Assume that the partners of Exercise 12-5 agreed to share net income and loss by granting annual salary allowances of $55,000 to Cosmo and $45,000 to Ellis, 10% interest allowances on their investments, and any remaining balance shared equally.
1. Determine the partners’ shares of Cosmo and Ellis given a first-year net income of $94,400.
2. Determine the partners’ shares of Cosmo and Ellis given a first-year net loss of $15,700.