can you decide which proposal is better using the information and proposal options from the picture for my homework please You, yes you, are an accountant with Debits and Credits, LLP, a small accounting firm. Alyssaapproaches you for some advice about a partnership. Five years ago, Joy and Alyssa formed apartnership which operated under the name IT Connections. Their capital contributions were $100 000each. They shared profits based on a fixed drawings and percentage method. Joy's fixed drawingswere $25 000 and Alyssa's were $35 000. Any excess profits or any losses were divided equallybetween the two partners.Alyssa has expressed displeasure with the way profits and losses are being divided. The agreementdoes not take into consideration their capital balances, which have changed because of investmentsand withdrawals by each of them. Joy has withdrawn more from the partnership than Alyssa has overthe five years. Their current capital balances are:JoyAlyssa$220 000$315 000Joy put forward two proposals to attempt to solve the problem.Proposal 1The following is a summary of the first option of a new proposed income ratio:a. The fixed salary allowance would be changed, Joy and Alyssa would receive $35 000 and $50000, respectively;b. Interest of 6% would be allowed on the capital balances at the beginning of each year. The fiscalyear of the partnership ends on December 31 of each year;c. Any excess profits would be split equally.Proposal 2The following is a summary of the second option of a new proposed income ratio:a. There would be no fixed drawings, and the profits would be based solely on a percentage. Joywould receive 40% and Alyssa would receive 60% of the net income/loss.Alyssa has asked for your advice on the proposals and has suggested that net income for the nextthree years should be $90 000, $150 000 and $200 000 **(this is for both proposals)**.Roguirod

Under Proposal 1. Income Statement Years Ist 2nd 3rd Net Income Given 90000 150000 200000…

Joy Alyssa $220 000 $315 000 Joy put forward two proposals to attempt to solve the problem. Proposal 1 The following is a summary of the first option of a new proposed income ratio: a. The fixed salary allowance would be changed, Joy and Alyssa would receive $35 000 and $50 000, respectively; b. Interest of 6% would be allowed on the capital balances at the beginning of each year. The fiscal year of the partnership ends on December 31 of each year; c. Any excess profits would be split equally. Proposal 2 The following is a summary of the second option of a new proposed income ratio: a. There would be no fixed drawings, and the profits would be based solely on a percentage. Joy would receive 40% and Alyssa would receive 60% of the net income/loss. Alyssa has asked for your advice on the proposals and has suggested that net income for the next throo un uld bo 00 000 150 000 and 9200 0 00

Joy Alyssa $220 000 $315 000 Joy put forward two proposals to attempt to solve the problem. Proposal 1 The following is a summary of the first option of a new proposed income ratio: a. The fixed salary allowance would be changed, Joy and Alyssa would receive $35 000 and $50 000, respectively; b. Interest of 6% would be allowed on the capital balances at the beginning of each year. The fiscal year of the partnership ends on December 31 of each year; c. Any excess profits would be split equally. Proposal 2 The following is a summary of the second option of a new proposed income ratio: a. There would be no fixed drawings, and the profits would be based solely on a percentage. Joy would receive 40% and Alyssa would receive 60% of the net income/loss. Alyssa has asked for your advice on the proposals and has suggested that net income for the next throo un uld bo 00 000 150 000 and 9200 0 00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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