Problem V:

The following information is available concerning the agreement for income/(loss) distribution of the Earth, Wind & Fire partnership for 2030:

Income to be awarded based on labor: Earth, $10,000; Wind $20,000; Fire, $25,000.

Interest is to be awarded based on a 10% return on capital. Earths capital is $100,000; Winds capital is $40,000; and Fires capital is $50,000.

The remainder is to be allocated on 2:1:1 basis.

REQUIRED:

1) Prepare a schedule of income distribution if 2020 net income was $170,000.

2) Prepare a schedule of income distribution if there was a LOSS of ($14,000) in 2020.