Part(a) GraceandJameshaveapartnershipandshareincomeonabasisof6:4.WhenKarlis admittedtothepartnership,GraceandJameshavecapitalbalancesof$100,000and $70,000,respectively.Karlinvests$90,000cashfora30%ownershipinterestwithbonuses totheexistingpartners. Required:PreparethejournalentrytorecordtheadmissionofKarl.

Part(b) AfterKarljoinedthepartnership,anewprofitandlossdistributionagreementwasmade. Eachpartnerisallowedinterestof10%onendingcapitalbalances.Graceisgivenan$8,000 salaryallowanceandtheremainderoftheprofitorlossissharedequally.Attheendofthe firstyearofoperationafterKarljoinedthepartnership,theaccountingrecordsshowed partnersdrawingandcapitalaccountsasfollows:GracesDrawings$27,200andCapital $107,200,JamessDrawings$34,800andCapital$74,800,andKarlsDrawings$18,000and Capital$78,000.Inaddition,thepartnershipearnednetincomeof$29,000.

Required:

(a)Prepareascheduleshowingthedivisionofnetincomebetweenthepartners.

(b)Preparejournalentriestorecordthedivisionofnetincomebyusingmethod1.