AB Partnership was formed on February 28, 20x1. Partner A invested P150,000 cash while PartnerB invested land that he originally bought for P70,000 but has a current fair value of P180,000. Binvested additional cash of P60,000 on November 1, 20x1. The partnership contract states thefollowing:AB• Monthly salary (recognized asexpenses and withdrawn10,00020,000periodically)Interest on beginning capital• Bonus on profit before salaries12% p.a.12% p.a.20%and interest but after bonus• Remaining profit or loss50%50%AB Partnership earned profit of P120,000 in 20x1. What is the capital balance of A on December31, 20x1?

The partnership capital account is an equity account in the accounting records of a partnership. It…

Answered: AB Partnership was formed on February…

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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M, N, and 0 formed a partnership on January 1, 200A with 3.7 investments of P 40,000, P 24,000 and P 20,000, respectively. The partners agreed to the following distribution of profits: Annual salaries allowed: М, Р 4,800; N, P 6,000; 0, Р 6,000 5% interest on the beginning capital. M, the managing partner is allowed a bonus of 20% of the net profit after treating as expenses the partners' salaries, interest, and bonus. Profits after the allowances are to be divided 3:3:4, for M, N, and O, respectively. For the year 200A, the net profit before interest, salaries, and bonus amounted to P 29,400. Cash withdrawals made were M, P 10,200; N, P 12,000; and O, P 10,600. REQUIRED: Prepare a Statement of Partners' Equity for the year ended December 31, 200A.
Jasmine Partnership began its first year of operations with the following capital balances: J, Capital: $143,000 A, Capital: $104,000 S, Capital: $143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: - J was to be awarded an annual salary of $26,000 with $13,000 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 $13,000 per year. If the net loss for the first year of operations was $36,000 with net income of $42,000 in the second year. Assume also that each partner withdrew the maximum amount from the business each year. a. How much was the share of income or loss for the first year of S? b. How much was the balance in the capital account at the end of the second year of S?
Partners A, B and C started their partnership firm M/s. ABC LLC in Muscat with capitals of OMR80,000; OMR 48,000 and OMR 40,000 respectively on 1.1.2019. They prepared Partnership Deedfor the partnership and it contains the various clauses related to – the firm has to pay the partners@ 5.5 % p.a., for their capital contributed to the business and the partners have to pay @ 2.5% fortheir drawings taken from the business during the financial year. Further the firm has to pay salaryto A @ OMR 600 per month, @ 10% commission to B and C and bonus to A and C @ OMR 500 each.Finally the firm’s Profit and Losses for the partners to be shared at the end the financial year Up toOMR 9,000 in the ratio of 4:3:2 and Above OMR 9,000 equally. The net profit earned by the firmduring the year ended 31st December 2019 amounted to OMR 55,500. The partners were drawnthe money from the firm during the financial year is - A OMR 4,800: B OMR 3,200 and C OMR 2,000.Prepare both Profit and Loss Appropriation…
Part II: Problems 1. On January 1, 2021, Kaye, Erika and April formed a partnership with original capital contribution ratio or 4:5:1 for total agreed capitalization of P5,000,000. The profit or loss ratio agreement provides that profits shall be distributed in the ratio of 3:2:5 while losses shall be distributed in the ratio of 6:1:3. During 2021, the partnership reported net income of P2,000,000 with Kaye and Erika withdrawing P500,000 and P300,000, respectively. During 2022, the partnership reported net loss of P1,000,000 with Erika and April withdrawing P200,000 and P400,000 respectively. What is the adjusted capital balances of each partner on December 31, 2022?
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On January 1, 2022, A and B decided to form a partnership by contributing their respective assets and equities subject to adjustments. Cash Accounts Receivable Building A 50,000 20,000 520,000 B 40,000 10,000 30,000 Computer Equipment An Allowance for Doubtful Accounts of 3% of accounts receivable is set up for each partner, and a mortgage of P30,000 is assumed from building contribution. Compute the adjusted capital account of A after the formation.
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: • Jones, the managing partner, receives a bonus equal to 15 percent of the business's profit. • Each partner receives 10 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones King Lane The partnership earned $84,000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to the partners. (Loss amounts should be indicated with a minus sign.) Net income Bonus Interest $ 190,000 380,000 570,000 Remainder to allocate Total allocation Jones King Lane Total
Energetic and Faithful decided to form a partnership on June 1, 2021 by investing P100,000 and P150,000 respectively. They agreed that profits are to be divided as follows: Partners are to receive a 10% interest on beginning capital. Each partner is to receive an annual salary of P24,000. Energetic, the managing partner, is to receive a bonus equivalent to 10% of the net income after interest, salaries and bonus. The remaining profit is to be divided equally. Energetic invested P50,000 on August 1 and withdrew cash amounting to P10,000 on December 1. Faithful invested P15,000 on September 1 and withdrew cash amounting to 5,000 in November 1. During the year, the partnership had a net income of P80,000. How much is the ending capital of Energetic and Faithful?
The following balance sheet for the partnership of Juan, Ponce and Enrile were taken from the books on November 30, 2011: Cash P 80,000 Liabilities P 200,000 Other Assets 720,000 Juan, Capital 148,000 Ponce, Capital 260,000 Enrile, Capital 192,000 The partners’ agreed to distribute the profits as follows; Annual salaries to Juan and Ponce of P 6,000 each.6 % interest on beginning capital10 % bonus to Ponce (the bonus to be treated as an expense after salaries and interest)Remaining profit – 40:40:20 respectively. If the net income of the partnership was P 122,400 during the two-month period ending December 31, 2011, the total share of Ponce in the net income is; a. P 61,440 b. P 55,600 c.…

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