AA and BB are partners engaged in a manufacturing business.  Transactions affecting the partners’ capital accounts in 2022 are as follows:   AA BB   Debit Credit Debit Credit Beg. Balance   P250,000   P350,000 April 1   150,000 100,000   June 30 125,000     250,000 September 1 225,000     300,000 October 1   350,000 200,000     The income summary has a debit balance of P225,000.   Agreement between AA and BB are as follows: Interest on average capital at 8%. Salaries of P125,000 and P175,000 are given to AA and BB, respectively. Bonus to BB at 25% of net income after deducting interest and salaries but before deducting bonus. Balance is to be divided equally. How much is the net increase (decrease) in BB’s capital account in 2022?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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AA and BB are partners engaged in a manufacturing business.  Transactions affecting the partners’ capital accounts in 2022 are as follows:

 

AA

BB

 

Debit

Credit

Debit

Credit

Beg. Balance

 

P250,000

 

P350,000

April 1

 

150,000

100,000

 

June 30

125,000

 

 

250,000

September 1

225,000

 

 

300,000

October 1

 

350,000

200,000

 

 

The income summary has a debit balance of P225,000.

 

Agreement between AA and BB are as follows:

  • Interest on average capital at 8%.
  • Salaries of P125,000 and P175,000 are given to AA and BB, respectively.
  • Bonus to BB at 25% of net income after deducting interest and salaries but before deducting bonus.
  • Balance is to be divided equally.

How much is the net increase (decrease) in BB’s capital account in 2022?

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