PARTNERSHIP ACCOUNTING

Smith and Jones established a partnership on January 1, 2021. Smith invested cash of $150,000 and Jones invested $50,000 in cash and equipment with a book value of $80,000 and fair value of $100,000. For both partners, the beginning capital balance was to equal the initial investment. Smith and Jones agreed to the following procedure for sharing profits and losses: - 10% interest on the yearly beginning capital balance -Bonus to Smith of $10,000 - the remainder divided in a 50:50 ratio The Articles of Partnership specified that each partner should withdraw no more than $1,250 per month or $15,000 per year. For 2021, the partnership's income was $100,000. Each partner withdrew $1,250 per month throughout 2021 amounting to $15,000 per year.

1) Determine the amount of net income allocated to each partner for 2021.

2)Determine the balance in both capital accounts at the end of 2021.