David Fire and Chip Ice form a partnership, investing $56,000 and $112,000 respectively. Determine their shares of net income or net loss for each of the following situations: a. Net loss is $84,000 and the partners have no written partnership agreement. b. Net income is $126,000, and the partnership agreement states that the partners share profits and losses on the basis of their capital contributions. c. Net income is $138,000. The first $84,000 is shared on the basis of partner capital contributions. The next $42,000 is based on partner service with Fire receiving 40% and Ice receiving 60%. The remainder is shared equally.

EC-2 (15-20 min) Net Income (Net Loss) Ice Total Fire a. Half to each partner b. Net Income Allocated based on capital balances: Total Net Income Sharing of first $84,000 of net income based on capital balances: Total Net income remaining for allocation: Sharing of next $42,000 based on service: Total Net income remaining for allocation: Remainder shared equally: Total Net income remaining for allocation: Net income allocated to the partners $0 $0