1. Ehrlich (beginning capital, $80,000) and A. Haar (beginning capital $75,000) are partners. During 2021 the partnership earned net income of $92,000.

Ehrlich made drawings of $15,000 while Haar made drawings of $35,000.

Instructions

Assume the partnership income-sharing agreement calls for income to be divided with a salary of $45,000 to Ehrlich and $25,000 to Haar, interest of 10% on beginning capital, and the remainder divided 60%-40%.

a)Prepare a schedule of the income allocation to each partner.

b) Prepare the journal entry to record the allocation of net income.

c) Compute each partners ending capital balances

SHOW ALL WORK.