Question

Oriole Co. reports net income of $59,000. Partner salary allowances are Pitts $15,000, Filbert $5,000, and Witten $6,000. Indicate the division of net income to each partner, assuming the income ratio is 56 : 26 : 18, respectively

Answer 1

Oriole Co

Division of net income to each partner:

Pitts Filbert Witten Total

Total income $33,480 $13,580 $11,940 $59,000

Step-by-step explanation:

a) Data and Calculations:

Net income = $59,000

Salary allowances = $26,000

Remaining shareable income = $33,000

Allocation of net income to each partner:

Pitts Filbert Witten

Income sharing ratio 56 : 26 : 18

Salary Allowances $15,000 $5,000 $6,000

Shareable income 18,480 8,580 5,940

Total income $33,480 $13,580 $11,940

b) Calculation of shareable income:

Pitts = $33,000 * 56% = $18,480

Filbert = $33,000 * 26% = $8,580

Witten = $33,000 * 18% = $5,940