Sixty-year-old Jan Howard retired from her computer consulting business in Boston and moved to Florida. There she
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At the end of the first year of operations, the two partners disagreed on the division of net income. Jan reasoned that the division should be equal. Although she devoted only one-half time to the business, she contributed all of the startup funds. Tami reasoned that the income-sharing ratio should be 2:1 in her favor because she devoted full time to the business and her monthly drawings were twice those of Jan.
Can you identify any flaws in the partners' reasoning regarding the income-sharing ratio?
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
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