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Early in 2018, the partners of Fitz, Leu and Wen sought your assistance to help with their partnership accounting. They began the new business in 2017 but did not hire a professional accountant to help them. Fitz and Leu began the partnership contributing $170,000 and $120,000 in cash, respectively. Fitz was to work occasionally at the business, and Leu was to be employed full-time. They decided that year-end profits and losses should be assigned as follows: 1. Each partner was to be allocated 8% interest computed on the beginning capital balances for the period. 2. A compensation allowance of $8,000 was to go to Fitz with a $45,000 amount assigned to Leu. 3. Any remaining income would be split on a 6:4 basis to Fitz and Leu, respectively. In 2017, revenues totaled $642,000 and expenses were $480,000 (not including the partners' compensation allowance). Fitz withdrew cash of $11,000 during the year, and Leu took out $50,000. In addition, the business paid $9,000 for repairs made to Fitz's home and charged it to Repair Expense. On January 1, 2018, the partnership sold a 20% interest to Wen for $110,000 cash. This money was contributed to the business with the bonus method used for accounting purposes. Answer the following: 1. Prepare a worksheet for 2017 showing the investment of Fitz and Leu, the partners' allocations during the year, the allocation of net income, the partners' withdrawals, and the ending capital balances. 2. Prepare a worksheet for 2018 showing the beginning partners' capital balances and the admission of Wen as a partner using the bonus method. 3. What is the logic of the partners' making the allocations as outlined above, the splitting of the income, and the withdrawals of cash

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