. S. Wagner (beginning capital, $80,000) and M. Jerome (beginning capital $120,000) are partners. During 2017 the partnership earned net income of $90,000, and Wagner made drawings of $24,000 while Jerome made drawings of $32,000.

Instructions

(a) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $50,000 to Wagner and $45,000 to Jerome, interest of 10% on beginning capital, and the remainder divided 50%-50%. Prepare the journal entry to record the allocation of net income.

(b) Compute the partners ending capital balances under the assumption in part (a).