Sally Cook, Lin Xi, and Ken Schwartz formed the CXS Partnership by making capital contri...

Sally Cook, Lin Xi, and Ken Schwartz formed the CXS Partnership by making capital contributions of $144,000, $216,000, and $120,000, respectively. They predict annual partnership net income of $240,000 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $40,000 to Cook, $30,000 to Xi, and $80,000 to Schwartz; interest allowances of 12% on their initial capital investments; and the balance shared equally.

Required

1. Prepare a table with the following column headings. Use the table to show how to distribute net income of $240,000 for the calendar year under each of the alternative plans being considered. (Round answers to the nearest whole dollar.)

2. Prepare a statement of partners? equity showing the allocation of income to the partners assumingthey agree to use plan (c), that income earned is $87,600, and that Cook, Xi, and Schwartz withdraw$18,000, $38,000, and $24,000, respectively, at year-end.3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c)and that net income is $87,600. Also close the withdrawals accounts.