Acc280 Financial Accounting: E12-4 F. Calvert and G. Powers have capital balances

Acc280 Financial Accounting

E12-4
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)(1) Prepare a schedule showing the distribution of net income, assuming net income is $50,000.
(a)(2) Prepare a schedule showing the distribution of net income, assuming net income is $36,000.
(b)(1) Journalize the allocation of net income in (a)(1), above.
(b)(2) Journalize the allocation of net income in (a)(2), above.
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