Answer:
a. Both Tyler Hawes and Piper Albright get an equal amount of $147,500 of the net income.
b. Each of Tyler Hawes and Piper Albright get an amount of $112,000 and $116,000 of the shared income respectively.
c. Each of Tyler Hawes and Piper Albright get an equal amount of $102,500 each from the net income.
d. Each of Tyler Hawes and Piper Albright get an equal amount of $95,000 each of the net income.
Explanation:
a. No agreement concerning division of net income.
Net income or loss are of a partnership shared equally when there is no agreement concerning division of net income. Therefore, each partner's participation in the year's net income are as follows:
Tyler Hawes' share = $295,000 ÷ 2 = $147,500
Piper Albright' share = $295,000 ÷ 2 = $147,500
Therefore, each of Tyler Hawes and Piper Albright get an equal amount of $147,500 each from the net income.
b. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.
Investment interest to Tyler Hawes = $120,000 × 5% = $6,000
Investment interest to Piper Albright = $180,000 × 5% = $9,000
Total interest payments to partners = $6,000 + $9,000 = $15,000
Income to share = $295,000 - $15,000 = $280,000
Tyler Hawes' income share = $280,000 × (2 ÷ 5) = $112,000
Piper Albright' income share = $280,000 × (3 ÷ 5) = $168,000
Therefore, Tyler Hawes and Piper Albright get an amount of $112,000 and $116,000 of the shared income respectively.
c. Salary allowances of $40,000 and $50,000, respectively, and the balance divided equally.
Income to share = $295,000 - ($40,000 + 50,000) = $205,000
Tyler Hawes' income share = $205,000 ÷ 2 = $102,500
Piper Albright' income share = $205,000 ÷ 2 = $102,500
Therefore, each of Tyler Hawes and Piper Albright get an equal amount of $102,500 each of the net income.
d. Allowance of interest at the rate of 5% on original investments, salary allowances of $40,000 and $50,000, respectively, and the remainder divided equally.
Income to share = $295,000 - ($6,000 + $9,000) - ($40,000 + 50,000)
Income to share = $190,000
Tyler Hawes' income share = $190,000 ÷ 2 = $95,000
Piper Albright' income share = $195,000 ÷ 2 = $95,000
Therefore, each of Tyler Hawes and Piper Albright get an equal amount of $95,000 each of the net income.
