McGill and Smyth have capital balances on January 1 of $60,000 and $48,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $16,000 for McGill and $20,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth.

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McGill and Smyth have capital balances on January 1 of $60,000 and $48,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $16,000 for McGill and $20,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. (a) Your answer is correct. (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 s 16000 $ 20000 s 36000 Interest allowance T 6000 4800 10800 Total salaries and interest 22000 24800 46800 Remaining income / deficiency 12120 8080 20200 Total division of net income 34120 34120 32880 32880 1 67000 Prepare a schedule showing the distribution of net income, assuming net income is $24,000. (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 16000 $L 20000 36000 Interest allowance 6000 4800 10800 Total salaries and interest 22000 24800 46800 Remaining income / deficiency -13680 -9120 -22800 TE Total division of net income 1 8320 15680) 24000) Click if you would like to show Work for this question: Open Show Work Your answer is partially correct. Try again. Journalize the allocation of net income in each of the situations above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record entries in the order presented in the previous part.) No. Account Titles and Explanation Debit Credit 1. Income Summary 20200 McGill, Capital 12120 Smyth, Capital T 8080 2. X McGill, Capital -13680 Smyth, Capital -9120 Income Summary y C -22800 -22800