A and B formed a Partnership on January 1, 2020. A contributed capital of P50,000, while B contributed capital of P30,000. The Partnership agreement provides for the following:Capital accounts are to be credited annually with interest at 5% of the beginning capital.Partner B is to be paid salary of P2,000 a month.Partner B is to receive a bonus of 10% based on the net income. The Partnership's income statement for the year ended is as follows:Revenues P101,000Expenses (including salary, interest, and bonus) 30,000 Net income 71,000 Determine the amount of bonus.

B's bonus is based on Net income.

Answered: A and B formed a Partnership on January…

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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A and B formed a Partnership on January 1, 2020. A contributed capital of P50,000, while B contributed capital of P30,000. The Partnership agreement provides for the following:

Capital accounts are to be credited annually with interest at 5% of the beginning capital.
Partner B is to be paid salary of P2,000 a month.
Partner B is to receive a bonus of 10% based on the net income.

The Partnership's income statement for the year ended is as follows:

Revenues	P101,000
Expenses (including salary, interest, and bonus)	30,000
Net income	71,000

Determine the amount of bonus.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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