Problem 12-2A (Static) Allocating partnership income and loss; sequential years LO P2 Watts and Lyon are forming a partnership. Watts invests $42,000 and Lyon invests $63,000. The partners agree that Watts will work one-third of the total time devoted to the parthership and Lyon will work two-thirds. They have discussed the following altemative plans for sharing income and loss fot in the ratio of their initial capital investments: (b) in proportion to the time devoted to the business: (c) a salary allowance of $72,000 per year to lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) salary allowance of $72,000 per year to Lyon, 10% interest on their initial capital investments, and the remaining balance shared equally. The portners expect the business to perform as follows: Yeaf 1, $36,000 net loss; Year 2, $90,000 net income; and Year 3, $150,000 net incorive. 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. (Do not round intermediate calculations. Enter all allowances as positive values, Enter losses as negative values.) partnership income or loss to the partners under each of the four plans being considered. Problem 12-2A (Static) Allocating partnership income and loss; sequential years LO P2 Watts and tyon are forming a partnership. Watts invests $42.000 and Lyon invests $63,000. The partners agree that Watts will work one-third of the total time devoled to the partnership and Lyon will work two-thirds. They have discussed the following alternative plans for sharing income and loss: (d) in the ratio of their initial capital investments: (b) in proportion to the time devoted to the business; (c) a salary allowance of $72,000 per year to lyon and the remaining balance in accordance with the ratio of their initiol capital investments; of (c) a saiary allowance of $72,000 per year to Lyon, 10% interest on their initial capital investments, and the remaining balance shared equally. The? partners cxpect the besiness to perform as follows Year 1, $36,000 net loss; Year 2, $90,000 net income, and Year 3, $150,000 net income. Aequired: 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. (Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as negative values.) Complete this question by entering your answers in the tabs below. 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. Problem 12-2A (Static) Aliocating partnership income and lossi sequential years LO P2 Wotts and tyon are forming a partnership. Whats invests 542,000 and tyon invests $63,000. The partners agree sutt Watts will work one-third of the total time devoted to the partnership and kyon will work tero-thirds. They hove. discussed the following alternative plans for shafing income and foss: (a) in the ratio of their initbal capital ifvestments: (b) in proportion to the time devoted to the business; (c) a salary allowance of 572,000 per year to lyon and the remaining bolance in accordance with the ratio of their initial capital investments; or (of a satary allowance of 572000 . per yoar to Lyon, 10x, interest on their initial capital investments, and the remaining batanoe shared equaty The: partners expect the business to perform as follows; Year 1, $36,000 net loss; Year 2, 590,000 net income, and Year 3 , $150,000 net income. Required: Complete the tables, one for eech of the first three years, by showing how fo allocate parthership income ar ioss to the portners under each of the four plasis being considered. (Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as negative values, ) Complete this question by entering your answers in the tabs below. Complete the tabies, 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. Show less A
