Exercise 7 (LO 3, 4) Profit allocation based on several factors; weighted-average interest. Gabriel and Hall are partners in a manufacruring business located in Portland, Oregon. Their profit and loss agreement contains the following provisions:

1. Salaries $35,000 and $40,000 for Gabriel and Hall, respectively.

2. A bonus to Gabriel equal to 10% of net income after the bonus.

3. Interest on weighted-average capital at the rate of 8%. Annual drawings in excess of $20,000 are considered to be a reduction of capital for purposes of this calculation.

4. Profit and loss percentages of 40% and 60% for Gabriel and Hall, respectively.

Capital and drawing activity of the partners for the year 20X5 are as follows:

Gabriel Capital Gabriel Drawing Hall Capital Hall Drawing

Particulars	Gabriel Capital	Gabriel Drawing	Hall Capital	Hall Drawing
Begining Balance	$120,000	$0	$60,000	$0
April 1	$20,000
June 1		$15,000		$20,000
September 1	$30,000
November 1		$15,000	$40,000
Ending Balance	$170,000	$30,000	$100,000	$20,000

Assuming net income for 20X5 of $132,000, determine how much profit should be allocated to each partner. This is the complete question.