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 $203,100 for its first full year. The partnership agreement provides for the following division of income: Monthly Salary Allowance M. Withhim $6,230 E. Swithme $5,570 2. Interest of 12% on each partners January 1 Capital balance. Capital, I.M. Withhim, January 1 $211,500 Capital, H.E. Swithme, January 1 $128,500 3. Remaining Net Income Divided Equally Based on this agreement, how would annual net income of $203,100 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