Problem
The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio, respectively, after Tatum receives a 10,000 salary and Brook receives a 15,000 salary. Formulate a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is:
• $40,000
• $25,000
• $5,000
In addition, show the resulting entries to each partner's capital account. Tatum's capital account balance is $50,000, and Brook's is $60,000.