Answer and Explanation:
a. The net income allocated to each partner is shown below:-
Norr Caylor Total
Interest $12,000 $9,600 $21,600
Compensation $10,000 $14,000 $24,000
Subtotals $22,000 $23,600 $45,600
Allocation of reminder $14,640 $9,760 $24,400
Totals $36,640 $33,360 $70,000
b. The balance in both capital accounts is shown below:-
Norr Caylor
Beginning capital balances $100,000 $80,000
Share of income $36,640 $33,360
Withdrawals ($12,000) ($12,000)
Ending capital balances $124,640 $101,360
