Ross & Saye LLP was organized and began operations on March $1,2004.$ On that date, Roberta Ross invested $$150,000,$ and Samuel Saye invested land and building with current fair values of $$80,000$ and $$100,000,$ respectively. Saye also invested $$60,000$ in the partnership on November $1,2004,$ because of its shortage of cash. The partnership contract includes the following remuneration plan:

Ross Saye

Annual salary $($recognized as operating expense$)$ $$18,000$ $$24,000$

Annual interest on average capital account balances $10\%10\%$

Remainder $60\%40\%$

The annual salary was to be withdrawn by each partner in $12$ monthly installments.

During the fiscal year ended February $28,2005,$ Ross & Saye LLP had net sales of $$500,000,$ cost of goods sold of $$280,000,$ and total operating expenses of $$100,000($in$-$cluding partners' salaries expense but excluding interest on partners' average capital account balances$).$ Each partner made monthly cash drawings in accordance with the partnership contract.

Instructions

a$.$ Prepare a condensed income statement of Ross & Saye LLP for the year ended Febru$-$arv $28.2005.$ Show the details of the division of net income in a subporting exhibit.