Year 1Plan (a)Net Income (loss)Balance allocated in proportion toinitial investmentsBalance of income (loss)Shares to the partnersPlan (b)Net Income (loss)Balance allocated in proportion totime devotedBalance of income (loss)Shares to the partnersPlan (c)Net Income (loss)Salary allowancesBalance of income (loss)Balance allocated in proportion toinitial investmentsBalance of income (loss)Shares to the partnersPlan (d)Net Income (loss)Salary allowancesBalance of income (loss)Interest allowancesBalance of income (loss)Balance allocated equallyBalance of income (loss)40,500/90,00040,500/90,000$$Watts$27,500 49,500/90,00027,500Watts9,750 49,500/90,0009,750Watts7,875 49,500/90,0007,875Watts$ 4,4553,800$$$$$$Lyon36,50036,500 $LyonLyon015,0009,62524,625LyonTotal$ (13,000)64,000$ (77,000)64,000Total$ (13,000)9,750$ (22,750)$9,750Total$ (13,000)15,00017,500$ (17,500)$ 32,500Total$ (13,000)15,00017,5009,9007,6007,600015,0005,4453,800$ Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. The partners agree that Watts will workone-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternativeplans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to thebusiness; (c) a salary allowance of $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initialcapital investments; or (d) a salary allowance of $15,000 per year to Lyon, 11% interest on their initial capital investments, and theremaining balance shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32,500net income; and Year 3, $54,167 net income.Required:Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners undereach of the four plans being considered. (Enter all allowances as positive values. Enter losses and capital deficits, if any, asnegative values. Do not round intermediate calculations. Round final answer to the nearest whole dollar.)Complete this question by entering your answers in the tabs below.Year 1Year 2Year 3Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to thepartners under each of the four plans being considered.Year 1Plan (a)WattsLyonTotal$ (13,000)Net Income (loss)Balance allocated in proportion toinitial investments40,500/90,00027,500 49,500/90,00064,000Balance of income (loss)$ (77,000)Shares to the partners$ 64,000Plan (b)Total(13,000)Net Income (loss)Balance allocated in proportion to0.750$ 27,500Watts0.75040 0000 000$36,50036,500Lyon$

ear 1 lan (a) et Income (loss) alance allocated in proportion to nitial investments Balance of income (loss) Shares to the partners Plan (b) Net Income (loss) Balance allocated in proportion to ime devoted Balance of income (loss) Shares to the partners 40,500/90,000 $ Watts $ 27,500 49,500/90,000 27,500 Watts 9,750 49,500/90,000 9,750 Wette $ $ Lyon 36,500 36,500 Lyon Lyon Total $(13,C 64, $(77,C $ 64, Total $(13,C 9. $ (22,7 9, SASA 0 $ Total

ear 1 lan (a) et Income (loss) alance allocated in proportion to nitial investments Balance of income (loss) Shares to the partners Plan (b) Net Income (loss) Balance allocated in proportion to ime devoted Balance of income (loss) Shares to the partners 40,500/90,000 $ Watts $ 27,500 49,500/90,000 27,500 Watts 9,750 49,500/90,000 9,750 Wette $ $ Lyon 36,500 36,500 Lyon Lyon Total $(13,C 64, $(77,C $ 64, Total $(13,C 9. $ (22,7 9, SASA 0 $ Total

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 2PA: Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances...

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Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances prior to Tammys admission are $50,000 each. Prepare a schedule showing how the bonus should be divided among the three, assuming the profit or loss agreement will be 1:3 once Tammy has been admitted and her contribution is: A. $20,000 B. $80,000 C. $50,000. In addition, show the resulting journal entries to each of the three partners capital accounts.
Watts and Lyon are forming a partnership. Watts invests $36,000 and Lyon invests $54,000. 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 $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, 12% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $15,000 net loss; Year 2, $37,500 net income; and Year 3, $62,500 net income.
Watts and Lyon are forming a partnership. Watts invests $36,000 and Lyon invests $54,000. 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 $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, 12% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $15,000 net loss; Year 2, $37,500 net income; and Year 3, $62,500 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…
Watts and Lyon are forming a partnership. Watts invests $24,500 and Lyon invests $45,500. 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: (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, 9% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $17,000 net loss; Year 2, $42,500 net income; and Year 3, $70,833 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…
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…
Watts 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: (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 balance 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. 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…
Watts 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: (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 balance 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. 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…
Watts and Lyon are forming a partnership. Watts invests $42,000 and Lyon invests $63,000. The partners agree that Watts will work one-third of the total time devoted to the partnership and Lyon will work twothirds. 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 $72,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $72,000 per year to Lyon, 10% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $36,000 net loss; Year 2, $90,000 net income; and Year 3, $150,000 net income. Required Prepare three tables with the following column headings. Complete the tables, one for each of the first three years, by showing how to allocate…
Bums and Allan have formed a partnership and invested $20,000 and $40,000, respectively. They have agreed to share profits as follows: 1) Burns is to reccivé a "salary" of $20,000 and Allan is to receive a "salary" of $30,000. 2) $30,000 is to be allocated according to their original capital contributions to the partnership. 3) The remainder is to be allocated 2:3 respectively Assuming that the business had a loss of $15.000, allocate the loss to Burns and Allan, Ending capital balances to each partner?
Cook, Jing, and Schwartz formed the CJS Partnership by making investments of $144,000, $216,000, and $120,000, respectively. They predict annual partnership net income of $240,000 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $40,000 to Cook, $30,000 to Jing, and $80,000 to Schwartz; interest allowances of 12% on their initial capital investments; and the remaining balance shared equally. Required 1.how to distribute net income of $240,000 for the calendar year under each of the alternative plans being considered.
The ABC Partnership agreement provides for guaranteed payments for services rendered of $70,000, $64,000, and $60,000 for Adam, Brian, and Cynthia, respectively. After the guaranteed payments are deducted, the partnership agreement calls for sharing of profits and losses as follows: Adam – 40%, Brian – 35%; Cynthia – 25%. Each partner is a general partner. If net profits before the guaranteed payments are $176,000, what amount of income from the partnership should each partner report on his or her individual income tax return (what amount for each partner is subject to self-employment tax)?
Determine the net income to be allocated to each partner. Danger and Tol formed a partnership with capital contributions of $150,000 and $180,000, respectively. Their partnership agreement called for Danger to receive a $60,000 annual salary allowance. They also agreed to allow each partner an interest allowance equal to 10% of their initial capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $120,000, what are Danger's and Tol's respective shares? Danger Allocated Net Income Tol