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 negative values. Do not round intermediate calculations. Round final answer to the nearest whole dollar. 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 Net Income (loss) $(16,000) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $(16,000) Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Watts Lyon Total Net Income (loss) $(16,000) Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (d) Watts Lyon Total Net Income (loss) $(16,000) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners 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 2 Plan (a) Watts Lyon Total Net Income (loss) $40,000 Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $40,000 Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Watts Lyon Total Net Income (loss) $40,000 Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (d) Watts Lyon Total Net Income (loss) $40,000 Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners 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. 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 3 Plan (a) Watts Lyon Total Net Income (loss) $66,667 Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $66,667 Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Watts Lyon Total Net Income (loss) $66,667 Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (d) Watts Lyon Total Net Income (loss) $66,667 Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners

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 negative values. Do not round intermediate calculations. Round final answer to the nearest whole dollar. 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 Net Income (loss) $(16,000) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $(16,000) Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Watts Lyon Total Net Income (loss) $(16,000) Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (d) Watts Lyon Total Net Income (loss) $(16,000) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners 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 2 Plan (a) Watts Lyon Total Net Income (loss) $40,000 Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $40,000 Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Watts Lyon Total Net Income (loss) $40,000 Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (d) Watts Lyon Total Net Income (loss) $40,000 Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners 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. 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 3 Plan (a) Watts Lyon Total Net Income (loss) $66,667 Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (b) Watts Lyon Total Net Income (loss) $66,667 Balance allocated in proportion to time devoted Balance of income (loss) Shares to the partners Plan (c) Watts Lyon Total Net Income (loss) $66,667 Salary allowances Balance of income (loss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (d) Watts Lyon Total Net Income (loss) $66,667 Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares to the partners

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

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 negative values. Do not round intermediate calculations. Round final answer to the nearest whole dollar.

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
Net Income (loss)		$(16,000)
Balance allocated in proportion to initial investments
Balance of income (loss)
Shares to the partners
Plan (b)	Watts		Lyon	Total
Net Income (loss)		$(16,000)
Balance allocated in proportion to time devoted
Balance of income (loss)
Shares to the partners
Plan (c)	Watts		Lyon	Total
Net Income (loss)		$(16,000)
Salary allowances
Balance of income (loss)
Balance allocated in proportion to initial investments
Balance of income (loss)
Shares to the partners
Plan (d)	Watts		Lyon	Total
Net Income (loss)		$(16,000)
Salary allowances
Balance of income (loss)
Interest allowances
Balance of income (loss)
Balance allocated equally
Balance of income (loss)
Shares to the partners

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 2
Plan (a)	Watts		Lyon	Total
Net Income (loss)		$40,000
Balance allocated in proportion to initial investments
Balance of income (loss)
Shares to the partners
Plan (b)	Watts		Lyon	Total
Net Income (loss)		$40,000
Balance allocated in proportion to time devoted
Balance of income (loss)
Shares to the partners
Plan (c)	Watts		Lyon	Total
Net Income (loss)		$40,000
Salary allowances
Balance of income (loss)
Balance allocated in proportion to initial investments
Balance of income (loss)
Shares to the partners
Plan (d)	Watts		Lyon	Total
Net Income (loss)		$40,000
Salary allowances
Balance of income (loss)
Interest allowances
Balance of income (loss)
Balance allocated equally
Balance of income (loss)
Shares to the partners

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 3
Plan (a)	Watts		Lyon	Total
Net Income (loss)		$66,667
Balance allocated in proportion to initial investments
Balance of income (loss)
Shares to the partners
Plan (b)	Watts		Lyon	Total
Net Income (loss)		$66,667
Balance allocated in proportion to time devoted
Balance of income (loss)
Shares to the partners
Plan (c)	Watts		Lyon	Total
Net Income (loss)		$66,667
Salary allowances
Balance of income (loss)
Balance allocated in proportion to initial investments
Balance of income (loss)
Shares to the partners
Plan (d)	Watts		Lyon	Total
Net Income (loss)		$66,667
Salary allowances
Balance of income (loss)
Interest allowances
Balance of income (loss)
Balance allocated equally
Balance of income (loss)
Shares to the partners

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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.