Irma Watts and John Lyon are forming a partnership

P12-2A Allocating partnership income and loss; sequential years L.O. P2 

(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:

Complete the tables, one for each of the first three years, by showing how to allocate partnership income or