McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 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.

(1) Prepare a schedule showing the distribution of net income, assuming net income is $50,000. (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

Intereste 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 $36,000. (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/deficiencey

Total division of net income

Journalize the allocation of net income in each of the situations above. (Credt account titles are automatically indented when amount is entered. Do not indent manually. Record entries in the order present in the previous part.)

No. Account Tittles and Explanation

1. Debit Credit

2. Debit Credit