DJ and AM Co. reports net loss of $35,000. The partnership agreement provides for annual salaries of $15,000 for DJ and $20,000 for AM and interest allowances of $2,500 to DJ and $3,500 to AM. Any remaining income or loss is to be shared 70% for DJ and 30% for AM.

Instructions

Compute the amount of net income/loss distributed to each partner at year-end.

Prepare the necessary closing entries at year end.