Calculate each partners share of last years income, assuming that the proposed allocation of partnership income from Appendix A had been in place.

Table 1 Income Statement ($ in thousands)

ACCOUNT	PHARMACY	SUNDRIES	LUNCH COUNTER	TOTAL
Sales	$ 600,000	$ 620,000	$ 252,000	$1,472,000
Cost of Goods Sold	375,000	400,000	75,000	850,000
Gross Profit	225,000	220,000	177,000	622,000
Direct Operating Expenses	110,000	100,000	60,000	270,000
Salaries	100,000*	40,000	30,000	170,000
Allocated Common Expenses	30,000	30,000	30,000	90,000
Net Income	$ (15,000)	$ 50,000	$ 56,0000	$ 92,000

*Represents owners withdrawals.

Allocation of Partnership Income

a.	An allowance of $100,000 will be allocated to Junior Davis, $40,000 to Mary Jones, and $30,000 to Nancy Wilson.
b.	Each partner will get 20% of the income or loss for his or her department without consideration of the allocation from part a. The formula for each department is ((gross profit the sum of direct operating expenses + allocated common expenses) x 20%).
c.	All remaining profits or losses will be allocated to the partners evenly.