Watts and Lyon are forming a partnership Watts invests $32,000 and Lyon invests $48,000. The partners agree that Watts will work one fourth of the total time devoted to the partnership and Lyon will work three fourths. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments. (b) in proportion to the time devoted to the business. (c) a salary allowance of $18,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments, or (d) a salary allowance of $18,000 per year to Lyon, 11% interest on their initial capital investments, and the remaining balance shared equally The partners expect the business to perform as follows: Year 1, $20.000 net loss: Year 2. $50,000 net income, and Year 3. $83,334 net income 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. (Enter all allowances os positive values. Enter losses and capital deficits, if any, os negative values. Do not round intermediate calculations, Round final answer to the nearest whole dollar) Complete this question by entering your answers in the tabs below. Year 1 Year 2 Year 3 Plan (0) Complete the tables, one for each of the flest three years, by showing how to allocate partnership income or loss to the partners under each of the four plans being considered. Year 1 Watts Lyon Total Net Income (loss) 5 (20,000) Balance allocated in proportion to Initial investments 0 Balance of income (less) $ 120.000) Shares to the partners 0 $ 0 $ 0 Plan (6) Watts Lyon Total Not Income (1065) 520.000) Balance allocated in proportion 10 time devoted Balance of income (ons) Share to the partners 5 0 $ 05 0 Plan (c) Watts Lyon Total Net Income (oss) $(20.000) Salary allowances 0 Balance of income (losa) 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. Watts Lyon Total S (20,000) 0 $ (20,000) 0 $ Total $ (20,000) Watts Lyon 0 0 Watts Lyon Year 1 Plan (a) Net Income (loss) Balance allocated in proportion to Initial investments Balance of income (los) Shares to the partners Plan (6) Net Income (loss) Balance allocated in proportion to time devoted Balance of incomo (loss) Shares to the partners Plan (c) Net Income (loss) Salary allowances Balance of income (1095) Balance allocated in proportion to Initial investments Balance of income (loss Shares to the partners Plan (d) Net Income (oss) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners Total $ (20,000) 0 0 S 0 S Watts Lyon $ 0 $ 0 Total $ (20,000) 0 0 0 S 05 0 0 5 5 Year 1 Year 2 Year 3 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. Watts Lyon Total 50,000 $ 0 $ 0 $ 50,000 0 $ 0 $ Watts Lyon Total 50,000 $ 0 5 $ Watts Lyon Year 2 Plan (a) Net Income (los) Balance allocated in proportion to Initial investments Balance of income (loss) Shares to the partners Plan (6) Net Income (los) Balance allocated in proportion to time devoted Balance of income (los) Shares to the partners Plan (c) Net Income (106) Salary allowances Balance of income (los) Balance allocated in proportion to Initial investments Balance of income (los) Shares to the partners Plan (0) Not Income (oss) Salary allowances Balance of income (ons) Interest allowances Balance of income (los) Balance allocated equally Balance of income (os) Shares to the partners $ 0 Total $ 5e900 0 0 50.000 0 $ 0 $ 05 Watts Lyon Total 50.000 0 0 0 S os 0 O 0 $ Year 1 Year 2 Year 3 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. Watts Lyon Total 83.334 0 $ 83,334 0 $ 0 s Watts Lyon Total 83,334 $ $ 0 0 $ 0 Watts Lyon Year 3 Plan (a) Net Income (loss) Balance allocated in proportion to Initial investments Balance of income (loss) Shares to the partners Plan (b) Net Income (loss) Balance allocated in proportion to time devoted Balance of income (los) Shares to the partners Plan (c) Net Income (105) Salary allowances Balance of income (105) Balance allocated in proportion to initial investments Balance of income (los) Shares to the partners Plan (d) Net Income (loss) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners Total 83,334 5 0 0 $ 05 0 Watts Lyon Total 83,334 $ 0 0 0 $ 0 S 0 5
