Joy and Jolly have decided to form a partnership by Joy investing $45,000 and Jolly $30,000 into the business. They have agreed to share profits and losses under the following terms:

(1) Interest of 8% on their original investments.

(2) Salary allowances of $15,000 to Joy and $30,000 to Jolly.

(3) Remaining balance of profit or losses will be divided between the partners, Joy and Jolly in the ratio of 6:4, respectively.

Required: (a) Assuming that the business made a loss of $135,000 for the year, prepare schedule of division of net loss between Joy and Jolly, the partners. (8 marks) (b) Prepare journal entry to record the distribution of loss to Joy and Jolly's capital account. (3 marks)