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

Answer:

Oriole Co

Division of net income to each partner:

                                     Pitts      Filbert       Witten      Total

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

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