Exercise 12-04 a-b (Part Level Submission) (Video) McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth.

(a)

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(1) Prepare a schedule showing the distribution of net income, assuming net income is $50,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).)

DIVISION OF NET INCOME
		McGill		Smyth		Total
Salary allowance		$		$		$
Interest allowance
Total salaries and interest
Remaining income / deficiency
Total division of net income		$		$		$

(2) Prepare a schedule showing the distribution of net income, assuming net income is $36,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).)

DIVISION OF NET INCOME
		McGill		Smyth		Total
Salary allowance		$		$		$
Interest allowance
Total salaries and interest
Remaining income / deficiency
Total division of net income		$		$		$