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Clark and Dave are partners in the Company. following manner: They share income and losses in the (1) Each partner is to receive a salary of $75,000; (2) Each partner is to receive 5% interest on beginning capital balances; and (3) Any remainder profit/loss is to be split in a ratio of 6:4 (Clark/Dave). The partners withdraw an amount equal to their salary each year. On January 1, 2017, Clarks capital balance was $1,000,000 and Daves was $900,000. Assuming each partners share of income is added to his capital account and withdrawals deducted each year. Prepare a worksheet for the division of net income and journal entries for the allocation of profits and closing out of withdrawals for 2017 and 2018. Prepare T - accounts for each partners capital account listing beginning balances, share of profits, deduction of withdrawals, and ending balances as of December 31, 2017 and December 31, 2018 under the following assumptions. Required: a. What will the capital account balances for Clark and Dave be at December 31, b. What will be the capital account balances for Clark and Dave be at December 31, c. Explain why a partnership would have a net income allocation formula that used a 2017, if the company realizes net income of $380,000 in 2017? 2018 if net income is $440,000 in 2018? salary and interest allowance in the calculation of each partners share of earnings.

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