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Question
Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year’s net income of $380,000 under each of the following independent assumptions:
a. No agreement concerning division of net income
b. Divided in the ratio of original capital investment
c. Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3 (2/5 to Holly and 3/5 to Luke)
d. Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally
e. Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally
Answer
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