Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 1

Irene Watts and John Lyon are forming a partnership to which Watts will devote one-half time and Lyon will devote full time. They have discussed the following alternative plans for sharing income and loss: ( a ) in the ratio of their initial capital investments, which they have agreed will be $42,000 for Watts and $63,000 for Lyon; ( b ) in proportion to the time devoted to the business; ( c ) a salary allowance of $6,000 per month to Lyon and the balance in accordance with the ratio of their initial capital investments; or ( d ) a salary allowance of $6,000 per month to Lyon, 10% interest on their initial capital investments, and the balance shared equally. The partners expect the business to perform as follows: year 1, $36,000 net loss; year 2, $90,000 net income; and year 3, $150,000 net income.
Required
Prepare three tables with the following column headings.