B. Pedigo and W. Vernon have capital balances on January 1 of 50,000 and 40,000, respectively. The

Question:

B. Pedigo and W. Vernon have capital balances on January 1 of €50,000 and €40,000, respectively. The income-sharing agreement provides for (1) annual salaries of €20,000 for Pedigo and €12,000 for Vernon, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by Pedigo and 30% by Vernon.
Instructions
(a) Prepare a schedule showing the of net income, assuming net income is (1) €55,000 and (2) €30,000.
(b) Journalize the allocation of net income in each of the situations above.
Distribution
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