Business, 05.12.2019 17:31 frandariusscott

Watts and lyon are forming a partnership. watts invests $42,000 and lyon invests $63,000. the partners agree that watts will work one-third of the total time devoted to the partnership and lyon will work two-thirds. they have discussed the following alternative plans for sharing 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 $72,000 per year to lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $72,000 per year to lyon, 10% interest on their initial capital investments, and the remaining 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.

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Watts and lyon are forming a partnership. watts invests $42,000 and lyon invests $63,000. the partne...

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