AA and BB have been partners for a decade. As of January 1, 2022, the capital balances of AA and BB are: AA capital P55,000 BB. 75,000 capital Partnership agreement provides for the following manner of profit distribution: • Annual salaries of P80,000 and P100,000 will be provided to AA and BB. respectively A bonus of 20% based on net income will be given to AA -30% of the remaining profit or loss is distributed to AA with the balance provided to BB In 2022, the partnership reported net income of P250,000. On January 1, 2023, CC was admitted as a partner by investing P70,000 for a 25% interest in the capital of the partnership. The partners agreed that the plant assets of the partnership were to be increased by P30,000. The profit and loss sharing agreement was revised to: . Annual salaries of P80,000, P100,000 and P70,000 will be provided to AA BB and CC, respectively. • A bonus of 20% based on net income will be given to AA and a 5% bonus based on net income after A's bonus will be provided to CC . Any remaining profits or losses will be distributed as follows: 30%-AA 45%-BB 25%-CC The partnership generated net income of P400.000. How much is the share of CC in the partnership profit for 2023
AA and BB have been partners for a decade. As of January 1, 2022, the capital balances of AA and BB are: AA capital P55,000 BB. 75,000 capital Partnership agreement provides for the following manner of profit distribution: • Annual salaries of P80,000 and P100,000 will be provided to AA and BB. respectively A bonus of 20% based on net income will be given to AA -30% of the remaining profit or loss is distributed to AA with the balance provided to BB In 2022, the partnership reported net income of P250,000. On January 1, 2023, CC was admitted as a partner by investing P70,000 for a 25% interest in the capital of the partnership. The partners agreed that the plant assets of the partnership were to be increased by P30,000. The profit and loss sharing agreement was revised to: . Annual salaries of P80,000, P100,000 and P70,000 will be provided to AA BB and CC, respectively. • A bonus of 20% based on net income will be given to AA and a 5% bonus based on net income after A's bonus will be provided to CC . Any remaining profits or losses will be distributed as follows: 30%-AA 45%-BB 25%-CC The partnership generated net income of P400.000. How much is the share of CC in the partnership profit for 2023
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
AA and BB have been partners for a decade. As of January 1, 2022, the capital balances
of AA and BB are:
AA
capital P55,000
BB.
75,000
capital
Partnership agreement provides for the following manner of profit distribution: • Annual salaries of P80,000 and P100,000 will be provided to AA and BB.
respectively A bonus of 20% based on net income will be given to AA
-30% of the remaining profit or loss is distributed to AA with the balance provided to
BB
In 2022, the partnership reported net income of P250,000. On January 1, 2023, CC was admitted as a partner by investing P70,000 for a 25% interest in the capital of the partnership. The partners agreed that the plant assets of the partnership were to be increased by P30,000.
The profit and loss sharing agreement was revised to:
. Annual salaries of P80,000, P100,000 and P70,000 will be provided to AA BB and CC, respectively.
• A bonus of 20% based on net income will be given to AA and a 5% bonus based on net income after A's bonus will be provided to CC
. Any remaining profits or losses will be distributed as follows: 30%-AA 45%-BB
25%-CC
The partnership generated net income of P400.000.
How much is the share of CC in the partnership profit for 2023
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