3. Cabello and Dacanay are partners in a trading company. During 2020, theywithdrew their salary allowances of P250,000 and P375,000, respectively.Profits and losses are shared in the ratio of 3:2. The income summaryaccount before any profit allocation has a credit balance of P750,000. Thepartners' capital account show the following:CabelloDacanayP750,000 P500,000Beginning balancesAdditional investments250,000Withdrawals other than salary allowances (250,000) (125,000)125,000What are the capital balances of the partners for the year 2020 after closingincome summary and withdrawals accounts?Cabelloa. P700,000b. P450,000DacanayP675,000P300,000P425,000c. P575,000d. P950,000 P1,050,000

It is pertinent to note that net profit in partnership is shared between partners in a predetermined…

Answered: 3. Cabello and Dacanay are partners in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On February 1, 2023, Tessa Williams and Audrey Xie formed a partnership in Ontario. Williams contributed $85,000 cash and Xie contributed land valued at $125,000 and a small building valued at $185,000. Also, the partnership assumed responsibility for Xie's $135,000 long-term note payable associated with the land and building. The partners agreed to share profit or loss as follows: Williams is to receive an annual salary allowance of $95,000, both are to receive an annual interest allowance of 15% of their original capital investments, and any remaining profit or loss is to be shared equally. On November 20, 2023, Williams withdrew cash of $65,000 and Xie withdrew $50,000. After the adjusting entries and the closing entries to the revenue and expense accounts, the Income Summary account had a credit balance of $165,000. Required: 1. Present general journal entries to record the initial capital investments of the partners, their cash withdrawals, and the December 31 closing of the…
On February 1, 2020, Tessa Williams and Audrey Xie formed a partnership in Ontario. Williams contributed $89,000 cash and Xie contributed land valued at $129,000 and a small building valued at $189,000. Also, the partnership assumed responsibility for Xie’s $139,000 long-term note payable associated with the land and building. The partners agreed to share profit or loss as follows: Williams is to receive an annual salary allowance of $99,000, both are to receive an annual interest allowance of 12% of their original capital investments, and any remaining profit or loss is to be shared equally. On November 20, 2020, Williams withdrew cash of $69,000 and Xie withdrew $54,000. After the adjusting entries and the closing entries to the revenue and expense accounts, the Income Summary account had a credit balance of $169,000.Required:1. Present general journal entries to record the initial capital investments of the partners, their cash withdrawals, and the December 31 closing of the Income…

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