McGill and Smyth have capital balances on January 1 of $55,000 and $47,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $15,000 for McGill and $13,000 for Smyth, (2) interest at 11% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth.

(a)

(1) Prepare a schedule showing the distribution of net income, assuming net income is $67,000. (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 $23,000. (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		$		$		$

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