Watts and Lyon are forming a partnership. Watts invests $36,000 and Lyon invests $54,000. The partners agree that Watts will work three-fourths of the total time devoted to the partnership and Lyon will work one-fourth. 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 $21,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $21,000 per year to Lyon, 12 % interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32,500 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 se 'Kue 's e d pue sassoj Jaua sanjeA aAa/sod se saouemolele aua) pauapisuo ag suejd unoj ano a (ejop ajouM asaueau a o amsue jeuy punoN "suoneinae pau puno ou og 'sanjen angebau Year 1 Year 2 Year 3 Complete the tables, one for each of the first three years, by showing how to allocate partnership income partners under each of the four plans being considered. Year 1 Plan (a) Watts Lyon Total Net Income (loss) $ (13,000) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $ (13,000) Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Watts Lyon Total Net Income (loss) S (13,000) Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Watts Plan (d) Lyon Total S (13,000) 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 Year 2> Year 1 Year 2 Year 3 Complete the tables, one for each of the first three years, by showing how to allocate partnership in partners under each of the four plans being considered. Year 2 Plan (a) Watts Lyon Total Net Income (loss) $ 32,500 Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $ 32,500 Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Total Watts Lyon Net Income (loss) $ 32,500 Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (d) Watts Total Lyon 32,500 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 Year 3>
