Fatima, Nouf, and Zainab have the following capital balances; $50,000, $72,000 and $95,000 respectively at the beginning of 2018. Because of a cash shortage Fatima invests an additional $15,000 on May 1st, 2018. Each partner withdraws $1,200 per month. Fatima, Nouf, and Zainab receive a salary of $12,000, $14,000 and $18,000 respectively, for work done during the year. Each partner receives interest of 8% on that partners beginning capital balance without regard to normal drawings. Any remaining profits are split 25%, 35%, and 40% respectively. The net income for 2018 is $40,000.

Required:

a. Allocate the $40,000 income among the partners. Show your working.

b. Determine the ending capital balances for each partner at December 31st, 2018. Show your workings.

c. Record the journal entry for the distribution of net income.