4. During 2014, Taylor and Adele created a partnership to own and operate a minimart by contributing P100,000 each. Thepartnership agreement provided that Taylor and Adele are to recelve salaries of P100,000 and P50,000, respectively.Remaining profits will be allocated 60:40. Partnership income for 2014 was P130,000, from which Taylor was allocatedwith an amount of P88,000 and Adele with P42,000. During 2015, the partners agreed to change their profit and loss sharingagreement. The new agreement allows Taylor a salary of P180,000. Adele will no longer receive any salary. The remainderwill be split between the partners equally. At the end of 2015, the partnership reported an income of P250,000, However, itwas discovered that a counterbalancing error was made by the partnership's accountant last year, resulting to theunderstatement of 2014's net income by P40,000 and the overstatement of 2015's net income by the same amount.What should be the capital balances of Taylor and Adele at the end of 2015 after allocating profits and after considering theerror?A. Taylor-P299,000; Adele-P81,000B. Taylor-P307,000; Adele-P23,000C.Taylor-P407,000; Adele-P173,000D. Taylor-P399,000; Adele-P181.000

Calculation of Net Profit for the year 2014 and 2015 Particulars 2014 2015 Partnership income…

Answered: 4. During 2014, Taylor and Adele…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

and Sumara started a retailing shop on a partnership. Each of them contributed $500,000 fund to the business. The partnership agreement provides: Both Ali and Sumara are to receive interest at the rate of 5% pa on their capital contribution. Sumara will receive a salary of $95,000 for the management of the shop, as well as superannuation contributions of $15,600. The remainder in profit and loss will be shared Ali 70% and Sumara 30% The accounts for this income year show the following: Income ($) Sales 915,000 Expenses ($) Cost of goods sold 326,000 Interest on capital paid to Ali and Sumara in total 9,000 Salary to Ali 95,000 Concessional Superannuation to Ali 12,000 Rent expense 38,000 Other deductible operating expenses 61,000 Required: Calculate the net income of the partnership. Show the allocation of net income to each of the partners.
Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or loss is to be divided equally. Assuming net income for the current year is $189,000, the journal entry to allocate net income is: dit Fo Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit Taylor, Capital, $94,500. Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit Taylor, Capital, $23,000. Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital, $140,160. Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit Taylor, Capital, $55,000. Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit Farmer, Capital, $55,000.
Shawna Kearn and Todd White are forming a partnership to develop a theme park near Bay City, Florida. Kearn contributes cash of $1,000,000 and land with a current market value of $13,500,000. When Kearn purchased the land in 2013, its cost was $7,500,000. The partnership will assume Kearn's $3,000,000 note payable on the land. White contributes cash of $3,000,000 and equipment with a current market value of Requirements 1. Journalize the partnership's receipt of assets and liabilities from Kearn and from White. 2. Compute the partnership's total assets, total liabilities, and total partners' equity immediately after organizing.
6) Oliva Tsang and David Breck began a partnership by investing $5,000 and $45,000 respectively. For the year-ended December 31, 2009, the partnership earned $100,000. The partners agree to share income by allowing a $65,000 per year salary allowance to Breck, a $15,000 per year salary allowance to Tsang, 5% interest on beginning capital balances and the remainder equally. a) Prepare calculations that show how the income should be allocated to the partners under the following plans for sharing net incomes and losses.
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…
A Lululime fashion business partnership has agreed that half of the annual profit be distributed in proportion to each partner's investment in the partnership, and that the other half be distributed in proportion to the total number of hours that each partner worked in the business during the year. In 2020 the profit of the company was $82,780. How the company should allocated this profit to its three investors if the amounts invested by Howe, Denver, and Laura are $68,000, $27,000, and $43,000, and their hours of work for the year were 420, 1170, and 1230, respectively?

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS