution of profits, the profits are distributed equally.

So, the distribution of profits between them is $270,000 / 2 = $135,000

b) Dividend in the ratio of original capital investment

The profit distribution according to their  investment is

Dawson = $270,000 * ($60,000 / $240,000) = $67,500

McDonald = $270,000 * ($180,000 / $240,000) = $202,500

c) Interest at the rate of 5% allowed on original capital investment and the remainder divided in the ratio of 2:3

Dawson = $60,000 * 5% = $300

McDonald = $180,000 *5% = $9,000

Remainder Profit = $270,000 - $9,300 = $260,700

Dawson = $260,700 * (2/5) = $104,280

McDonald = $260,700 * (3/5) = $156,420

Total Distributions are as follows

Dawson = $104,280 + $300 = $104,580

McDonald =  $156,420 + $9,000 = $165,420

d) Salary allowances of $36,000 and $46,000 respectively, and the balance divided equally

Balance after salaries = $270,000 - $36,000 - $46,000 = $188,000

Remaining Blance is shared between them equally $188,000 / 2 = $94,000

Total share is as follows

Dawson = $36,000 + $94,000 = $130,000

McDonald = $46,000 + $94,000 = $140,000

e) Allowance at the rate of 5% on original investment, salary allowance of $36,000 and $46,000 respectively and the remainig divided equally.

Dawson = $60,000 * 5% = $300

McDonald = $180,000 *5% = $9,000

Remainder after allowances and salaraies

$270,000 - $300 - $9,000 - $36,000 - $46,000 = $178,700

Remainder is divided equally $178,700 / 2 =$89,350

Dawson = $300 + $36,000 + $89,350 = $125,650

McDonald = $9,000 + $46,000 +$89,350 = $144,350

	Dawson	McDonald
a	$135,000	$135,000
b	$67,500	$202,500
c	$104,580	$165,420
d	$130,000	$140,000
e	$125,650	$144,350