Partner A and Partner B are partners in XYZ Services. The partnership agreement specifies the following income sharing provisions:

• Partner A receives an annual salary of $100,000 and Partner B receives an annual salary of $75,000.
• Each partner receives 10% interest on average capital investment.
• Remaining income is allocated in a 1:4 ratio for Partner A and Partner B, respectively.
• All provisions are fully implemented.

Additional information:

• Average capital investment for the year is $300,000 for Partner A and $450,000 for Partner B.
• Assume that revenues and expenses have been closed to an “Income Summary” account, from which the income is allocated to the partners.

Using the T-account template, prepare the entries to allocation partnership income in each of the following scenarios.

1. Allocate partnership income of $270,000.
2. Allocate partnership income of $150,000.

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