Liam and Katano formed a partnership to open a sushi restaurant by investing $112,000 and $122,000, respectively. They agreed to share profit based on an allocation to Liam of an annual salary allowance of $167,000, interest allowance to both Liam and Katano equal to 15% of their beginning-of-year capital balance, and any balance based on a 1:3 ratio, respectively. At the end of their first year, December 31, 2023, the Income Summary had a credit balance of $47,000. Liam withdrew $24,000 during the year and Katano $41,000. Required: 1. Determine each partner's share if the first-year profit was $47,000. Prepare the entry to close the Income Summary on December 31, 2023. (Leave no cell blank. Enter "0" when the answer is zero. Negative answers should be indicated by a minus sign.) Profit Salary allowances Share to Share to Liam Katano $ 167,000 $ Total

Liam and Katano formed a partnership to open a sushi restaurant by investing $112,000 and $122,000, respectively. They agreed to share profit based on an allocation to Liam of an annual salary allowance of $167,000, interest allowance to both Liam and Katano equal to 15% of their beginning-of-year capital balance, and any balance based on a 1:3 ratio, respectively. At the end of their first year, December 31, 2023, the Income Summary had a credit balance of $47,000. Liam withdrew $24,000 during the year and Katano $41,000. Required: 1. Determine each partner's share if the first-year profit was $47,000. Prepare the entry to close the Income Summary on December 31, 2023. (Leave no cell blank. Enter "0" when the answer is zero. Negative answers should be indicated by a minus sign.) Profit Salary allowances Share to Share to Liam Katano $ 167,000 $ Total

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 32P

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Liam and Katano formed a partnership to open a sushi restaurant by investing $106,000 and $116,000, respectively. They agreed to share profit based on an allocation to Liam of an annual salary allowance of $161,000, interest allowance to both Liam and Katano equal to 12% of their beginning-of-year capital balance, and any balance based on a 1:3 ratio, respectively. At the end of their first year, December 31, 2023, the Income Summary had a credit balance of $41,000. Liam withdrew $18,000 during the year and Katano $35,000. Required: 1. Determine each partner's share if the first-year profit was $41,000. Prepare the entry to close the Income Summary on December 31, 2023. (Leave no cell blank. Enter "0" when the answer is zero. Negative answers should be indicated by a minus sign.) Total salaries and interest allocation Balance of profit Remainder 1:3 ratio: Balance of profit Shares of each partner Share to Liam Share to Katano Total
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