Will Beck, Trevor Beck, and Barb Beck formed the BBB Partnership by making capital contr...

Will Beck, Trevor Beck, and Barb Beck formed the BBB Partnership by making capital contributions

of $142,500, $118,750, and $213,750, respectively. They predict annual partnership net income of

$210,000 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 $38,000 to Will, $28,000

to Trevor, and $43,000 to Barb; interest allowances of 10% 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 $210,000 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 assuming

they agree to use plan (c), that income earned is $87,500, and that Will, Trevor, and Barb withdraw

$18,000, $25,000, and $34,000, 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 $87,500. Also close the withdrawals accounts.