F. Calvert and G. Powers have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for
(1) Annual salaries of $20,000 for Calvert and $12,000 for Powers,
(2) Interest at 10% on beginning capital balances, and
(3) Remaining income or loss to be shared 60% by Calvert and 40% by Powers.
Instructions
(a) Prepare a schedule showing the distribution of net income, assuming net income is
(1) $50,000 and
(2) $36,000
(b) Journalize the allocation of net income in each of the situations above.