# 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…
Please I want answer for these questions. Big thanks Salim and Rashid form a partnership, investing OR 80,000 and OR 120,000, respectively. Required: Determine their shares of net income: Net income is OR 60,000. The first OR 30,000 is shared on the basis of partner capital balances. The next OR 20,000 is based on partner services, with Salim getting 40% and Rashid 60%. The remainder is shared equally. How can partnership profits and losses be allocated.
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…
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TOPIC: LUMPSUM LIDUATION (PARTNERSHIP) SHOW YOUR COMPUTATION, 1. Jack, Jill, Dick and Jane are partners with capitals of P 22,000, P 20,600, P 27,400 and P 18,000 respectively. Jack has a loan balance of P 4,000. Profits and losses are shared 40%; 30%; 20%; 10% by Jack, Jill, Dick and Jane respectively. Assuming assets were sold and liabilities paid and the balance of cash showed P 24,000. Prepare a schedule showing how the P 24,000 will be distributed to the partners. 2. The partnership accounts of Guess, Jag and Levis are shown below as of December 31, 2019. Profits and losses are shared 50%; 30%; and 20%, respectively. Guess, Drawing (debit balance) P (32,000) Levis, Drawing (debit balance) (12,000) Jag, Loan 40,000 Guess, Capital 164,000 Jag, Capital 134,000 Levis, Capital 144,000 Total assets amounted to P 638,000, including cash of P 70,000, and P 200,000 worth of liabilities. On January 2019, the partnership was liquidated, and Jag…