1. The partnership of Katie and Leo began with the partners investing $6,000 and $2,000, respectively. At the end of the first year, the partnership earned net income of $8,400. Under each of the following independent situations, calculate how much of the $8,400 each is entitled to:

Situation 1: No agreement on how income was to be shared.

Situation 2: Katie and Leo share income based on the beginning-ofyear investment ratio.

Situation 3: Salary allowance of $2,800 to Katie and $2,420 to Leo.

Ten percent interest on beginning year’s investment. Remainder split equally.

2. In Situation 3, what would the earnings to each partner be if net income were $4,200?