# Question & Answer: newconnectmheducation.com/flow/connecthtml 顛☆ pter 12 Partnership Income or Loss G Saved Help Save & Exi 3 Chec Problem 12-2A Allocating partnershi…..

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newconnectmheducation.com/flow/connecthtml 顛☆ pter 12 Partnership Income or Loss G Saved Help Save & Exi 3 Chec Problem 12-2A Allocating partnership income and loss; sequential years LO P2 and John Lyon are forming a partnership to which Wtts will devote one-fourth time and Lyon will devote full time. They discussed the followin g alternative plans for sharing income and loss: in the ratio of their initial capital investments, which they ts for Watts and \$63,000 for Lyon; (b) in proportion to the time devoted to the business, (c a salary per month to Lyon and the balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of \$1,750 per month to Lyon, 12% interest on their initial capital investments, and the balance shared equally. The partners expect the business to perform as follows: year 1, \$13,000 net loss; year 2, \$32,500 net income; and year 3, \$54,167 net income eBook Print ferences 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 as positive values. Enter losses as 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 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. Year 1 cation here to search

 Year 1 Part (a) Watts Lyon Total Net Income/(loss) (\$13,000) Balance allocated in proportion to initial investment 27000/100000*-13000 -3510 63000/100000*-13000 -8190 13000 Balance of income/(loss) 0 Share to partners -3510 -8190 (\$13,000) Plan b Net Income/(loss) (\$13,000) Balance allocated in proportion to time devoted -13000*.25/1.25 -2600 -13000*1/1.25 -10400 13000 Balance of income/(loss) 0 Share to partners -2600 -10400 (\$13,000) Plan c Net Income/(loss) -13000 Salary Allowance 1750*12 21000 -21000 Balance of income/(loss) -34000 Balance allocated in proportion to initial investment 30%*-34000 -10200 70%*-34000 -23800 -34000 Balance of income/(loss) 0 Share to partners -10200 -2800 -13000 Plan d Net Income/(loss) -13000 Salary Allowance 1750*12 21000 -21000 Balance of income/(loss) -34000 Interest alowances 3240 7560 -10800 Balance of income/(loss) -44800 balance allocated equally 50%*-44800 -22400 50%*-44800 -22400 44800 Balance of income/(loss) 0 Watts Lyon Initial investment % 30 70 27/90*100 63/90*100 Interest 3240 7560 27000*12% 63000*12% Year 2 Part (a) Watts Lyon Total Net Income/(loss) \$32,500 Balance allocated in proportion to initial investment 32500*30% \$9,750 32500*70% \$22,750 (\$32,500) Balance of income/(loss) 0 Share to partners 9750 22750 \$32,500 Plan b Net Income/(loss) \$32,500 Balance allocated in proportion to time devoted 32500*.25/1.25 6500 32500*1/1.25 26000 (\$32,500) Balance of income/(loss) 0 Share to partners 6500 26000 \$32,500 Plan c Net Income/(loss) 32500 Salary Allowance 1750*12 21000 -21000 Balance of income/(loss) 11500 Balance allocated in proportion to initial investment 30%*11500 3450 70%*11500 8050 11500 Balance of income/(loss) 0 Share to partners 3450 29050 32500 Plan d Net Income/(loss) 32500 Salary Allowance 1750*12 21000 -21000 Balance of income/(loss) 11500 Interest alowances 3240 7560 -10800 Balance of income/(loss) 700 balance allocated equally 50%*700 350 50%*700 350 -700 Balance of income/(loss) 0 Share to partners 3590 28910 32500 Year 3 Part (a) Watts Lyon Total Net Income/(loss) \$54,167 Balance allocated in proportion to initial investment 54167*30% \$16,250 54167*70% \$37,917 (\$54,167) Balance of income/(loss) 0 Share to partners 16250 37917 54167 Plan b Net Income/(loss) \$54,167 Balance allocated in proportion to time devoted 54167*.25/1.25 \$10,833 54167*1/1.25 \$43,334 (\$54,167) Balance of income/(loss) 0 Share to partners 10833 43334 \$54,167 Plan c Net Income/(loss) \$54,167 Salary Allowance 1750*12 21000 -21000 Balance of income/(loss) 33167 Balance allocated in proportion to initial investment 30%*33167 9950 70%*33167 23217 33167 Balance of income/(loss) 0 Share to partners 9950 44217 54167 Plan d Net Income/(loss) \$54,167 Salary Allowance 1750*12 21000 -21000 Balance of income/(loss) 33167 Interest alowances 3240 7560 -10800 Balance of income/(loss) 22367 balance allocated equally 50%*22367 11184 50%*22367 11184 -22367 Balance of income/(loss) 0 Share to partners 14424 39744 54167