Scribd
Upload
15 views2 pages

Corporate Accounting Income Allocation Guide

1) The document discusses accounting concepts related to partnerships including withdrawals, salaries, bonuses, and income allocations. 2) Bonuses can be calculated in several ways such as based on net income before or after other allocations, or after subtracting the bonus amount. 3) Three examples are provided showing calculations for interest on capital, salaries, bonuses, and allocating remainder/losses for partners in different proportions.

Uploaded by

Mega Pop Locker
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
15 views2 pages

Corporate Accounting Income Allocation Guide

1) The document discusses accounting concepts related to partnerships including withdrawals, salaries, bonuses, and income allocations. 2) Bonuses can be calculated in several ways such as based on net income before or after other allocations, or after subtracting the bonus amount. 3) Three examples are provided showing calculations for interest on capital, salaries, bonuses, and allocating remainder/losses for partners in different proportions.

Uploaded by

Mega Pop Locker
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Tutorial 3

Corporate Accounting I
Q5.A withdrawal is a reduction in assets, not a distribution of income. A salary is a
determinate in the allocation of income and is a reward to the partner for the amount
of time devoted to the partnership's operations.
Q6.A bonus may be calculated in several ways. Some of these are: (1) net income
before any income allocations are made; (2) net income after income allocations are
made, but before subtracting the bonus; (3) net income after subtracting the bonus,
but before any other income allocations are made; and (4) net income after all income
allocations are made, including the bonus.

Exercise 15-3
Jones
$4,000
24,000
28,000
16,000
$44,000

Silva Thompson
$2,500
$3,000
0
18,000
2,500
21,000
16,000
16,000
$18,500
$37,000

Total
$9,500
42,000
51,500
48,000
$99,500

Interest on capital
Salary (12 months)
Total
Remainder divided equally
Income allocation

Interest on capital and salary


Excess allocation ($38,300 - $51,500)
Income allocation

$28,000
(4,400)
$23,600

$2,500
(4,400)
$(1,900)

$21,000
(4,400)
$16,600

$51,500
(13,200)
$38,300

Interest on capital and salary


Excess allocation (-$15,100 -$51,500)
Net loss allocation

$28,000
(22,200)
$5,800

$2,500
(22,200)
$(19,700)

$21,000
(22,200)
$(1,200)

$51,500
(66,600)
$(15,100)

Exercise 15-5
Salary
Bonus (schedule 1)
Interest on capital
Total
Remainder
Income allocation

(40%)

Tony
$42,000
0
38,400
80,400
2,851
$83,251

(60%)

Jon
$66,000
7,273
27,200
100,473
4,276
$104,749

Total
$108,000
7,273
65,600
180,873
7,127
$188,000

Schedule 1 - Bonus Calculation


B = .10 (income after salaries - B)
B = .10 [($188,000 - $108,000) - B]
B = .10 ($80,000 - B)
B = $8,000 - .10 B
1.10 B = $8,000
B = $7,273
Proof:
Net Income
Salaries
Bonus
Net income subject to bonus
B = .10 $72,727
B = $7,273

$188,000
(108,000)
(7,273)
$72,727

You might also like