Bryant, Milton, and Pine formed a partnership and agreed to share profits in a 3:1:2 ratio after recognition of 5% interest on average capital balances and monthly salary allowances of $3,750 to Milton and $3,000 to Pine. Average capital balances were as follows:

Bryant 300,000

Milton 240,000

Pine 180,000

Required:

a) Compute the net income (loss) that will be allocated to each partner assuming the partnership incurred a $27,000 net operating loss. Prepare a schedule in good form to support your answer and to report to the partnership.

b) Compute the net income (loss) that will be allocated to each partner assuming the partnership incurred a $175,000 net operating income. Prepare a schedule in good form to support your answer and to report to the partnership.