R. Huma and W. How have capital balances on July 1, 2023, of $65,000 and $50,000, respectively. The partnership profit-sharing agreement specifies: 

1. salary allowances of $32,000 for Huma and $20,000 for How.

2. interest at 5% on beginning capital balances.

3. for the remaining profit or loss to be shared 60% by Huma and 40% by How. 

Instructions

a. Prepare a schedule showing the division of profit for the year ended June 30, 2024, assuming profit is

(1) $70,000

(2) $55,000. 

b. Journalize the allocation of profit in each of the situations in part (a).