Nan Ferdinand and Misti Morris have formed a partnership. During their first year of operations, the partnership earned $50,000. Their profit and loss sharing agreement states that first, each partner will receive 10% of their capital balances. The second level is based on service, with $10,000 to Ferdinand and $15,000 to Morris. The remainder then will be shared 3:5 between Ferdinand and Morris, respectively.
Requirements
1. Calculate the amount of income each partner will receive under their profit and loss sharing agreement.
2. Journalize the entry to close the Income summary account for the year.