Terms and Definitions The income of a partnership is divided among the partners each period. The income or losses of the partnership are divided . If there is no agreement, income and losses are divided Understanding the Business Transaction A partnership agreement may divide income based upon (1) salary allowances, or (2) salary allowances and interest on capital balances of each partner. The amounts of the distributions reflect differences in partners' abilities and time devoted to the partnership. The partnership of I.M. Withhim and H.E. Swithme earned $207,730 for its first full year. The partnership agreement provides for the following division of income: Monthly Salary Allowance I.M. With him $6,020 H.E. Swithme $5,470 2. Interest of 10% on each partners January 1 Capital balance. Capital, I.M. Withhim, January 1 $227,000 Capital, H.E. Swithme, January 1 $176,500 3. Remaining Net Income Divided Equally Based on this agreement, how would annual net income of $207,730 be distributed between the partners? I.M. Withhim H.E. Swithme Total Annual salary allowance (mo. X 12) $ Interest Allowance Remaining income Division of Net income # # # # # # # Recording in the Accounting System Using the data above, prepare the journal entry for closing Income Summary and dividing net income between the partners' captial accounts. If an amount box does not require an entry, leave it blank