Dagnachew and Firdu formed a partnership. Dagnachew invested Birr 90,000 and Firdu invested Birr 60,000. Dagnachew is to devote one-half time to the business while Firdu is to devote full time.

The following plans for the division of income are being considered:

equally
in the ratio of original investments
in the ratio of time devoted to the business
Interest of 12% on original investments and the reminder equally.
Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and Birr 20,000 to Firdu, and the remainder equally.
The same as in #5 except that Dagnachew is also to be allowed a bonus equal to 25% of the amount by which net income exceeds salary allowances.

Required:

Determine the division of income to Dagnachew and Firdu under each plan assuming the partnership of Danagnachew and Firdu earned a net income of:
Birr 32,000
Birr 150,00

Did you know?

Did you know that the division of income in a partnership can be determined based on various factors such as the original investments, time devoted to the business, and interest on investments? In the case of Dagnachew and Firdu, who formed a partnership with investments of Birr 90,000 and Birr 60,000 respectively, the division of income can be calculated based on different plans. These plans include dividing the income equally, in the ratio of their original investments, in the ratio of time devoted to the business, or with interest of 12% on the original investments and the remainder equally. Another option is to include salaries for Dagnachew and Firdu, along with interest on the investments, and divide the remainder equally. Lastly, Dagnachew can also receive a bonus equal to 25% of the amount by which the net income exceeds salary allowances. By considering these different plans, the income division between Dagnachew and Firdu can be determined based on the net income earned by the partnership.