Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show all work and calculations. Olsen and Katch organized the OK Partnership on 1/1/01. The following entries were made into their capital accounts during

Please show all work and calculations.
image text in transcribed
Olsen and Katch organized the OK Partnership on 1/1/01. The following entries were made into their capital accounts during 01: Olsen Debits Credits 20,000 5,000 5,000 10/1 Katch 40,000 / 10,000 9/1 10,000 10,000 The partnership agreement called for the following in the allocation of partnership profits and losses Salaries of S48,000 and S36,000 would be allocated to Olsen and Katch, respectively Interest of 8% on average capital balances will be allocated Katch will receive a bonus of 10% on all partnership billings in excess of $300,000 Any remaining profits/losses will be allocated 60/40 to Olsen and Katch, respectively. Required (account for each situation independently): a. Determine the distribution of partnership net income. Assume the following priority of allocation: interest, bonus, salaries, then remaining assuming partnership income of $85,000; partnership blings amounted to $400,000 b. Determine the distribution of partnership net income of $165,000 on billings of $400,000. No specific priority is given to any of the allocation criteria

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Managerial Accounting Creating Value In A Dynamic Business Environment

Authors: Ronald Hilton, David Platt

12th Edition

1260566390, 9781260566390

More Books

Students also viewed these Accounting questions

Question

=+6. Select the one that would work best for this client.

Answered: 1 week ago