Exposing this to me step by step how I you got 5850 Watts and Lyon are forming a partnership. Watts invests$40,500 and Lyon invests $49,500. The partners agreethat Watts will work one-fourth of the total time devoted tothe partnership and Lyon will work three-fourths. Theyhave discussed the following alternative plans for sharingincome and loss: (a) in the ratio of their initial capitalinvestments; (b) in proportion to the time devoted to thebusiness; (c) a salary allowance of $15,000 per year toLyon and the remaining balance in accordance with theratio of their initial capital investments; or (d) a salaryallowance of $15,000 per year to Lyon, 11% interest ontheir initial capital investments, and the remaining balanceshared equally. The partners expect the business toperform as follows: Year 1, $13,000 net loss; Year 2,$32,500 net income; and Year 3, $54,167 net income.Required:Complete the tables, one for each of the first three years,by showing how to allocate partnership income or loss tothe partners under each of the four plans beingconsidered. (Enter all allowances as positive values.Enter losses and capital deficits, if any, as negativevalues. Do not round intermediate calculations. Roundfinal answer to the nearest whole dollar.)Complete this question by entering your ansbelow.Year 1Year 2Year 3Complete the tables, one for each of the first threto allocate partnership income or loss to the partnfour plans being considered.Year 1Plan (a)WattsLyoNet Income (loss)Balance allocated in proportionto initial investments40,500/90,000(5,850) 49,500/90,000Balance of income (loss)Shares to the partners$ (5,850)11(7,1$(7,1 considered. (Enter all allowances as positive values.Enter losses and capital deficits, if any, as negativevalues. Do not round intermediate calculations. Roundfinal answer to the nearest whole dollar.)Complete this question by entering your ansbelow.Year 1Year 2Year 3Complete the tables, one for each of the first threto allocate partnership income or loss to the partnfour plans being considered.Year 1Plan (a)WattsLyoNet Income (loss)Balance allocated in proportionto initial investments40,500/90,000(5,850) 49,500/90,000✔ (7.1Balance of income (loss)Shares to the partners$ (5,850)$ (7.1Plan (b)WattsLyoNet Income (loss)Balance allocated in proportionto time devoted(9,7Balance of income (loss)Shares to the partners$ (9.7LyoPlan (c)Net Income (loss)Salary allowances$ 15,Balance of income (loss)Balance allocated in proportionto initial investments(15,4Balance of income (loss)Shares to the partners(4Plan (d)LyoNet Income (loss)Salary allowances$ 15,Balance of income (loss)Interest allowances$ 5,Balance of income (loss)Balance allocated equally(18,9Balance of income (loss)Shares to the partners1,1/4✓(3,250)✓$ (3,250)Watts$040,500/90,000✔ (12,600) 49,500/90,000✔$ (12,600)$Watts$0$ 4,455(18,950)✓3/4✔$ (14,495)$

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The partners working in partnership firm together shares the profits and losses on the basis of…