A and B's partnership agreement provides for an annual salary allowance of P100,000 for A and 10% interest on the weighted average capital balance of B. The remainder is shared on a 60:40 ratio, respectively. During the period, the partnership earned profit of P200,000. B's capital account had a beginning balance of P120,00. B made additional investments of P40,000 on April 1, P80,000 on Sept. 30, and P20,000 on Dec. 31, and made drawings of P60,000 on July 31. Requirement: Compute for the respective shares of the partners in the profit (Prepare profit distribution schedule)
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
A and B's partnership agreement provides for an annual salary allowance of P100,000 for A and 10%
interest on the weighted average capital balance of B. The remainder is shared on a 60:40 ratio,
respectively. During the period, the partnership earned profit of P200,000. B's capital account had a
beginning balance of P120,00. B made additional investments of P40,000 on April 1, P80,000 on Sept.
30, and P20,000 on Dec. 31, and made drawings of P60,000 on July 31.
Requirement: Compute for the respective shares of the partners in the profit (Prepare profit distribution
schedule)
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