A and B formed a partnership in 20x1. The partnership contract stipulates the following:• P30,000 annual salary to each partner due at each year-end.• Bonus of 10% of profit after salaries and bonus for A• 8% interest on the partners' weighted average capital balances.• Any remaining profit or loss is divided equally.The partnership's ledger shows the following:A, CapitalRef.DateDebitCreditBalanceMarch 1, 20x1June 1, 20x100130,000.00 30,000.0020,000.00098 10,000.00August 1, 20x1December 1, 20x1 21114620,000.00 40,000.005,000.0035,000.00B, CapitalDateRef.DebitCreditBalanceMarch 1, 20x100120,000.0020,000.00June 1, 20x1098 10,000.0010,000.00August 1, 20x1 1462,000.008,000.00The partnership's profit, before salaries and bonus, in 20x1 is P60,000. The partners agreed toreceive full annual salaries in 20x1. How much is the share of B?

Partnership is a sort of business in which two or more than two persons agree to share profit and…

Answered: A and B formed a partnership in 20x1.…

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 January 1, 20xx, A, B, C and D formed 5G Trading Co., a partnership with capital contributions as follows: A, P500,000; B, P250,000; C, P250,000; and D, P200,000. The 4. partnership contract provided that each partner shall receive a 5% interest on contributed capital, and that A and B shall receive salaries of P50,000 and P30,000 respectively. The contract also provided that C shall receive a minimum of P2,500 per annum, and Da minimum of P60,000 per annum, which is inclusive of amounts representing interest and share of remaining profits. The balance of the profit shall be distributed to A, B,C and D in a 3:3:2:2 ratio. What amount must be earned by the partnership, before any charge for interest and salaries, so that A may receive an aggregate of P125,000 including interest, salary and share of profit? a. P166,667 с. Р300,000 b. Р300,000 d. P323,333
Emerson and Dakota formed a partnership dividing income as follows: Annual salary allowance to Emerson of $34,000 Interest of 10% on each partner's capital balance on January 1 Any remaining net income divided equally. Emerson and Dakota had $30,000 and $146,800, respectively, in their January 1 capital balances. Net income for the year was $201,600. How much net income should be distributed to Dakota?$fill in the blank 1
Thomas and Anna are in a partnership sharing profits and losses equally. The partnership agreement states that interest on drawings is to be charged at a rate of 10% and interest on capital credited at the rate of 6%. The following information is available about the partners' transactions. The partnership has a year end of 31 December 20X1. Thomas Drawings 30/04/X1 30/06/X1 30/09/X1 Capital account Opening balance Capital introduced in year £20,000 Anna a. Debit of £10,333 O b. Credit of £10,333 O c. Debit of £13,667 Od. Credit of £13,667 £20,000 £10,000 £15,000 £10,000 £10,000 £20,000 £150,000 £200,000 What is the net movement in the current account of Anna in respect of interest on drawings and interest on capital?
P and T are in partnership sharing profits and losses in the ratio of 60:40. The partnership agreement provides that interest on partner’s capital account should be allowed at the rate of 10% pa. The following information has been made available for the year ended 31st Dec 2018. Net profit for the year RO 30,500 Partner P Partner T RO RO Capital Accounts on 1st Jan 2018 20,000 15,000 Current Account 1,800(Cr) 3,400 (Dr) Drawings for the year 12,785 18,275 Salary to be credited -- 6,000 Interest on drawings 640 910 You are required to: Prepare Journal Entries Prepare…
A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital $ 56,000 46,000 56,000 Kent, Capital According to the articles of partnership, all profits will be assigned as follows: Allegan will be awarded an annual salary of $16,000 with $8,000 assigned to Kent. The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year. The remainder will be assigned on a 5:2:3 basis, respectively. • Each partner is allowed to withdraw up to $7,000 per year. The net loss for the first year of operations is $22,000, and net income for the subsequent year is $27,000. Each partner withdraws the maximum amount from the business each period. Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations. Ending Capital Ending Capital Balance Year One Balance Year Two Prepare schedules that compute…
Ange partnership begins its first year of operations with the following capital balances: Ange, Capital P70,000 Bill, Capital P90,000 Cayne, Capital P110,000 The articles of partnership stipulate that profits and losses be assigned in the following manner: Each partner is allocated interest equal to 10% of the beginning capital. Bill is allocated compensation of P2,000 per month. Any remaining profits of losses are allocated on a 4:2:4 basis, respectively. Each partner is allowed to withdraw up to P3,000 cash per year. Assuming that the net income, is 50,000 and that each partner withdraws the maximum amount allowed, what is the balance of the capital of partner Ange at the end of that year?
Aquila partnership began its first year of operations with the following capital balances: N, Capital: P143,000 A, Capital: P104, 000 C, Capital: P143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: -N was to be awarded an annual salary of P26,000 with P13,000 salary assigned to C -Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year. -The remainder was to be assigned on a 4:3:3 basis, respectively. -Each partner was allowed to withdraw up to P13,000 per year. Assume that the net loss for the first year of operations was P36,000 with net incomeof P42,000 in the second year. Assume further that each partner withdrew the maximum amount fiom the business each year. A. What was C's share of income or loss for the first year? B. What was the balance in C's capital account at the end of the second year?
Terms of the partnership agreement: 1.1 The partners are entitled to a salary of R18 000 each per month. 1.2 Zozi and Sethu share profits in the ratio of 1:1 respectively. 2. Year-end adjustments: 2.1 An outstanding debt of R2 200 is irrecoverable and must be written off. The allowance for credit losses must be increased to R6 500. 2.2 An amount of R4 500 owed by a debtor was written off as irrecoverable during the year ended 29 February 20.1. The debtor has settled the amount previously written off in full on 25 February 20.2. This transaction is still to be recorded in the books of the business. 2.3 Depreciation for the year must still be provided as follows: Office equipment: 20% according to diminishing balance method. Vehicles: 15% according to straight-line method and have a R15 000 residual value. 2.4 Inventories on hand on 28 February 20.1: Merchandise R45 100 2.5 Only 65% of salaries were paid to partners during…
A partnership begins its first year of operations with the following capital balances: Allegan, Capital $60,000 Berrien, Capital 50,000 Kent, Capital 60,000 According to the articles of partnership, all profits will be assigned as follows: • Allegan will be awarded an annual salary of $20,000 with $10,000 assigned to Kent. ⚫ The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year. ⚫ The remainder will be assigned on a 5:2:3 basis, respectively. • Each partner is allowed to withdraw up to $8,000 per year. The net loss for the first year of operations is $24,000, and net income for the subsequent year is $29,000. Each partner withdraws the maximum amount from the business each period. Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations.
The Income Statement of a partnership firm shows Net Income of OMR 75,000. A partner has provided OMR 40,000 loan to the partnership firm at 5% interest.Also, in the agreement it is provided that one of the partners is eligible to get salary of OMR 25,000.How much is the Net Profit of the partnership firm available for appropriation?
The partnership contract of Robert Florence and Karen Partnership provided for the sharing of net income and losses as follows:A) Salaries of $30,000 to Robert, $28,000 to Florence and $26,000 to Karen.B) Interest of 10% a year on average capital balances.C) Any residual income or loss in the ration of 3:5:2 to Robert, Florence, and Karen respectively. The net income for the year is $140,000. The average capital balances were $60,000 for Robert, $40,000 for Florence and $100,000 for Karen. Prepare a journal entry to distribute the profit. Show details of the calculation in the space provided.
The Smith & Adams Partnership Capital Balances at 12/31/21 are as follows -Smith Capital $50,000 - Adams Capital 22,000 Smith and Adams share profits and losses in the ratio of 3:1 Weston contributes $50,000 cash, in exchange for a partnership interest. The partners agree to admit Weston into the partnership and he is credited with $30,000 in the new. partnership. REQUIRED: Record the Journal Entry for the admission of Weston to the new partnership. (Assume any Bonus is credited to the Old Partners Capital Accounts).

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