Norrudin, Norsal, and Nasheb operate a partnership with a complex profit and loss sharing agreement. The average capital balance for each partner on December 31, 2006 is $300,000 for Norrudin, $250,000 for Norsal, and $325,000 for Nasheb. An 8.5% interest allocation is provided to each partner. Norrudin and Nasheb receive salary allocations of $10,000 and $15,000, respectively. All residual income is allocated in the ratios of 2:3:5 to Norrudin, Norsal, and Nasheb, respectively. (a) Prepare a schedule to allocate income to the partners assuming that partnership net income is $270,000. (b) Prepare a journal entry to distribute the partnership's income to the partners.

Norrudin, Norsal, and Nasheb operate a partnership with a complex profit and loss sharing agreement. The average capital balance for each partner on December 31, 2006 is $300,000 for Norrudin, $250,000 for Norsal, and $325,000 for Nasheb. An 8.5% interest allocation is provided to each partner. Norrudin and Nasheb receive salary allocations of $10,000 and $15,000, respectively. All residual income is allocated in the ratios of 2:3:5 to Norrudin, Norsal, and Nasheb, respectively. (a) Prepare a schedule to allocate income to the partners assuming that partnership net income is $270,000. (b) Prepare a journal entry to distribute the partnership's income to the partners.

Accounting

27th Edition

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 12.14EX

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