On January 1, 2019, Jolly and Bee formed a partnership by contributing cash of 810,000 and 540,000, respectively. On February 1, 2019, Partner Jolly contributed additional 279,000 cash to the partnership and on August 1, 2019 Partner Jolly made a permanent withdrawal of 135,000. On May 1, 2019, Partner Bee contributed machinery with a fair market value of 180,000 and a net book value of 150,000 when contributed. On November 1, 2019 Partner Bee contributed an additional 90,000 cash to the partnership both partners withdrew one-fourth of their salary allowances in 2019. The partnership reported a net income of 514,800 in 2019 and the profit and loss agreement are as follows:

a. Interest at 6% is allowed on average capital balances;

b. Salaries of 5,400 per month to each partner;

c. Bonus to Jolly of 10% of net income after interest, salaries, and bonus; and

d. Bonus to be divided in the ratio of 6:4 to Jolly and Bee, respectively

1.)What is the net income that will be allocated to the partners:

a. Jolly, 320,000 and Bee, 252,000.

b. Jolly, 360,000 and Bee, 212,000.

c. Jolly, 340,000 and Bee, 232,000.

d. Jolly, 306,000 and Bee, 208,000.

2.)What is the capital balances of the partners at December 31, 2019:

a. Jolly, 1,234,800 and Bee, 1,002,600.

b. Jolly, 1,102,000 and Bee, 1,372,000.

c. Jolly, 1,376,000 and Bee, 898,000.

d. Jolly, 1,366,000 and Bee, 1,108,000.

Assume the partners have decided instead to report partners' interests and salaries as operating expenses and modified its P&L agreement as follows: (a) Bonus to Jolly of 10% of the net income after bonus and (b) balance to be divided in the ratio of 6:4 to Jolly and Bee, respectively.

3.)What is the capital balances of the partners at December 31, 2019:

a. Jolly, 1,360,000 and Bee, 1,114,000.

b. Jolly, 1,234,000 and Bee, 1,002,600.

c. Jolly, 1,366,600 and Bee, 1,108,000.

d. Jolly, 1,376,000 and Bee, 898,000