Problem $12-2$A $($Algo$)$ Allocating partnership income and loss; sequential years LO P$2$

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 $$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 $1,$ $$16,000$ net loss; Year $2,$ $$40,000$

net income; and Year $3,$ $$66,667$ 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.

Note: 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.

Complete this question by entering your answers in the tabs below.

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.