1. Prepare a Schedule for Profit Distribution. 2. Journal entry to record the distribution of profit to partners.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

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 2:2
The 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.

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Partnership Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education