Blue and Green formed a partnership in 20X4. The partnership agreement provides for annual salary allowances of $55,000 for Blue and $45,000 for Green. The partners share profits equally and losses in a 60:40 ratio, respectively. The partnership had earnings of $80,000 for 20X5 before any allowance to partners. What amount of these earnings should be credited to each partner’s capital account?

Transcribed Image Text:

Blue Green $40,000 $40,000 b. $43,000 $37,000 $44,000 $36,000 d. $45,000 $35,000