Bill Beck, Bruce Beck and Barb Beck formed the BBB Partnership by making capital contributions of $67,500, $262,500 and $420,000, respectively. The predict annual partnership net income of $450,000 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 $80,000 to Bill, $60,000 to Bruce, and $90,000 to Barb; interest allowances of 10% on their initial capital investments; and balance shared as follows; 20% to Bill, 40% to Bruce, and 40% to Barb.
Required:
1. Prepare a table with the following column headings. Use the table to show how to distribute net income of $450,000 for the calendar year under each of the alternative plans being considered(Round answers to the nearest whole dollar).
2. Prepare a statement of Partners' equity showing the allocation of income to the partners assuming they agree to use plan(c), that income earned is$209,000, and that Bill, Bruce and Barb withdraw $34,000, 48,000, and $64,000 respectively at year end.
3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $209,000. Also close the withdrawals accounts.