7. The abbreviated income statement of Fran and Robert for December 31, 19X8, appears below: Sales (net) Less Cost of Goods Sold Gross Profi Less: Expenses Net Income The profit and loss agreement specifies that $240,000 105.000 $135.000 65,000 $ 70.000 1. Interest of 5 percent is to be allowed on capital balances (Fran, $25,000, Robert, $15,000). 2. Salary allowances to Fran and Robert are to be $6,000 and $4,000, respectively. 3. A bonus equal to 20 percent of net income is to be given to Fran without regard to interest or salary 4. Remaining profits and losses are to be divided in the ratio of capital balances.

(a) Present the distribution of net income.

(b) Present the journal entry required to close the books.