R. Huma and W. How have capital balances on July 1, 2016, of $62,000 and $58,000, respectively.

Question:

R. Huma and W. How have capital balances on July 1, 2016, of $62,000 and $58,000, respectively. The profit-sharing agreement specifies:
1. Salary allowances of $30,900 for Huma and $21,900 for How,
2. Interest at 6% on beginning capital balances,
3. For the remaining profit or loss to be shared 60% by Huma and 40% by How.
Instructions
(a) Prepare a schedule showing the division of profit for the year ended June 30, 2017, assuming profit is
(1) $70,000,
(2) $55,000.
(b) Journalize the allocation of profit in each of the situations in part (a).
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...