McGill and Smyth have capital balances on January 1 0f $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Instructions Prepare a schedule showing the distribution of net income, assuming net income is (1) $50,000 and (2) $36,000. Journalize the allocation of net income in each of the situations above.
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