Red and White formed a partnership in Year 1. The partnership agreement provides for annual salary allowances of $55,000 for Red and $45,000 for White. The partners share profits equally and losses in a 60/40 ratio. The partnership had earnings of $80,000 for Year 2 before any allowance to partners. What amount of these earnings should be credited to each partner's capital account? Red White 1. $40,000 $40,000 2. $43,000 $37,000 3. $44,000 $36,000 4. $45,000 $35,000 $40,000 $40,000 $43,000 $37,000 $44,000 $36,000 $45,000 $35,000