Polacco and Walsh have formed a partnership. During their first year of operations, the partnership earned $140,000. Their profit-and-loss-sharing agreement states that, first, each partner will receive 10% of their capital balances. The second level is based on services, with $25,000 to Polacco and $15,000 to Walsh. The remainder then will be shared 4:1 between Polacco and Walsh, respectively.

Requirements

1. Calculate the amount of income each partner will receive under their profit-andl oss- sharing agreement assuming Polacco's capital balance is $78,000 and Walsh's capital balance is $78,000.

2. Journalize the entry to close the Income Summary account for the year?