Farmer and Taylor formed a partnership with capital contributions of $230,000 and $280,000, respectively. Their partnership agreement calls for Farmer to receive a $76,000 per year salary. The remaining income or loss is to be divided equally. Assuming net income for the current year is $171,000, the journal entry to allocate net income is:

Multiple Choice

• Debit Income Summary, $171,000; Credit Farmer, Capital, $85,500; Credit Taylor, Capital, $85,500.

• Debit Income Summary, $171,000; Credit Farmer, Capital, $154,000; Credit Taylor, Capital, $17,000.

• Debit Income Summary, $171,000; Credit Farmer, Capital, $106,140; Credit Taylor, Capital, $28,860.

• Debit Income Summary, $171,000; Credit Farmer, Capital, $123,500; Credit Taylor, Capital, $47,500.

• Debit Income Summary, $171,000; Credit Taylor, Capital, $123,500; Credit Farmer, Capital, $47,500.