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1. Bill and John are partners in a small business. Their partnership agreement states that net income is divided based on annual salaries of $45,000 for Bill and $35,000 for John, and an income ratio of 4:3. Calculate the net income allocation and record the journal entry, based on the following unrelated situations: (a) net income of $250,000 (b) net loss of $12,000. 2. Business partners Barcelona, Monroe, and Romalia have a partnership agreement that outlines a detailed formula for sharing profits and losses. Barcelona, Monroe and Romalia earn annual salaries of $80,000, $70,000, and $100,000 respectively. They also earn a fixed percentage of interest on their capital balances which are $60,000, $60,000, and $80,000 respectively. Any remaining income is allocated using an income ratio of 30%, 30% and 40% respectively. Calculate the net income allocation and record the journal entry under the following unrelated situations: (a) net income of $600,000, and 7% on capital balances (b) net income of $50,000, and 5% on capital balances. Date a) b) General Journal Particulars Debit Page Credit CALCULATIONS (a) Income Ratio Net Income Income Distribution Salary Net Income allocated PRIOR to ratio application Net Income to be allocated based on income ratio Share of income based on income ratio Total allocation of net income (b) Income Ratio Net Loss Income Distribution Salary Net Income allocated PRIOR to ratio application Net Income to be allocated based on income ratio Share of income based on income ratio Total allocation of net income Bill Bill John John Total Total Date a) b) General Journal Particulars Debit Page Credit CALCULATIONS Scenario (a) Balance in Capital account, January 1 Income Ratio Net Income Income Distribution Salary Interest Allowance Net Income allocated PRIOR to ratio application Net Income to be allocated based on income ratio Share of income based on income ratio Total allocation of net income Scenario (b) Balance in Capital account, January 1 Income Ratio Net Income Income Distribution Salary Interest Allowance Net Income allocated PRIOR to ratio application Net Income to be allocated based on income ratio Share of income based on income ratio Total allocation of net income Barcelona Monroe Romalia Barcelona Monroe Romalia Total Total