2. Business partners Baliva, Masi, and Romalati have a partnership agreement that outlines a detailed...
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Accounting
2. Business partners Baliva, Masi, and Romalati have a partnership agreement that outlines a detailed formula for sharing profits and losses. Baliva, Masi, and Romalati earn annual salaries of $50 000, $70 000, and $90 000 respectively. They also earn a fixed percentage of interest on their capital balances which are $50 000, $50 000, and $70 000 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 $500 000, and 7% on capital balances
(b) net income of $40 000, and 5% on capital balances.
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