Morrison and Greene have decided to form a partnership. They have agreed that Morrison is to invest $150,000 and that Greene is to invest $50,000. Morrison is to devote one-half time to the business, and Greene 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 6% on original investments and the remainder equally

e. Interest of 6% on original investments, salary allowances of $40,000 to Morrison and

$70,000 to Greene, and the remainder equally

f. Plan (e), except that Greene is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances

Instructions

For each plan, determine the division of the net income under each of the following assumptions:

(1) Net income of $115,000 and

(2) Net income of $200,000. Present the data in tabular form, using the following columnar headings:

Transcribed Image Text:

115,000 $200,000 eeneMorrison Plan Morrisorn Greene