Question: Mo, Lu, and Barb formed the MLB Partnership by making investments of $72.900, $283,500, and $453,600, respectively, They predict annual partnership net income of $481,500


Mo, Lu, and Barb formed the MLB Partnership by making investments of $72.900, $283,500, and $453,600, respectively, They predict annual partnership net income of $481,500 and are considering the following alternative plans of sharing income and loss: (a) equally. (b) in the ratio of their initial capital investments, or (0 salary allowances of $82.400 to Mo, $61,800 to Lu, and $93,000 to Barb: interest allowances of 10% on their initial capital investments; and the remaining balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb. Income (Loss) Sharing Plan Mo LU 1/3 s 160,500 1/35 160,500 187 $ 160.500 5 $ 5 160 500 160,500 Mo 160,500 LU Barh $72.900/5810,000 $ 43,335 $283,500/5810,000 $ 168,525 5453,600/10 10,000 $ 269.640 Plan (a) Net Income (loss) Balance allocated equally Balance of income (loss) Shares to the partners Plan (b) Net Income (oss) Balance allocated in proportion to initial investments Balance of income (loss) Shares to the partners Plan (c) Net income (los) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated Balance of income (loss) Shares of the partners $ $ 43,335 $ 209.540S 168,525 Lu Mo $ $ 82,400 93000 61,800 93.000 $ 5 61,800 $ 82,400 Total $ 481,500 481,500 $ 0 $ 481,500 Total $ 481,500 481,500 $ 0 $ 481,500 Total $ 481,500 (237,200) 244,300 0 0 0 $ $ $ 237,200
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