Mo, Lu, and Barb formed the MLB Partnership by making investments of $67,500, $262,500, and $420,000, respectively. They predict annual partnership net income of $450,000 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 $80,000 to Mo, $60,000 to Lu, and $90,000 to Barb; interest allowances of 10% on their initial capital investments; and the remaining balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb.

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 $209,000; and that Mo, Lu, and Barb withdraw $34,000, $48,000, and $64,000, respectively, at year-end.

\begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ MLB PARTNERSHIP } \\ \hline \multicolumn{5}{|c|}{ Statement of Partners' Equity } \\ \hline \multicolumn{5}{|c|}{ For Year Ended December 31} \\ \hline & Mo & Lu & Barb & Total \\ \hline Initial partnership investments & 67,500 & 262,500 & 420,000 & 750,000 \\ \hline \multicolumn{5}{|l|}{ Net income } \\ \hline \multicolumn{5}{|l|}{ Salary allowances } \\ \hline \multicolumn{5}{|l|}{ Interest allowances } \\ \hline \multicolumn{5}{|l|}{ Balance allocated } \\ \hline Total net income & & & & 0 \\ \hline Total & 67,500 & 262,500 & 420,000 & 750,000 \\ \hline Less partners' withdrawals & 34,000 & 48,000 & 64,000 & 146,000 \\ \hline Ending capital balances & 33,500 & 214,500 & 356,000 & 604,000 \\ \hline \end{tabular}