Phillip and Case are in the process of forming a partnership to import Belgian chocolates, to which Phillip will contribute one-third time and Case full time. They have discussed the following alternative plans for sharing profit and losses.

a. In the ratio of their initial investments, which they have agreed will be $196,000 for Phillip and $294,000 for Case.

b. In proportion to the time devoted to the business.

c. A salary allowance of $5,000 per month to Case and the balance in accordance with their initial investment ratio.

d. A $5,000 per month salary allowance to Case, 10% interest on their initial investments, and the balance equally.

The partners expect the business to generate profit as follows: Year 1, $109,000 loss; Year 2, $159,000 profit; and Year 3, $259,000 profit.

schedule for each of the four plans being considered by showing how the partnership profit or loss for each year would be allocated to the partners.

Plan A:

calculations share to philip share to case total

1.loss

2.profit

3.profit

Plan B:

calculations share to philip share to case total

1.loss

2.profit

3.profit

Plan C: calculations for all 3 years

calculations: share to philip share to case total

year one

salary allowances

remainder (initial investment ratio)

shares to each partner

year two

salary allowances

remainder (initial investment ratio)

shares to each partner

year 3

salary allowances

reainder (initial investment ratio)

shares to each partner

Plan D: calculations for all 3 years

calculations: share to philip share to case total

year one

salary allowances

interest allowances

total salaries and interest allocation

remainder equally

shares of each partner

year 2

salary allowances

interest allowances

total salaries and interest allocations

remainder equally

shares of each partner

year 3

salary allowances

interest allowances

total salaries and interest allocation

remainder equally

shares of each partner