Exercise 12-04 a-b (Part Level Submission) (Video) McGill and Smyth have capital balances on January 1 of $54,000 and $37,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $20,000 for McGill and $12,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth. (a) Your answer is partially correct. Try again. (1) Prepare a schedule showing the distribution of net income, assuming net income is $65,000. (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 20,000 12000 32000 Interest allowance 2000 1200 3200 Total salaries and interest 22000 13200 35200 Remaining income / deficiency 20860 8940 29800 Total division of net income 42860 22140 65000 (2) Prepare a schedule showing the distribution of net income, assuming net income is $20,000. (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 20000 12000 32000 Interest allowance 2000 1200 2300 TX Total salaries and interest 22000 13200 35200 Remaining income / deficiency -10640 -4560 -15200 Total division of net income 11360 8640 20000 Click if you would like to Show Work for this question: Open Show Work