Novarro and Ocampo are partners in NO Services. The partnership agreement specifies the following income sharing provisions:
1. Novarro receives an annual salary of $100,000 and Ocampo receives an annual salary of $75,000.
2. Each partner receives 10% interest on average capital investment.
3. Remaining income is allocated in a 1:4 ratio.
4. All provisions are fully implemented.
Average capital investment for the year is $300,000 for Novarro and $450,000 for Ocampo.
Required
a. Prepare a schedule to allocate partnership income of $270,000.
b. Prepare a schedule to allocate partnership income of $150,000.
c. Suppose that in addition to the above income allocation provisions, Novarro receives a bonus of 25% of profit after the bonus but before other allocation provisions. Prepare a schedule to allocate partnership income of $320,000.

Question

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The Answer of Novarro and Ocampo are partners in NO Services. The partnership agreement specifies the following income sharing provisions:
1. Novarro receives an annual salary of $100,000 and Ocampo receives an annual salary of $75,000.
2. Each partner receives 10% interest on average capital investment.
3. Remaining income is allocated in a 1:4 ratio.
4. All provisions are fully implemented.
Average capital investment for the year is $300,000 for Novarro and $450,000 for Ocampo.
Required
a. Prepare a schedule to allocate partnership income of $270,000.
b. Prepare a schedule to allocate partnership income of $150,000.
c. Suppose that in addition to the above income allocation provisions, Novarro receives a bonus of 25% of profit after the bonus but before other allocation provisions. Prepare a schedule to allocate partnership income of $320,000.

Novarro and Ocampo Are Partners in NO Services