Financial Accounting Exercise 12 - 3

 Ex 12 : 3

Plan A Share to Dallas Share to Weiss Total Net income  $    394,000 Allocation of balance of net income: Balance of net income  $    394,000  $    394,000 Times share 50% 50% Allocation of balance of net income  $    197,000  $    197,000 - 394,000 Balance of net income  $            -0- Allocation to each partner  $    197,000  $    197,000 Plan B Share to Dallas Share to Weiss Total Net income  $    394,000 Allocation in proportion to initial investment: Initial investment  $    115,000  $    135,000 Divide by total investment 250,000 250,000 46% 54% Times net income  $    394,000  $    394,000 Allocation in proportion to initial investment  $    181,240  $    212,760 - 394,000 Balance of net income  $            -0- Allocation to each partner  $    181,240  $    212,760 Plan C Share to Dallas Share to Weiss Total Net income  $    394,000 Salary allowances  $    140,000  $      70,000 - 210,000 Balance of net income  $    184,000 Interest allowances: Investment  $    115,000  $    135,000 Times interest rate 25% 25% Interest allowances 28,750 33,750 - 62,500 Balance of net income  $    121,500 Allocation of balance of net income: Balance of net income  $    121,500  $    121,500 Times share 50% 50% Allocation of balance of net income 60,750 60,750 - 121,500 Balance of net income  $            -0- Allocation to each partner  $    229,500  $    164,500