Question

Tyler Hawes and Piper Albright formed a partnership, investing $210,000 and $70,000, respectively. Determine their participation in the year’s net income of $290,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $36,000 and $45,000, respectively, and the balance divided equally. Allowance of interest at the rate of 5% on original investments, salary allowances of $36,000 and $45,000, respectively, and the remainder divided equally.

Answer 1

Tyler year-end capital account 373,500

Piper year-end capital account 196,500

Step-by-step explanation:

income 290,000

interest: (14,000) (210,000 x 5% + 70,000 x 5%)

salaries: (81,000) (36,000 + 45,000)

remainder 195,000

Tyler:

210,000 + 5% interest + 36,000 salary + 195,000 x 3/5 = 373.500‬

Piper

70,000 + 5% interest + 45,000 salary + 195,000 x 2/5 = 196,500