Carlin and Larve have a partnership agreement which includes the following provisions regarding sharing net income or net loss:

1. A salary allowance of $54,000 to Carlin and $36,000 to Larve.

2. An interest allowance of 10% on capital balances at the beginning of the year.

3. The remainder to be divided 60% to Carlin and 40% to Larve.

The capital balance on January 1, 2008, for Carlin and Larve was $90,000 and $120,000, respectively. During 2008, the Carlin and Larve Partnership had sales of $495,000, cost of goods sold of $290,000, and operating expenses of $75,000.

Instructions

Prepare an income statement for the Carlin and Larve Partnership for the year ended December 31, 2008. As a part of the income statement, include a Division of Net Income to each of the partners.