The partnership of John and Pete has the following provisions in the partnership agreement:

1. The partners are to earn 8 percent interest on the average capital.

2. John and Pete are to earn salaries of \(\$ 35,000\) and \(\$ 25,000\), respectively.

3. Any remaining income or loss is to be divided between John and Pete in a \(60: 40\) ratio.

4. John's average capital is \(\$ 100,000\), and Pete's is \(\$ 60,000\).

\section*{Required}

Prepare an income distribution schedule assuming the income of the partnership is

(a) \(\$ 100,000\) and

(b) \(\$ 40,000\).