2. Use the following information for the next three cases: The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. Each partner shall receive 10% interest on average capital investments. TAny remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: AP100,000 B 60,000 C 120,000 Case #1: The partnership earns profit of P100,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #2: The partnership earns profit of P10,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #3: The partnership incurs loss of P20,000. Requirement: Compute for the respective shares of the partners on the partnership loss.

2. Use the following information for the next three cases: The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. Each partner shall receive 10% interest on average capital investments. TAny remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: AP100,000 B 60,000 C 120,000 Case #1: The partnership earns profit of P100,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #2: The partnership earns profit of P10,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #3: The partnership incurs loss of P20,000. Requirement: Compute for the respective shares of the partners on the partnership loss.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 2PA: Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances...

See similar textbooks

Similar questions

The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of 12,000 and ₱ 8,000, respectively. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. (Deduct the salaries to the profit, as basis for computation) Each partner shall receive 10% interest on average capital investments. Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: A ₱100,000 B 60,000 C 120,000 The partnership earns profit of ₱100,000. Requirement: Compute and explain for the respective shares of the partners on the partnership profit.
The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of 12,000 and ₱ 8,000, respectively. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. (Deduct the salaries to the profit, as basis for computation) Each partner shall receive 10% interest on average capital investments. Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: A ₱100,000 B 60,000 C 120,000 The partnership earns profit of ₱100,000. Requirement: Compute for the respective shares of the partners on the partnership profit.
The partnership agreement of X, Y, and Z stipulates the following:a. Partners Y and Z shall receive annual salaries of P23,000 and P12,000, respectively.b. A bonus of 15% of profit after salaries but before deduction of bonus shall be given to Partner X, themanaging partner.c. Each partner shall receive 11% interest on average capital investments.d. Any remaining profit or loss shall be shared as follows: 30% to X, and 35% each to Y and Z.The average capital investments of the partners during the year are as follows: X – P125,000; Y – P78,000;and Z – P101,000.Case # 1: The partnership earns profit of P125,000.Case # 2: The partnership earns profit of P9,000.Case # 3: The partnership incurs a loss of P19,000.For items 1-3, refer to Case #11. How much is X's share in the profit/loss?a. P 40,168b. P 40,169c. P 60,170d. P 60,1712. How much is Y's share in the profit/loss?a. P 46,652b. P 46,651c. P 56,653d. P 56,6543. How much is Z's share in the profit/loss?a. P 38,182b. P 38,181c. P…
1. Partners MM and LL have profit and loss agreement with the following provisions: salaries of P30,000 and P45,000 for MM and LL, respectively; a bonus to MM of 10% net income after salaries and bonus; and interest of 10% on average capital balances of P20,000 and P35,000 for MM and LL, respectively. One-third of any remaining profits will be allocated to MM and the balance to LL. If the partnership had a net income of P104,500, how much should be allocated to MM, assuming the provisions of the profit and loss agreement are ranked by order of priority, starting with salaries?2. Renalie and Ben are partners who share profits and losses in the ratio of 6:4, respectively. On June 1, 20X2, their respective capital accounts were as follows:• Renalie - P60,000 • Ben - P50,000On the same date, Jeremiah was admitted as a partner with 1/5 interest in capital and profits for an investment of P40,000. What is the capital of Ben after Jeremiah’s admission if the partnership began with a total…
The following are the partnership agreement between partners Baby Love & Honey Sweet for their partnership’s profit distribution:A. Each partners shall be entitled for an annual salary of P50,000 each.B. 15% Bonus of partnership profits after salaries to Honey Sweet being a managing partner.C. 20% interest is given to both partners based on average capital ratio.D. Residual profit and loss shall be distributed on the ratio 2:2The ledgers of their capital balances are shown below: Baby Love Debit: July 1. P20,000 Credit: Jan 1. P80,000 Oct 1. P40,000 Honey Sweet Debit: Oct 1. P10,000 Credit: Jan 1. P120,000 May 1. 30,000 The partnership profit for the year is P150,000 before distribution to partners Required: 1. Prepare a Schedule for Profit Distribution.2. Journal entry to record the distribution of profit to partners.
The partnership agreement of Angela and Dawn has the following provisions: 1. The partners are to earn 10 percent on the average capital. 2. Angela and Dawn are to earn salaries of $26,000 and $18,000, respectively. 3. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela's average capital is $59,000 and Dawn's is $43,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $90,000 and (b) $28,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign. (a) Distribution of $90,000 income: Profit percentage Average capital Net income Interest on average capital Salary Residual income (deficit) Allocate Total (b) Distribution of $28,000 income: Angela 70 % $ 26,000 Dawn 64,100 $ 102,200 30 % $18,000 $ 5,900 $ 4,300 32,200…
The partnership agreement of X, Y, and Z stipulates the following: Partners Y and Z shall receive annual salaries of P23,000 and P12,000, A bonus of 15% of profit after salaries but before deduction of bonus shall be given to Partner X, the managing Each partner shall receive 11% interest on average capital Any remaining profit or loss shall be shared as follows: 30% to X, and 35% each to Y and The average capital investments of the partners during the year are as follows: X – P125,000; Y – P78,000; and Z – P101,000. Case # 3: The partnership incurs a loss of P19,000. 1. How much is X's share in the profit/loss? a. (P 12,482) c. (P7,494) b. P 976 d. (P 19,000) 2. How much is Y's share in the profit/loss? a. (P 12,482) b. P 976 c. (P7,494) (P 19,000) 3. How much is Z's share in the profit/loss? a. (P 12,482) c. (P7,494) b. P 976 d. (P 19,000)
The partnership agreement of Angela and Dawn has the following provisions: 1. The partners are to earn 10 percent on the average capital. 2. Angela and Dawn are to earn salaries of $33,000 and $13,500, respectively. 3. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela's average capital is $70,000 and Dawn's is $59,000. Required: As Prepare an income distribution schedule assuming the income of the partnership is (a) $89,000 and (b) $36,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.
The partnership agreement of Angela and Dawn has the following provisions: 1. The partners are to earn 10 percent on the average capital. 2. Angela and Dawn are to earn salaries of $32,000 and $15,500, respectively. 3. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela's average capital is $68,000 and Dawn's is $53,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $81,000 and (b) $26,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? (Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.) Angela Dawn Total (a) Distribution of $81,000 income: Profit percentage % % 0% Average capital Net income Interest on average capital Salary Residual income (deficit) Allocate Total 0 0 $ 0 0 $ 0 $ 0 $ 0 (b) Distribution of $26,000 income: Profit percentage Average capital Net…
The partnership agreement of partners A, B and C stipulates the following: A shall receive a salary of P40,000. Interest of 10% shall be computed on the partners' capital contributions of P40,000, P100,000 and P200,000. • Balance is divided among the partners on a 2:3:5 ratio. However, C is guaranteed a minimum share of P40,000, inclusive of interest, if the partnership earns profit. How much is the minimum level of profit necessary so that A shall receive a total of P50,000, inclusive of salary, interest and share in remaining profit, and C shall also receive his guaranteed minimum share?
Partners A and B have a profit and loss agreement with the following provisions: • Salaries of P30,000 and P45,000 for A and B, respectively; The interest of 10% on average capital balances of P50,000 and P65,000 for A and B, respectively. • One-fourth of any remaining profits are allocated to A and the ratio to B. If the partnership had a net income of 250,000, how much profit is allocated to Partner B? ●
Partners MM and LL have profit and loss agreement with the following provisions: salaries of P30,000 and P45,000 for MM and LL, respectively; a bonus to MM of 10% net income after salaries and bonus; and interest of 10% on average capital balances of P20,000 and P35,000 for MM and LL, respectively. One-third of any remaining profits will be allocated to MM and the balance to LL. If the partnership had a net income of P104,500, how much should be allocated to MM, assuming the provisions of the profit and loss agreement are ranked by order of priority, starting with salaries?