Garland and Driscoe have decided to form a partnership. They

Garland and Driscoe have decided to form a partnership. They have agreed that Garland is to invest $200,000 and that Driscoe is to invest $100,000. Garland is to devote one-half time to the business and Driscoe is to devote full time. The following plans for the division of income are being considered:
a. Equal division.
b. In the ratio of original investments.
c. In the ratio of time devoted to the business.
d. Interest of 12% on original investments and the remainder equally.
e. Interest of 12% on original investments, salary allowances of $30,000 to Garland and $60,000 to Driscoe, and the remainder equally.
f. Plan (e), except that Driscoe is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the salary allowances.

Instructions
For each plan, determine the division of the net income under each of the following assumptions:
(1) Net income of $90,000
(2) Net income of $240,000. Present the data in tabular form, using the following columnarheadings:
Garland and Driscoe have decided to form a partnership. They

Members

  • Access to 2 Million+ Textbook solutions
  • Ask any question from 24/7 available
    Tutors
$9.99
VIEW SOLUTION

OR

Non-Members

Get help from Accounting Tutors
Ask questions directly from Qualified Online Accounting Tutors .
Best for online homework assistance.