Question

Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $380,000 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 15% allowed on original investments and the remainder divided in the ratio of 2:3; d. Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally, e. Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally. Holly Luke Total b. C. d.

Answer 1

Capital muestment Holly $ 24000 Luke $ 800us Capital Retio 3 10 of not income • @ When no agreement concerning division Equally distribution of Profit. Holly - luke Tutal 19000 190000 38000 In Capital ratio - luke Total Holly 87692 29 2308 380000 Working Note :- Holly : 380000 x 3 87692 Luke 380000 x 10 Z 29 2308 13

(c) (४ Amt 380000 Profit & loss Appropsictim Ale Particulan Amt Particulan to Interest in By Net Profit Capited All Holly:- 36000 Luke: 12000 48000 to share of Profit All Holly; 132800 Luke: 199 200 332000 380000 Bloou Luke Total Answer:- Holly 199 200 ပပပပ 132800

re Poufit & loss Appropriction Ale Partsulan Amt Amt 1 Partrelem By Net Profit Yo Interest in Capital 38000s AU Holly: :36oou Luke: 12000 48000 to Partners Selang All Holly: 50000 ပ Luke: 7ouou 1 20000 to share of Poft All Holly: 106000 Luke: 106000 212000 3800us 38000

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(d) Particulan to Partners Sclay Amt Amt Particular By Net Profit 38 ouw Holly: 5oooo Luke: 7oouu 120000 to share of Poof it all Holy: 130000 Luke: 13uuuu 26000 380vou 38 0000

Luke Total Holly 190000 1900 د 38000 a b) 87692 292 303 38000 ပပ 132 800 199 200 332000 1 30000 26000 d) 130000 106 OUD 212000 106000