Will Beck, Trevor Beck, and Barb Beck formed the BBB Partnership by making capital contributions of $142,500, $118,750, and $213,750, respectively. They predict annual partnership net income of $210,000 and are considering the following alternative plans of sharing income and loss:
(a) Equally;
(b) In the ratio of their initial capital investments; or
(c) Salary allowances of $38,000 to Will, $28,000 to Trevor, and $43,000 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared equally.
Required
1. Prepare a table with the following column headings.

Use the table to show how to distribute net income of $210,000 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 $87,500, and that Will, Trevor, and Barb withdraw $18,000, $25,000, and $34,000, 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 $87,500. Also close the withdrawalsaccounts.

Income (Loss) Sharing Plan Calculations Will Trevor Barb Total