Turner and Isham agreed to form a partnership. Turner contributed $ 200,000 in cash, and Isham contributed assets with a fair market value of $ 400,000. The partnership, in its initial year, reported net income of $ 120,000. Assume that the partnership agreement states that Turner and Isham are to receive salaries of $ 20,000 and $ 24,000, respectively; that Turner is to receive 6 percent interest on his capital balance at the beginning of the year; and that the remainder of income and losses are to be shared equally. Calculate the distribution of the income or losses under the following conditions:

1.Income totals $ 120,000.
2.Income totals $ 48,000.
3.There is a loss of $ 2,000.
4.There is a loss of $ 40,000.

To calculate the distribution of income or losses in a partnership, we need to follow the partnership agreement.

Let's start by calculating the total capital balance for Turner and Isham:
Turner's capital contribution = $200,000
Isham's capital contribution = $400,000
Total capital balance = Turner's capital contribution + Isham's capital contribution
Total capital balance = $200,000 + $400,000
Total capital balance = $600,000

Now, let's calculate the interest payment for Turner:
Turner's interest payment = Turner's capital balance * interest rate
Turner's interest payment = $200,000 * 6%
Turner's interest payment = $12,000

1. If the income is $120,000, here's how the distribution would look like:

Total income = $120,000
Total salaries = Turner's salary + Isham's salary
Total salaries = $20,000 + $24,000
Total salaries = $44,000

Income available for distribution = Total income - Total salaries - Interest payment
Income available for distribution = $120,000 - $44,000 - $12,000
Income available for distribution = $64,000

Now, let's distribute the remaining income equally:
Turner's share = Income available for distribution / 2
Turner's share = $64,000 / 2
Turner's share = $32,000

Isham's share = Income available for distribution / 2
Isham's share = $64,000 / 2
Isham's share = $32,000

So, Turner's distribution would be $32,000, and Isham's distribution would also be $32,000.

You can use the same calculations for the remaining scenarios by substituting the given values.

2. If the income is $48,000:
Total income = $48,000
Total salaries = $44,000
Income available for distribution = $48,000 - $44,000 - $12,000 = $-8,000

Since the income available for distribution is negative, it means there is a loss. In such cases, the partners' distributions are typically zero.

3. If there is a loss of $2,000:
Total income = -$2,000
Total salaries = $44,000
Income available for distribution = -$2,000 - $44,000 - $12,000 = -$58,000

Again, since the income available for distribution is negative, the partners' distributions would be zero.

4. If there is a loss of $40,000:
Total income = -$40,000
Total salaries = $44,000
Income available for distribution = -$40,000 - $44,000 - $12,000 = -$96,000

Once again, since the income available for distribution is negative, the partners' distributions would be zero.

It's important to note that these calculations are based on the given partnership agreement and assumptions. The specific terms of the partnership agreement may modify the distribution calculations.