Bill Beck, Bruce Beck, and Barb Beck formed the BBB Partnership by making capital contributions of $67,500, $262,500, and $420,000, respectively. They predict annual partnership net income of $450,000 and are considering the following alternative plans of sharing income and loss: (a) Equally; (b) In the ratio of their initial capital investments; (c) Salary allowances of $80,000 to Bill, $60,000 to Bruce, and $90,000 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Bill, 40% to Bruce, and 40% to Barb.
Required 1. Prepare a table with the following column headings.
Use the table to show how to distribute net income of $ 450,000 for the calendar year under each of the alternative plans being considered. (Round answers to the nearest whole dollar.) 2. Prepare a statement of partners’ equity showing the allocation of income to the partners assuming they agree to use plan (c), that income earned is $ 209,000, and that Bill, Bruce, and Barb withdraw $ 34,000, $ 48,000, and $ 64,000, respectively, at year- end. 3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $ 209,000. Also close the withdrawalsaccounts.