PROBLEM

The condensed, adjusted trial balance of the Mario and Luigi Partnership as at December 31, 2019 appears below:

MARIO AND LUIGI PARTNERSHIP

Adjusted Trial Balance

December 31, 2019

Debit Credit

Current assets........................................................................................... $ 25,000

Property, plant, and equipment................................................................. 80,000

Current liabilities...................................................................................... $ 7,000

Long-term debt......................................................................................... 44,000

Mario, capital........................................................................................... 26,000

Mario, drawings........................................................................................ 270,000

Luigi, capital............................................................................................. 18,000

Luigi, drawings......................................................................................... 245,000

Service revenue......................................................................................... 593,000

Operating expenses .................................................................................. 68,000

$ 688,000 $ 688,000

The partnership agreement stipulates that a division of partnership profit or loss is to be made as follows:

1. A salary allowance of $ 310,000 to Mario and $ 250,000 to Luigi.

2. The remainder is to be divided equally.

Instructions:

Prepare a schedule that shows the division of profit or loss to each partner.

DIVISION OF PROFIT/LOSS

Mario Luigi TOTAL