Adler, Milton, and Bryant have capital balances of $20,000, $30,000, and $50,000, respectively. The partners share profits and losses as follows:a. The first $30,000 is divided based on the partners' captal balances. b. The next $30,000 is based on service, shared equallyby Adler and Bryant. Milton does not receive a salary allowance. c. The remainder is divided equally. Requirements1. Compute each partner's share of the $72,000 net incme for the year.2. Journalize the closing entry to allocate net income for the year. Adler Milton Bryant TotalNet income (loss) $72,000Capital allocation:Adler $6,000Milton $9,000Bryant $15,000Salary allowance:Adler 15,000Milton 0Bryant 15,000Total salary and capital allocation 21,000 9,000 30,000 (60,000)Net income (loss) remaining for allocation 12,000Remainder shared equally:Adler 4,000Milton 4,000Bryant 4,000Total allocation (12,000)Net income (loss) remaining for allocation 0Net income (loss) allocated to the partners $25,000 $13,000 $34,000Requirement 2. Journalize the closing entry to allocate net income for the year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)Date Accounts and Explanation Debit CreditIncome Summary 72,000Adler, Capital 25,000Milton, Capital 13,000Bryant, Capital 34,000To close Income Summary account to partners' capital.

Adler, Milton, and Bryant

1. Computation of each partner's share of the $72,000 net income for the year:

                                  Adler       Milton        Bryant         Total

First $30,000:

Capital allocation      6,000      9,000         15,000       30,000

Second $30,000:

Salary allowance     15,000        0              15,000        30,000

Remainder $12,000:

Shared equally        4,000       4,000           4,000        12,000

Total                   $25,000    $13,000      $34,000     $72,000

2. Closing Journal Entry to allocate the net income for the year:

Date     Accounts and Explanation       Debit     Credit

Dec. 31 Income Summary                   $72,000

            Adler, Capital                                         $25,000

            Milton, Capital                                           13,000

            Bryant, Capital                                          34,000

To close Income Summary account to partners' capital.

Explanation:

a) Data and Calculations:

Net Income = $72,000

Sharing formula:

First $30,000 is divided based on the partners' capital balances.

Next $30,000 is based on service, shared equally by Adler and Bryant.

Remainder is divided equally.

                                  Adler       Milton        Bryant         Total

Capital balances   $20,000  $30,000     $50,000    $100,000

Ratio of capital          2 :            3 :                5                10

First $30,000:

Capital allocation      6,000      9,000         15,000       30,000

Second $30,000:

Salary allowance     15,000        0              15,000        30,000

Remainder $12,000:

Shared equally        4,000       4,000           4,000        12,000

Total                   $25,000    $13,000      $34,000     $72,000

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