Homework Help is Here – Start Your Trial Now!
Business
Accounting
ear 1 lan (a) et Income (loss) alance allocated in proportion to nitial investments Balance of income (loss) Shares to the partners Plan (b) Net Income (loss) Balance allocated in proportion to ime devoted Balance of income (loss) Shares to the partners 40,500/90,000 $ Watts $ 27,500 49,500/90,000 27,500 Watts 9,750 49,500/90,000 9,750 Wette $ $ Lyon 36,500 36,500 Lyon Lyon Total $(13,C 64, $(77,C $ 64, Total $(13,C 9. $ (22,7 9, SASA 0 $ Total

ear 1 lan (a) et Income (loss) alance allocated in proportion to nitial investments Balance of income (loss) Shares to the partners Plan (b) Net Income (loss) Balance allocated in proportion to ime devoted Balance of income (loss) Shares to the partners 40,500/90,000 $ Watts $ 27,500 49,500/90,000 27,500 Watts 9,750 49,500/90,000 9,750 Wette $ $ Lyon 36,500 36,500 Lyon Lyon Total $(13,C 64, $(77,C $ 64, Total $(13,C 9. $ (22,7 9, SASA 0 $ Total

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Year 1 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 (loss) Shares to the partners Plan (c) Net Income (loss) Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) 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) 40,500/90,000 40,500/90,000 $ $ Watts $ 27,500 49,500/90,000 27,500 Watts 9,750 49,500/90,000 9,750 Watts 7,875 49,500/90,000 7,875 Watts $ 4,455 3,800 $ $ $ $ $ $ Lyon 36,500 36,500 $ Lyon Lyon 0 15,000 9,625 24,625 Lyon Total $ (13,000) 64,000 $ (77,000) 64,000 Total $ (13,000) 9,750 $ (22,750) $ 9,750 Total $ (13,000) 15,000 17,500 $ (17,500) $ 32,500 Total $ (13,000) 15,000 17,500 9,900 7,600 7,600 0 15,000 5,445 3,800 $
Transcribed Image Text:Year 1 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 (loss) Shares to the partners Plan (c) Net Income (loss) Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) 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) 40,500/90,000 40,500/90,000 $ $ Watts $ 27,500 49,500/90,000 27,500 Watts 9,750 49,500/90,000 9,750 Watts 7,875 49,500/90,000 7,875 Watts $ 4,455 3,800 $ $ $ $ $ $ Lyon 36,500 36,500 $ Lyon Lyon 0 15,000 9,625 24,625 Lyon Total $ (13,000) 64,000 $ (77,000) 64,000 Total $ (13,000) 9,750 $ (22,750) $ 9,750 Total $ (13,000) 15,000 17,500 $ (17,500) $ 32,500 Total $ (13,000) 15,000 17,500 9,900 7,600 7,600 0 15,000 5,445 3,800 $
Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. 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 $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 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, $13,000 net loss; Year 2, $32,500 net income; and Year 3, $54,167 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 as positive values. Enter losses and capital deficits, if any, 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 Plan (a) Watts Lyon Total $ (13,000) Net Income (loss) Balance allocated in proportion to initial investments 40,500/90,000 27,500 49,500/90,000 64,000 Balance of income (loss) $ (77,000) Shares to the partners $ 64,000 Plan (b) Total (13,000) Net Income (loss) Balance allocated in proportion to 0.750 $ 27,500 Watts 0.750 40 0000 000 $ 36,500 36,500 Lyon $
Transcribed Image Text:Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. 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 $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 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, $13,000 net loss; Year 2, $32,500 net income; and Year 3, $54,167 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 as positive values. Enter losses and capital deficits, if any, 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 Plan (a) Watts Lyon Total $ (13,000) Net Income (loss) Balance allocated in proportion to initial investments 40,500/90,000 27,500 49,500/90,000 64,000 Balance of income (loss) $ (77,000) Shares to the partners $ 64,000 Plan (b) Total (13,000) Net Income (loss) Balance allocated in proportion to 0.750 $ 27,500 Watts 0.750 40 0000 000 $ 36,500 36,500 Lyon $
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Classification of Stocks
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS