Use the Following Information to Answer the Question(s)below

question 15

Essay

Use the following information to answer the question(s)below.
Xavier,Young,and Zane operate a partnership with a complex profit and loss sharing agreement.The average capital balance for each partner on December 31,2011 is $300,000 for Xavier,$250,000 for Young,and $325,000 for Zane.An 8% interest allocation is provided to each partner based on the average capital balance on December 31,2011.Xavier and Young receive salary allocations of $10,000 and $15,000,respectively.If partnership net income is above $25,000,after the salary allocations are considered (but before the interest allocations are considered),Zane will receive a bonus of 10% of the original amount of net income.All residual income is allocated in the ratios of 2:3:5 to Xavier,Young,and Zane,respectively.
-Required:
1.Prepare a schedule to allocate income to the partners assuming that partnership net income for 2011 is $250,000.
2.Prepare a journal entry to distribute the partnership's income to the partners (assume that an Income Summary account is used by the partnership).

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Definitions:

Horizontal Specialization

The division of labor in an organization in which tasks are separated based on specific skills and functions, leading to departments or teams with specialized roles.

Vertical Hierarchy

An organizational structure where power and decision-making authority flow from the top down through various levels of management.

Division of Labor

Refers to the allocation of tasks among a set of individuals or groups within an organization, aimed at improving efficiency and productivity.

Boundary-Spanning Subsystem

Components of an organization that interact with the external environment to obtain inputs and distribute outputs, facilitating the exchange of information and resources.