Ronica Kluge and Sam Edwards formed a partnership on May 1, 20-1. Kluge contributed $120,000 and Edwards contributed $50,000. During the year, Kluge contributed an additional $30,000. The partnership agreement states that Kluge is to receive $35,000 and Edwards is to receive $65,000 as a salary allowance. Any remaining net income is to be divided as follows: Kluge, 40% and Edwards, 60%. The partnership earned net income of $200,000 for the fiscal year ending April 30, 20-2. During the first year of operation, Kluge and Edwards withdrew $15,000 and $20,000, respectively.
1. Prepare the lower portion of the income statement showing the allocation of net income between Kluge and Edwards for the fiscal year ended April 30, 20-2.
2. Prepare a statement of partners' equity showing each individual partner's equity for the fiscal year ended April 30, 20-2.