# Partnership Income or Loss Allocation## InstructionsTo allocate partnership income or loss to the partners under each of the four plans being considered, follow these steps:1. **Enter all allowances as positive values.**2. **Enter losses and capital deficits, if any, as negative values.**3. **Do not round intermediate calculations. Round the final answer to the nearest whole dollar.**## TaskComplete the following tables for each of the first three years (Year 1, Year 2, Year 3) to allocate partnership income or loss to the partners under the four plans being considered.## Allocation Tables### Year 1#### Plan (a)**Net Income (loss)**- Watts: [Input field]- Lyon: [Input field]**Balance allocated in proportion to initial investments**- Watts: [Input field]- Lyon: [Input field]**Balance of income (loss)**- Watts: [Input field]- Lyon: [Input field]**Shares to the partners**- Watts: [Input field]- Lyon: [Input field]#### Plan (b)**Net Income (loss)**- Watts: [Input field]- Lyon: [Input field]**Balance allocated in proportion to time devoted**- Watts: [Input field]- Lyon: [Input field]**Balance of income (loss)**- Watts: [Input field]- Lyon: [Input field]**Shares to the partners**- Watts: [Input field]- Lyon: [Input field]#### Plan (c)**Net Income (loss)**- Watts: [Input field]- Lyon: [Input field]**Salary allowances**- Watts: [Input field]- Lyon: [Input field]**Balance of income (loss)**- Watts: [Input field]- Lyon: [Input field]**Balance allocated in proportion to initial investments**- Watts: [Input field]- Lyon: [Input field]**Balance of income (loss)**- Watts: [Input field]- Lyon: [Input field]**Shares to the partners**- Watts: [Input field]- Lyon: [Input field]#### Plan (d)**Net Income (loss)**- Watts: [Input field]- Lyon: [Input field]**Salary allowances**- Watts: [Input field]- Lyon: [Input field]**Balance of income (loss)**- Watts: ### Partnership Formation: Watts and LyonWatts 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:1. **Plan (a)**: In the ratio of their initial capital investments.2. **Plan (b)**: In proportion to the time devoted to the business.3. **Plan (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.4. **Plan (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- **Year 3**: $54,167 net income### Assignment RequirementsComplete 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.**Instructions:**- 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.### Tables for Data EntryProvide data for each year under each plan:**Year 1**| Plan | | Plan (a) | | ||------------|-------|:--------:|------:|-------:|| | Watts | | Lyon | || Net Income (loss) | | | || Balance allocated in proportion to initial investments | | | || Balance of income (loss) | | | || Shares to the partners | | | || Plan (b) | | | || Net Income (loss) | | | || Balance of income (loss) | | | || Shares to the partners | | | |**Year 2**| Plan | | Plan (a) | | |

that Watts will work one-fourth of the total time devoted the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for shari 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 balan 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.

that Watts will work one-fourth of the total time devoted the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for shari 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 balan 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.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter6: Losses And Loss Limitations

Section: Chapter Questions

Problem 20P

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Can I please get help with this practice question 7.13 Watts and Lyon are forming a partnership. Watts invests $40,000 and Lyon invests $60,000. 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 $24,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $24,000 per year to Lyon, 9% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $16,000 net loss; Year 2, $40,000 net income; and Year 3, $66,667 net income. . Note: Enter all allowances as positive values. Enter losses and capital deficits, if any, as…
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Question 1. Vann and Jhane capital are P480000 and P520,000 respectively. Profit sharing ratio is 4:6. Tin invested P500,000 for a 30% interest in the partnership. What is the capital of Vann after admitting Tin? Question 2. In the AD partnership, Adam's capital is Php140,000 and David's is Php40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David2 to the partnership. David2 invests Php40,000 for a one-fifth interest in the total capital of Php220,000. What is the journal to record David's2 admission into the partnership? Question 3: In the AD partnership, Adam's capital is Php140,000 and David's is Php40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David2 to the partnership. David2 invests Php40,000 for a one-fifth interest in the total capital of Php220,000. What are the capital balances of David2 after being admitted into the partnership? Question 4: In the AD partnership, Adam's capital is Php140,000 and David's is…
The following condensed statement of financial position is presented for the partnership of Morales, Gamino, and Quito, who share profits and losses in the ratio of 4:3:3, PROFESSOR: NAME: SECTION: Problem #15 Determining a New Partner's Investment Cost respectively. Accounts Payable Morales, Capital Gamino, Capital Quito, Capital Total Liabilities and Capital P150,000 260,000 180,000 160,000 P750,000 P 40,000 710,000 Cash Other Assets Total Assets P750,000 Assume that the partnership decided to admit Abello as a new partner with a one- fourth interest. Required: For each of the following independent cases, determine the amount that Abello must contribute in cash or other assets: 1. No goodwill or bonus will be recorded. 2. A bonus of P24,000 is to be paid by Abello and allocated to the prior partners. 3. The partners agreed that total resulting capital should be P820,000 and no goodwill should be recognized. 4. Other assets are written down by P20,000 and a bonus of P40,000 is paid to…
es Watts and Lyon are forming a partnership. Watts invests $27,000 and Lyon invests $63,000. 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, 8% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $18,000 net loss; Year 2, $45,000 net income; and Year 3, $75,000 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…
For Industry H, determine each partner's share of income assuming the partners agree to share income by giving a $67,700 per year salary allowance to Price, a $126,100 per year salary allowance to Waterhouse, a $113,700 per year salary allowance to Coopers, a 15% interest on their initial capital investments, and the remaining balance shared equally. (Enter all allowances as positive values. Enter losses as negative values.) Important! Be sure to click the correct Industry at the top of the dashboard. Net income (loss) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares of each partner Initial partnership investments Net income Allocation of Partnership Income Price Total net income Total 0 Waterhouse $ $ PRICE, WATERHOUSE, AND COOPERS Statement of Partners' Equity For Year Ended December 31 Price Coopers 0 0 Waterhouse 0 0 0 $ For Industry H, prepare a statement of partners' equity for the…
Dylan Howell and Demond Nickles have decided to form a partnership. They have agreed that Howell is to invest $50,000 and that Nickles is to invest $75,000. Howell is to devote full time to the business, and Nickles is to devote one-half time. The following plans for the division of income are being considered:a. Equal divisionb. In the ratio of original investmentsc. In the ratio of time devoted to the businessd. Interest of 10% on original investments and the remainder in the ratio of 3:2e. Interest of 10% on original investments, salary allowances of $38,000 to Howell and $19,000 to Nickles, and the remainder equally.f. Plan (e), except that Howell is also to be allowed a bonus equal to 20% of the amount by which net income exceeds the total salary allowances Instructions For each plan, determine the division of the net income under each of the following assumptions:(1) net income of $420,000 and (2) net income of $150,000. Present the data in tabular form, using the following…
Required information Important Note! Before you start working on this problem, watch the Hint video. This video shows you exactly how to work this problem. [The following information applies to the questions displayed below.] ** Ramer and Knox began a partnership by investing $68,000 and $102,000, respectively. During its first year, the partnership earned $205,000. Prepare calculations showing how the $205,000 income is allocated under each separate plan for sharing Income and loss. Important Notel Before you start working on this problem, watch the Hint video. This video shows you exactly how to work this problem. 1. The partners did not agree on a plan, and therefore share Income equally Ramer Knox Show Transcribed Text
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Required information Important Notel Before you start working on this problem, watch the Hint video. This video shows you exactly how to work this problem. The following information applies to the questions displayed below] 5 Ramer and Knox began a partnership by investing $68,000 and $102,000, respectively. During its first year, the partnership earned $205,000. Prepare calculations showing how the $205,000 income is allocated under each separate plan for sharing income and loss. O Important Note! Before you start working on this problem, watch the Hint video. This video shows you exactly how to work this problem. 2. The partners agreed to share income and loss in proportion to their initial investments. Net Income is $205,000. (Do not round Intermediate calculations.) A $68.000/5170 000 Fraction to Allocate Ramers Share Fraction to Allocate Knox's Share of Total Income Allocated Show Transcribed Text I