Jo Garrity, Maureen O’Riley, and David White decided to form a partnership called OnTime Copy Shop. The partners will invest the following assets in the business: 

They are considering the following plans for the division of net income or net loss:

1. Equally

2. Garrity, 20%; O’Riley, 40%; White, 40%

3. In the same ratio as the beginning balances of their capital accounts

Instructions

Assume that the business had a net income of $17,500 in its first year of operations. Calculate the division of net income under each of the three plans.

Transcribed Image Text:

Cash Supplies Equipment Building Land Garrity 0 0 0 $50,000 15,000 O'Riley $22,000 5,000 7,500 0 0 White $40,000 2,000 4,000 0 0