that Watts will work one-fourth of the total time devoted the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for shari 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 $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 per year to Lyon, 11% interest on their initial capital investments, and the remaining balan shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32.500 net income: and Year 3. $54.167 net income.
that Watts will work one-fourth of the total time devoted the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for shari 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 $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 per year to Lyon, 11% interest on their initial capital investments, and the remaining balan shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32.500 net income: and Year 3. $54.167 net income.
Chapter20: Corporations And Partnerships
Section: Chapter Questions
Problem 55P
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