Answer:
• Lisa $16,611
• Marie $15,070
• Shelley $8,391
• George $9,933
Explanation:
Daily allocation of $50,000 net reported net income
= $50,000/365
= $137 per day
• Income allocated to Lisa would be ;
Since Lisa and Marie are equal shareholders; meaning both would have 50% stake each in the business. Moreover, since Lisa sold half of her stake I.e 50% ÷ 2 = 25% to Shelley, her share would be;
(50% × 120 × 137) + (25% × 245 × 137) = $16,611
° Note Jan 1 to April 30 is 120 days, while the balance is 365 days - 120 days hence 245 days
• Income allocated to Marie would be;
Since Marie have 50% stake in the business and also sold her entire interest to George, her share will be;
50% × 220 × 137 = $15,070
°Note Jan 1 to August 8 is 220 days
• Income allocated to Shelley would be;
Since Shelly bought 25% out of the 50% stake that Lisa have in the business, her share will be;
25% × 245 × 137 = $8,391
°Note 245 days will be applied to Shelly's share which represent the number of days she purchased part of Lisa's interest in the business. I.e. 365 days - 120 days = 245 days
• Income allocated to George would be;
Since George purchased the whole 50% of Marie's stake in the business, his share of profit will be;
50% × 145 × 137 = $9,933
° Note 145 days will also be applied to George which represent the balance of days with which he purchased Marie's whole stake in the business. I.e 365 days - 220 days = 145 days
