Division of Income

C. Eastwood, A. North, and M. West are manufacturers' representatives in the architecture busi­ness. Their capital accounts in the ENW partnership for 20X1 were as follows:

    

C. Eastwood, Capital		A. North, Capital		M. West, Capital
9/1 8,000	1/1 30,000	3/1 9,000	1/1 40,000	8/1 12,000	1/1 50,000
	5/1 6,000		7/1 5,000		4/1 7,000
			9/1 4,000		6/1 3,000

Required

For each of the following independent income-sharing agreements, prepare an income distribution schedule.

a.   Salaries are $15,000 to Eastwood, $20,000 to North, and $18,000 to West. Eastwood receives a bonus of 5 percent of net income after deducting his bonus. Interest is 10 percent of ending capital balances. Eastwood, North, and West divide any remainder in a 3:3:4 ratio, respectively. Net income was $78,960. 

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b.   Interest is 10 percent of weighted-average capital balances. Salaries are $24,000 to Eastwood, $21,000 to North, and $25,000 to West. North receives a bonus of 10 percent of net income after deducting the bonus and her salary. Any remainder is divided equally. Net income was $68,080. 

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c.    West receives a bonus of 20 percent of net income after deducting the bonus and the salaries. Salaries are $21,000 to Eastwood, $18,000 to North, and $15,000 to West. Interest is 10 percent of beginning capital balances. Eastwood, North, and West divide any remainder in an 8:7:5 ratio, respectively. Net income was $92,940.