Question

Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $79,200, $308,000, and $492,800, respectively. They predict annual partnership net income of $519,000 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 $85,200 to Mo, $63,900 to Lu, and $96,500 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb. Required:Use the table to show how to distribute net income of $519,000 for the calendar year under each of the alternative plans being considered. Income(Loss) Sharing PlanPlan (a) Mo Lu Barb Total $519,000Balance allocated equity 1/3 $173,000 1/3 519.000 1/3 173.000 519,000 Balance of income(loss) $0Shares to the partners $173,000 173 000 173000 519,000 Plan (b) Mo Lu Barb TotalNet Income (loss) $519,000Balance allocated in proportion to initial investments 1/2 $46,710 1/2 181,650 1/2 $290,640 $519,000Balance of income (loss) Shares to the partners 1/2 $46,710 1/2 181,650 1/2 $290,640 $519,000

Answer 1

Answer:

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