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