Question
In: Accounting
Watts and Lyon are forming a partnership. Watts invests $31,500 and Lyon invests $58,500. The partners...
Watts and Lyon are forming a partnership. Watts invests $31,500
and Lyon invests $58,500. 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 $21,000 per year to Lyon and the remaining
balance in accordance with the ratio of their initial capital
investments; or (d) a salary allowance of $21,000 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, $19,000 net loss; Year 2, $47,500
net income; and Year 3, $79,167 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 the four plans being 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.)
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Irene Watts and John Lyon are forming a partnership to which Watts will devote one-half time...
Irene Watts and John Lyon are forming a partnership to which
Watts will devote one-half time and Lyon will devote full time.
They have discussed the following alternative plans for sharing
income and loss: (a) in the ratio of their initial capital
investments, which they have agreed will be $40,000 for Watts and
$60,000 for Lyon; (b) in proportion to the time devoted to
the business; (c) a salary allowance of $1,750 per month
to Lyon and the balance in...
Irene Watts and John Lyon are forming a partnership to which Watts will devote one-half time...
Irene Watts and John Lyon are forming a partnership to which
Watts will devote one-half time and Lyon will devote full time.
They have discussed the following alternative plans for sharing
income and loss: (a) in the ratio of their initial capital
investments, which they have agreed will be $42,000 for Watts and
$63,000 for Lyon; (b) in proportion to the time devoted to
the business; (c) a salary allowance of $6,000 per month
to Lyon and the balance in...
Irene Watts and John Lyon are forming a partnership to which Watts will devote one-half time...
Irene Watts and John Lyon are forming a partnership to which
Watts will devote one-half time and Lyon will devote full time.
They have discussed the following alternative plans for sharing
income and loss: (a) in the ratio of their initial capital
investments, which they have agreed will be $31,500 for Watts and
$38,500 for Lyon; (b) in proportion to the time devoted to the
business; (c) a salary allowance of $2,250 per month to Lyon and
the balance in...
Irene Watts and John Lyon are forming a partnership to which Watts will devote one-half time...
Irene Watts and John Lyon are forming a partnership to which
Watts will devote one-half time and Lyon will devote full time.
They have discussed the following alternative plans for sharing
income and loss: (a) in the ratio of their initial capital
investments, which they have agreed will be $31,500 for Watts and
$38,500 for Lyon; (b) in proportion to the time devoted to the
business; (c) a salary allowance of $2,250 per month to Lyon and
the balance in...
5/ Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market...
5/ Fontaine and Monroe are forming a partnership. Fontaine
invests a building that has a market value of $356,000; the
partnership assumes responsibility for a $128,000 note secured by a
mortgage on the property. Monroe invests $103,000 in cash and
equipment that has a market value of $78,000. For the partnership,
the amounts recorded for total assets and for total capital account
are:
Multiple Choice
Total assets $409,000; total capital $537,000.
Total assets $409,000; total capital $409,000.
Total assets $665,000;...
1. fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market...
1. fontaine and Monroe are forming a partnership. Fontaine
invests a building that has a market value of $356,000; the
partnership assumes responsibility for a $128,000 note secured by a
mortgage on the property. Monroe invests $103,000 in cash and
equipment that has a market value of $78,000. For the partnership,
the amounts recorded for total assets and for total capital account
are:
2. Fontaine and Monroe are forming a partnership. Fontaine
invests a building that has a market value...
A partnership is formed between partners A and B. A invests cash of $100,000, and B...
A partnership is formed between partners A and B. A invests cash
of $100,000, and
B invests several assets with the following book and fair
values. These assets are:
1.Office space with book and fair values of $40,000 and $60,000
respectively.
2. Office furniture and equipment with book and fair values of
$30,000 and
$20,000 respectively.
3. Accounts Receivable with book and fair values of $20,000 and
$18,000
respectively.
Each partners account is to be credited with 5% of their...
Problem 12-2A Allocating partnership income and loss; sequential years LO P2 Irene Watts and John Lyon...
Problem 12-2A Allocating partnership income and loss; sequential
years LO P2
Irene Watts and John Lyon are forming a partnership to which
Watts will devote one-fourth time and Lyon will devote full time.
They have discussed the following alternative plans for sharing
income and loss: (a) in the ratio of their initial capital
investments, which they have agreed will be $32,000 for Watts and
$48,000 for Lyon; (b) in proportion to the time devoted to
the business; (c) a salary...
Imagine that you are forming a partnership with two other partners. All three of you have...
Imagine that you are forming a partnership with two other
partners. All three of you have cash to invest in the business as
well as skills to contribute. Two of your partners will provide
services, along with investing cash.
Are there any details you think should be included in the
partnership agreement? What disadvantages should you be aware of
when forming a partnership?
How will you allocate income or loss? Will you also include a
salary allowance for the partners...
Partners in the ABCD Partnership decided to dissolve their partnership. On that date, the partners had...
Partners in the ABCD Partnership decided to dissolve their
partnership. On that date, the partners had the following
pre-liquidation capital balances:
Partner A
$28,000
Partner B
41,000
Partner C
18,000
Partner D
12,000
A, B, C, and D share residual profits and losses in a 4:3:2:1
ratio.
Liabilities at the date of dissolution total $100,000, and
noncash assets equal $105,000. During the first month of
liquidation, assets having a book value of $55,000 were sold for
$31,000. During the second...
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