Liam and Katano formed a partnership to open a sushi restaurant by investing $98,000 and $108,000, respectively. They agreed to share profit based on an allocation to Liam of an annual salary allowance of $153,000, interest allowance to both Liam and Katano equal to 12% of their beginning-of-year capital balance, and any balance based on a 13 ratio, respectively. At the end of their first year, December 31, 2020, the Income Summary had a credit balance of $33,000 Liam withdrew $10,000 during the year and Katano $27,000 Required: 1. Determine each partner's share if the first-year profit was $33,000. Prepare the entry to close the Income Summary on December 31, 2020. (Leave no cell blank. Enter "0" when the answer is zero. Negative answers should be indicated by a minus sign.) Share to Llam Share to Katano Total
Liam and Katano formed a partnership to open a sushi restaurant by investing $98,000 and $108,000, respectively. They agreed to share profit based on an allocation to Liam of an annual salary allowance of $153,000, interest allowance to both Liam and Katano equal to 12% of their beginning-of-year capital balance, and any balance based on a 13 ratio, respectively. At the end of their first year, December 31, 2020, the Income Summary had a credit balance of $33,000 Liam withdrew $10,000 during the year and Katano $27,000 Required: 1. Determine each partner's share if the first-year profit was $33,000. Prepare the entry to close the Income Summary on December 31, 2020. (Leave no cell blank. Enter "0" when the answer is zero. Negative answers should be indicated by a minus sign.) Share to Llam Share to Katano Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A28
Transcribed Image Text:Liam and Katano formed a partnership to open a sushi restaurant by investing $98,000 and $108,000, respectively. They agreed to
share profit based on an allocation to Liam of an annual salary allowance of $153,000, 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, 2020, the Income Summary had a credit balance of $33,000. Liam withdrew $10,000 during the year and Katano
$27,000.
Required:
1. Determine each partner's share if the first-year profit was $33,000. Prepare the entry to close the Income Summary on December 31.
2020. (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
$
S
0 $
0
Share to
Katano
$
0
$
0 $
Total
0
0
0
0
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