Question

Watts and Lyon are forming a partnership. Watts invests $36,000 and Lyon invests $54,000. The partners agree that Watts will work one-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to the business; (c) a salary allowance of $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 per year to Lyon, 10% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $17,000 net loss; Year 2, $42,500 net income, and Year 3, $70,833 net income. Required: Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of the four plans being considered. (Enter all allowances as positive values. Enter losses and capital deficits, if any, as negative values. Do not round intermediate calculations. Round final answer to the nearest whole dollar.)

Answer 1

pfa the image of the answer. The answer is hand written.
Plan (a) Pachit chanting on backó Mario Brita Miestnenie Twebment of walks - $36,00D Tovement of Lyon = $54. OUD Wall - $3600D = 36:54 $ 34,00 - 19:27 - 6:9 - > Year 1 Year 2 Year 3 $7,00) $42,560 $70,833 = 2:3 Ratio toss Income Income D

Ravie is 233 Www wayon Patricus Wak Do y eow Share 2. S1 ) $69.00) 310, 200) 2. 94.500 $12.000 32. SUD 3. $10,833 $28,333 $42, SOD Plan b Purohit showing Ow baud itemie devoted by was a you in business 702 Tume Deuced by Walt - 14 tumo Timis Devoted by lyon - 3/4th Time wall you 1 - 3 1 3 Ratio

Rahe is 113 bw Wow on Pashwaw Walk that the ($1000) $42) 12,750) $42, COD $10,625 $31,875 $ 10,833 $17208.25 $53,124.32 PPPPPP Plame : Salary allowance of Ovo to lyon per year and the elemaining balance m ade with mario V capital investment UN Ratio q capital Investment is 2:3 b/w walt a you as computed in PAMA.

Nel camp gloss, Salary cannot be allowed Won shaxe $10,200) Powiat Woul shaxs ($17.000) ($6200) No solay due to Lek.Ratio 2/3 $15000 $42.500 - $15,000 h wou + a Sala Sitout wa 2:3) St $16.COD 33,500

$1839 $100 to somming 2:3) - + $22.333 $22,333 1 000 + $33.560 $48. LEPPPPPPPY Plord: Sousy allowance 431ed to you pou year + 10 totest on early palivier capital + Remains than 11 Thteest on Watt 4 Lyon Wout $36,0 X 10 LH 1 = $ $u DVD + 10 + investment - 3600 + + M CHO

Nol Jucas LORI, W salary fe on Povement could be cifcibuli, Rahe Lost Would be 1: Parcul ($17,000) 342.500 a r (59500 + $ 3600 +14.250 $12,00 yen share $6.Soo) 315000 $ CUOD 14.20 $29.6 + $3.6UD +$23,416.50 $24.016.0 SIS UOD $ MOD $23.6.CO $426