On January 2 of the current year, Bulley and Scram formed a partnership in which Bulley invested $300,000 and Scram invested $700,000. During the year, the partnership had a net income of $200,000.
Instructions: Show how this net income would be distributed under each of the following conditions:
(1) The partnership agreement says nothing about the distribution of net income.
(2) The partnership agreement provides that Bulley and Scram are to share net income in a 2:3 ratio respectively.
(3) The partnership agreement provides that Bulley and Scram are to share net income in accordance with the ratio of their original capital investments.
(4) The partnership agreement provides that Bulley is to be allowed a salary of $30,000 and Scram a salary of $50,000 with the balance of net income distributed equally.

(5) The partnership agreement provides that interest at 5% is to be allowed on the beginning capital and that the balance is to be distributed equally.

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Division of Net Income Bulley Total Scram Salary allowance Remaining income $ 200,000 Net income