Explanation Given info, The net income is $31,000. The interest allowance of N is $7,000, and salary allowance is $15,000. The interest allowance of F is $5,000, and salary allowance is $10,000. Profit sharing ratio is 1:1 (equal). Calculate total interest allowance: Particulars Amount ($) N’s interest allowance 7,000 F’s interest allowance 5,000 Total interest allowance 12,000 Calculate total salary allowance: Particulars Amount ($) N’s salary allowance 15,000 F’s salary allowance 10,000 Total salary allowance 25,000 Calculate profit or loss available to distribute: Particulars Amount ($) Net income 31,000 Less: Interest allowance (12,000) Salary allowance (25,000) Loss to distribute (6000) Calculate share of each partner in loss as follow: Formula to compute the share of profit to each partner, Share of profit = Net income or loss × Profit sharing ratio N share: Substitute ($6,000) for net loss and 0