P 16-5 Profit or loss allocation Ahmed, Kamal, and Karim are in a partnership. They agree on a profit- or loss-sharing ratio of 20 percent, 30 percent, and 50 percent, respectively. In the partnership agreement, Ahmed and Kamal each receive a salary allowance of $100,000, and Karim receives a bonus of 20 percent of net income after salary allowance and bonus.

REQuIRED 1. Prepare a schedule to allocate profit or loss if the partnership reports net income of $600,000.

2. Prepare a schedule to allocate profit or loss if the partnership reports net loss of $10,000.

Partnerships—Formation, Operations, and Changes in Ownership Interests 561