Rick and Marilyn have a partnership agreement that includes the following provisions regarding sharing net income and net loss:

Salary allowances are $12,000 for Rick and $10,000 for Marilyn.

Both partners will be given an interest allowance of 5% on their beginning-of-the-year capital account balances.

The remaining income and loss is to be divided equally between Rick and Marilyn.

The capital account balances on January 1, 2016, for Rick and Marilyn were $26,000 and $24,000 respectively. For the year ended December 31, 2016, the partnership reports profit of $32,500. Neither partner had any drawings in 2016.

Instructions

Prepare a schedule that clearly sets out the division of income or loss to the partners for 2016.