Business partnersBennett, Woods, and Romanov have a partnership agreement that outlines a detailed formula for sharing profits and losses. Bennett, Woods and Romanov earn annual salaries of $60 000, $70 000, and $80 000 respectively. They also earn a fixed percentage of interest on their capital balances which are $50 000, $50 000, and $70 000 respectively. Any remaining income is allocated using an income ratio of 30%, 30% and 40% respectively. Calculate the net income allocation and record the journal entry under the following unrelated situations:

(a) net income of $500 000, and 7% on capital balances

(b) net income of $60 000, and 5% on capital balances.

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A B C D E F G H K L General Journal Page CALCULATIONS IN Date Particulars Debit Credit Scenario (a) Bennett Woods Romanov Total al Balance in Capital account, January 1 Income Ratio Net Income 6 Income Distribution Salary 8 Interest Allowance b) Net Income allocated PRIOR to ratio application 10 Net Income to be allocated based on income ratio 11 Share of income based on income ratio 12 Total allocation of net income 13 14 Scenario (b) Bennett Woods Romanov Total 15 Balance in Capital account, January 1 16 Income Ratio Net Income 18 Income Distribution 19 Salary 20 Interest Allowance 21 Net Income allocated PRIOR to ratio application 22 Net Income to be allocated based on income ratio 23 Share of income based on income ratio 24 Total allocation of net income 25