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1 2 2. 3 PSHIP Partnership: Division of Net Income 4 5 Data Section 6 Original investment - Morgan $48,000 7 Original investment - Freeman $62,000 8 Interest on original investment 12% 9 Interest on drawings 8% 10 Salary - Morgan $85,000 11 Salary - Freeman $55,000 12 Drawings - Morgan $35,000 13 Drawings - Freeman $28,000 14 Net income $187,000 15 Partners agree to share profits/losses equally 16 17 Required: Calculate the division of net income and the profit distribution to each of the partners. 18 Check cell: Morgan's share of net income equals $107,380 19 Distribution of Profit Freeman Morgan Total 20 Answer Section 21 22 23 24 Salary allowance 25 Interest allowance on original investment 26 less; Interest on drawings 27 Net Salary & Interest allowance 28 Excess of income over allowances 29 Net income distribution/Equity increase 30 31 32