Tyler Hawes and Piper Albright formed a partnership, investing $120,000 and $180,000, respectively. Determine their participation in the year's net income of $295,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $40,000 and $50,000, respectively, and the balance divided equally. 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.

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.

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.