Question

Tyler Hawes and Piper Albright formed a partnership, investing $112,000 and $168,000, respectively. Determine their participation in the year's net income of $280,000 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 6% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $36,000 and $48,000, respectively, and the balance divided equally. Allowance of interest at the rate of 6% on original investments, salary allowances of $36,000 and $48,000, respectively, and the remainder divided equally.

Answer 1

Income Summary 280,000 debit

Piper Account 140,000 credit

Tyler Account 140,000 credit

--under no agreement--

Income Summary 280,000 debit

Piper Account 112,000 credit

Tyler Account 168,000 credit

--under capital share --

Income Summary 280,000 debit

Piper Account 112,000 credit

Tyler Account 168,000 credit

--under 2:3 ratio with 6% interest rate --

Income Summary 280,000 debit

Piper Account 134,000 credit

Tyler Account 146,000 credit

--under salaries and equal share of the remainder --

Income Summary 280,000 debit

Piper Account 132,320 credit

Tyler Account 147,680 credit

--under interest, salaries and equal share of the remainder --

Step-by-step explanation:

If the partners made the proper accounting the income will be stored under income summary account then split accordingly

A) If there is no agreement then, they share equally

b) 112,000 + 168,000 = 280,000

participation

Tyler 112,000/280,000 = 40%

Piper 168,000/280,000 = 60%

application

Tyler 280,000 x 40% 112,000

Piper 280,000 x 60% = 168,000

c)

6% interest

112,000 x 6% = 6,720

168,000 x 6% = 10,080

Remainder: 280,000 - 6,720 - 10,080 = 263,200

ratio:

Tyler 40% (2 / (2+3)) = 105280

Piper 60% (3 / (2+3)) = 157920

Total

Tyler: 105,280 + 6,720 = 112,00

Piper 157,920 + 10,080 = 168,000

with salaries:

280,000 - 36,000 - 48,000 = 196,000

equally divided in 98,000

Tyler 98,000 + 36,000 = 134,000

Piper 98,000 + 48,000 = 146,000

with slaries and interest:

112,000 x 6% = 6,720

168,000 x 6% = 10,080

280,000 - 6,720 - 10,080 - 36,000 - 48,000 = 179,200

Divided equally in 89,600

Tyler 89,600 + 6,720 + 36,000 = 132,320

Piper 89,600 + 10,080 + 48,000 = 147,680