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Brief Exercise 12-04 Pharoah Co
Brief Exercise 12-04 Pharoah Co. reports net income of $73,000. Partner salary allowances are Pitts $11,000, Filbert $8,000, and Witten $6,000. Indicate the division of net income to each partner, assuming the income ratio is 55: 26:19, respectively. Division of Net Income Pitts Filbert Witten Total Salary allowance Remaining income Total division of net income $ Click if you would like to Show Work for this question: Open Show Work
Expert Solution
Division of Net Income -
| Particulars | Pitts | Filbert | Witten | Total |
| Salary Allowance | 11,000 | 8,000 | 6,000 | 25,000 |
| Remaining Income | 26,400 | 12,480 | 9,120 | 48,000 |
| Total Division of net income | 37,400 | 20,480 | 15,120 | 73,000 |
Note : Salary allowance totals to 25,000 leaving the 48,000 Balance to be distributable. So, 55% goes to Pitts, 26% to Filbert and 19% Witten.
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