MNO and PQR formed a partnership with initial investments of $30,000 and $20,000 respectively. The partnership agreement specifies that profits and losses are shared in a 60:40 ratio. The partnership earned a net income of $50,000 during the first year.

Tasks:

1. Allocate the net income to each partner.
2. Prepare the journal entries to record the allocation.
3. Prepare the partners' capital accounts at the end of the year.

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