Explain to me how you got 5850 as the answer for number a . did you subtract or multiply or divide or what I’m confused considered. (Enter all allowances as positive values.Enter losses and capital deficits, if any, as negativevalues. Do not round intermediate calculations. Roundfinal answer to the nearest whole dollar.)Complete this question by entering your ansbelow.Year 1Year 2Year 3Complete the tables, one for each of the first threto allocate partnership income or loss to the partnfour plans being considered.Year 1Plan (a)WattsLyoNet Income (loss)Balance allocated in proportionto initial investments40,500/90,000(5,850) 49,500/90,000✔ (7.1Balance of income (loss)Shares to the partners$ (5,850)$ (7.1Plan (b)WattsLyoNet Income (loss)Balance allocated in proportionto time devoted(9,7Balance of income (loss)Shares to the partners$ (9.7LyoPlan (c)Net Income (loss)Salary allowances$ 15,Balance of income (loss)Balance allocated in proportionto initial investments(15,4Balance of income (loss)Shares to the partners(4Plan (d)LyoNet Income (loss)Salary allowances$ 15,Balance of income (loss)Interest allowances$ 5,Balance of income (loss)Balance allocated equally(18,9Balance of income (loss)Shares to the partners1,1/4✓(3,250)✓$ (3,250)Watts$040,500/90,000✔ (12,600) 49,500/90,000✔$ (12,600)$Watts$0$ 4,455(18,950)✓3/4✔$ (14,495)$ Watts and Lyon are forming a partnership. Watts invests$40,500 and Lyon invests $49,500. The partners agreethat Watts will work one-fourth of the total time devoted tothe partnership and Lyon will work three-fourths. Theyhave discussed the following alternative plans for sharingincome and loss: (a) in the ratio of their initial capitalinvestments; (b) in proportion to the time devoted to thebusiness; (c) a salary allowance of $15,000 per year toLyon and the remaining balance in accordance with theratio of their initial capital investments; or (d) a salaryallowance of $15,000 per year to Lyon, 11% interest ontheir initial capital investments, and the remaining balanceshared equally. The partners expect the business toperform as follows: Year 1, $13,000 net loss; Year 2,$32,500 net income; and Year 3, $54,167 net income.Required:Complete the tables, one for each of the first three years,by showing how to allocate partnership income or loss tothe partners under each of the four plans beingconsidered. (Enter all allowances as positive values.Enter losses and capital deficits, if any, as negativevalues. Do not round intermediate calculations. Roundfinal answer to the nearest whole dollar.)Complete this question by entering your ansbelow.Year 1Year 2Year 3Complete the tables, one for each of the first threto allocate partnership income or loss to the partnfour plans being considered.Year 1Plan (a)WattsLyoNet Income (loss)Balance allocated in proportionto initial investments40,500/90,000(5,850) 49,500/90,000Balance of income (loss)Shares to the partners$ (5,850)11(7,1$(7,1

Appropriation of profit indicates the allocation of net profit or loss incurred (after deducting…

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 ans below. Year 1 Year 2 Year 3 Complete the tables, one for each of the first three to allocate partnership income or loss to the partn four plans being considered. Year 1 Plan (a) Watts Lyo Net Income (loss) Balance allocated in proportion to initial investments 40,500/90,000✔ (5,850) 49,500/90,000✔ (7.1 Balance of income (loss) Shares to the partners $ (5,850) $ (7.1 Plan (b) Watts Lyo Net Income (loss) Balance allocated in proportion to time devoted (9,7 Balance of income (loss) Shares to the partners $ (9,7 Lyo Plan (c) Net Income (loss) Salary allowances $ 15, Balance of income (loss) Balance allocated in proportion to initial investments (15,4 Balance of income (loss) Shares to the partners $ (4 Plan (d) Lyo Net Income (loss) Salary allowances $ 15, Balance of income (loss) Interest allowances $ 5, Balance of income (loss) Balance allocated equally (18,9 Balance of income (loss) Shares to the partners 1, 1/4 40,500/90,000✔ (3,250) $ (3,250) Watts $ 0 (12,600) 49,500/90,000 $ (12,600) Watts $ 0 $ 4,455 (18,950)✔ 3/4✓ $ (14,495) $

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q