Trevor and Brian enter into a partnership and decide to share profits and losses as follows:
1. The first allocation is a salary allowance with Trevor receiving $10,000 and Brian receiving $20,000.
2. The second allocation is 20% of the partners' capital balances at year end. On December 31, 2019, the
capital balances for Trevor and Brian are $50,000 and $40,000, respectively.
3. Any remaining profit or loss is allocated equally.
For the year ending December 31, 2019, the partnership reported net income of $50,000.
Required:
1. Calculate the share of profit allocated to each partner.
2. Prepare the journal entry to record the allocation of profit on December 31, 2019.
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