Purchase Solution

Morrison-Greene: Six Ways to Allocate Partnership Income

Not what you're looking for?

Ask Custom Question

Mornson and Greene have decided to form a partnership. They have agreed that Mornson is to invest $291,000 and Greene is to invest $97,000. Morrison is to devote one-half time to the business, and Greene is to devote full time. The following plans for the division of income are considered:
a. Equal division.
b. In the ratio of original investments.
c. In the ratio of time devoted to the business.
d. Interest of 5% on original investments and the remainder eQually
e. Interest of 5% on original investments, salary allowances of $55,000 to Morrison and $85,000 to Greene, and the
f. Plan (e), except that Greene is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowance allocation.

For each plan, determine the division of the net income under each of the following assumptions: (1) net income of!
$166,00 and $225,000.

Purchase this Solution
Solution Summary

The Solution uses Excel to compare the six suggested ways to allocate the income from the partnership of Morrison and Greene.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

View More Free Quizzes
Related BrainMass Solutions

  • S Corporation Distributions Reclassified as Salary

    What IRC is used to support the claim of the distribution as income based on the following facts and for the tax research memo? S. Johnson and K. Morrison, attorneys at law, formed a partnership, Johnson and Morrison, Attorneys at Law, in 2002.

  • Partnerships Allocate Income, Deduction, Loss, and Credit Items

    429997 Partnerships Allocate Income, Deduction, Loss, and Credit Items S-corporations must allocate their income to each shareholder on a strictly pro rata, per day basis. Is this also true with respect to partnerships?

  • Pearce Company, Morrison Sanitation, absorption step-down

    The company has decided to allocate all service department costs to the producing departments--Personnel on the basis of number of employees, and Administrative on the basis of direct department costs.

  • Death or Retirement of a Partner

    Assuming goodwill equal to the excess payment is recorded. 8 marks Partnership accounting - Three different ways that partnerships account for the death or retirement of a partner.

  • IncomeStatements Variable costing Absorption costing Pearce

    The company has decided to allocate all service department costs to the producing departments--Personnel on the basis of number of employees, and Administrative on the basis of direct department costs.

  • Income tax: Gain on Land Sale

    227068 Income tax: Gain on Land Sale True/False Michael contributes land with a value of $120,000 and a basis of $80,000 to the MNO Partnership in exchange for a 1/4 interest. Soon thereafter, the partnership sells the land for $140,000.

  • Black, White, and Green partnership: Allocating Income

    The three partners agreed to allocate each year's partnership profit (or loss) according to a specified plan written as follows: - Each partner is entitled to interest computed at the rate of 10% per year based on his/her capital balances

  • Correct Statement

    171480 Common Stock - Morrison Enterprises I need to know which is correct and WHY it is correct?

  • Morrison Company

    Dollar amount of sales needed = (Fixed cost+ desired pretax income)/contribution margin ratio = (630,000+120,000)/0.6 = $1,250,000 The solution explains how to calculate the contribution margin, breakeven and net income for Morrison Company

View More Related Solutions