1. Adam, Bella, and Chris operate a partnership with a complex profit and loss sharing agreement. The average capital balance for Adam, Bella and Chris on December 31, 2020 is $120.000, $270.000, and $340.000, respectively. A 6% interest allocation is provided to each partner based on the average capital balance on December 31, 2020. Adam and Bella receive salary allocations of $40.000 and $50.000, respectively. If partnership net income is above $160.000, after the salary allocations are considered (but before the interest allocations are considered), Chris will receive a bonus of 10% of the income (pre-salary and interest, but net of the bonus). All residual income is allocated in the ratios of 2:2:6 to Adam, Bella, and Chris, respectively.

Required:

a) Prepare a schedule to allocate income to the partners assuming that partnership net income for 2020 is $330.000.

b) Prepare a journal entry to distribute the partnership's income to the partners (assume that an Income Summary account is used by the partnership).

c) Prepare a schedule to allocate income or loss to the partners assuming that the partnership incurs a net loss of $26.200 for 2020.

d) Prepare a journal entry to distribute the partnership's loss to the partners (assume that an Income Summary account is used by the partnership).