April and May formed a partnership on January 1, 2011. April contributed $180,000 cash and equipment with a market value of $80,000 with a loan note payable of $40,000. May’s investment consisted of $60,000 in cash, $60,000; inventory, $40,000; all at market values. The partnership made a net income of $80,000 for 2011.

Required:

1. Prepare the journal entry to record the formation of the partnership on January 1, 2011

2. Determine each partner's share of the net income for the year and prepare the journal entry necessary to close the books, assuming each of the following independent situations:

(a) Income is divided based on the partners' failure to sign an agreement.

(b) Income is divided based on partners allowed 10% of the original capital investments, with salaries to April of $30,000 and May of $20,000, and the remainder to be divided equally.