Reference no: EM132555687

After closing the revenue and expense accounts, the profit for the year ended December 31, 2021 of the Mitt & Ryan partnership is $25,300. The partnership agreement specifies that profits and losses will be shared using the following formula.

1. Allocate profit by a 5% interest allowance on the partners' beginning capital balances.

2. Allocate salary allowances of $17,798 to Mitt and $12,598 to Ryan.

3. Remaining profit (loss) is to be shared on a ratio of 8:5.

At the beginning of the year, Mitt's capital account had a balance of $30,700 and Ryan's capital account had a balance of $33,000. Mitt withdrew $1,110 cash per month while Ryan withdrew $1,310 per month from the partnership. During the year, Mitt made an additional investment of $5,100 cash into the partnership.

Question 1: Show how the profit or loss will be allocated to the two partners. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)