Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions...

      

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Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $278,000, $314,000, and $208,000, respectively. They anticipate annual profit of $480,000 and are considering the following alternative plans of sharing profits and losses: a. Equally: b. In the ratio of their initial investments; or c. Salary allowances of $131,000 to Conway, $102,000 to Chan, and $77,000 to Scott and interest allowances of 10% on initial investments, with any remaining balance shared equally. Required: 1. Use the schedule to show how a profit of $480,000 would be distributed under each of the alternative plans being considered. (Enter all amounts as positive values.) Profit (Loss) Sharing Plan (a) (b) (c) Calculations Profit Profit Profit Salary allowances. Interest allowances Total salaries and interest allocation Balance of Profit Balance allocated equally Balance of Profit Shares of partners Share to Share to Share to Conway Chan Scott S $ 0 $ 0 $ 0 $ 0 $ 0 Total $ $ $ 480,000 0 0 $ $ 480,000 0 $ 0 0 $ 480,000 0 Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $278,000, $314,000, and $208,000, respectively. They anticipate annual profit of $480,000 and are considering the following alternative plans of sharing profits and losses: a. Equally: b. In the ratio of their initial investments; or c. Salary allowances of $131,000 to Conway, $102,000 to Chan, and $77,000 to Scott and interest allowances of 10% on initial investments, with any remaining balance shared equally. Required: 1. Use the schedule to show how a profit of $480,000 would be distributed under each of the alternative plans being considered. (Enter all amounts as positive values.) Profit (Loss) Sharing Plan (a) (b) (c) Calculations Profit Profit Profit Salary allowances. Interest allowances Total salaries and interest allocation Balance of Profit Balance allocated equally Balance of Profit Shares of partners Share to Share to Share to Conway Chan Scott S $ 0 $ 0 $ 0 $ 0 $ 0 Total $ $ $ 480,000 0 0 $ $ 480,000 0 $ 0 0 $ 480,000 0

Answer rating: 100% (QA)

SOLUTION 1 Profit Loss Sharing Plan a Equally Since they share the profit equally each partner will receive onethird of the total profit Profit distri... View the full answer