Additional information: The partnership agreement provided for the following: • Interest on capital to be allowed at 10% per year. • Interest to be provided at 12% per year on current account balances at the beginning of the year. • Interest on drawings to be charged at 12% per year on daily balances. This was calculated as follows: Stan - R3 825; and Ben - R2 775. • Salaries to be allowed as follows: Stan - R22 500 per month; and Ben R15 000 per month. • Stan is to be allowed a commission equal to 5% of turnover for the year. Ben is to be allowed a bonus equal to 7,5% of the net profit after allowing for interest on capital. • The remaining profits are to be shared in the ratio of the partners capital accounts at the beginning of the year. Required: Prepare the following ledger accounts for the year ended 31 December 2019: Appropriation account NB: The accounts must be properly balanced/closed. The detail column must show the contra account for each transaction.

Additional information: The partnership agreement provided for the following: • Interest on capital to be allowed at 10% per year. • Interest to be provided at 12% per year on current account balances at the beginning of the year. • Interest on drawings to be charged at 12% per year on daily balances. This was calculated as follows: Stan - R3 825; and Ben - R2 775. • Salaries to be allowed as follows: Stan - R22 500 per month; and Ben R15 000 per month. • Stan is to be allowed a commission equal to 5% of turnover for the year. Ben is to be allowed a bonus equal to 7,5% of the net profit after allowing for interest on capital. • The remaining profits are to be shared in the ratio of the partners capital accounts at the beginning of the year. Required: Prepare the following ledger accounts for the year ended 31 December 2019: Appropriation account NB: The accounts must be properly balanced/closed. The detail column must show the contra account for each transaction.

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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Aquila partnership began its first year of operations with the following capital balances: N, Capital: P143,000 A, Capital: P104, 000 C, Capital: P143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: -N was to be awarded an annual salary of P26,000 with P13,000 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 P13,000 per year. Assume that the net loss for the first year of operations was P36,000 with net incomeof P42,000 in the second year. Assume further that each partner withdrew the maximum amount fiom the business each year. A. What was C's share of income or loss for the first year? B. What was the balance in C's capital account at the end of the second year?
Terms of the partnership agreement: 1.1 The partners are entitled to a salary of R18 000 each per month. 1.2 Zozi and Sethu share profits in the ratio of 1:1 respectively. 2. Year-end adjustments: 2.1 An outstanding debt of R2 200 is irrecoverable and must be written off. The allowance for credit losses must be increased to R6 500. 2.2 An amount of R4 500 owed by a debtor was written off as irrecoverable during the year ended 29 February 20.1. The debtor has settled the amount previously written off in full on 25 February 20.2. This transaction is still to be recorded in the books of the business. 2.3 Depreciation for the year must still be provided as follows: Office equipment: 20% according to diminishing balance method. Vehicles: 15% according to straight-line method and have a R15 000 residual value. 2.4 Inventories on hand on 28 February 20.1: Merchandise R45 100 2.5 Only 65% of salaries were paid to partners during…
Terms of the partnership agreement: 1.1 The partners are entitled to a salary of R18 000 each per month. 1.2 Zozi and Sethu share profits in the ratio of 1:1 respectively. 2. Year-end adjustments: 2.1 An outstanding debt of R2 200 is irrecoverable and must be written off. The allowance for credit losses must be increased to R6 500. 2.2 An amount of R4 500 owed by a debtor was written off as irrecoverable during the year ended 29 February 20.1. The debtor has settled the amount previously written off in full on 25 February 20.2. This transaction is still to be recorded in the books of the business. 2.3 Depreciation for the year must still be provided as follows: Office equipment: 20% according to diminishing balance method. Vehicles: 15% according to straight-line method and have a R15 000 residual value. 2.4 Inventories on hand on 28 February 20.1: Merchandise R45 100 2.5 Only 65% of salaries were paid to partners during…
Before beginning their partnership, A and B agreed that net income would beallocated based first on 10% interest paid on their beginning capital balances.These were A – $100,000; B – $200,000. Profits would then be allocated basedon yearly “salaries” paid as follows: A – $70,000; B – $50,000. They also agreedthat any remaining profit and loss would be shared in the ratio of 3:2. Netincome for the first year is $150,000. This amount would be allocated as: Group of answer choices: A: $75,000; B: $75,000 A: $80,000; B: $70,000 A: $90,000; B: $60,000 None of the above The allocated amounts cannot be determined
Carmella and Luciana practice in partnership as accountants. Interest on fixed capital balances is allowed at 8% per annum and the remaining profits are shared equally. The following Trial balance was extracted from the ledger at the year ended 31st December 2020: Sh. Sh. Bank 294,000 Fixed capital: Carmella 1,500,000 Luciana 800,000 Current Accounts: Carmella 68,000 Luciana 74,000 Fees invoiced to clients…
Juan and Pedro’s partnership agreement shows that they will receive a salary of P150,000 and P100,000, respectively. Should there be a remainder, such will be divided based on their average capital balances. Below shows information in their respective capital balances:Juan, capital ending balance – P 3,000,000Debits: June 1 - P 500,000Credits: March 30 – P 1,000,000Credits: October 30 – P 500,000 Pedro, capital ending capital balance – P 4,500,000Credits: May 1 – P 1,000,000Credits: August 31 – P 1,000,000Income for the year amounted to P 300,000. How much profit will be distributed to Juan?
The Income Statement of a partnership firm shows Net Income of OMR 75,000. A partner has provided OMR 40,000 loan to the partnership firm at 5% interest.Also, in the agreement it is provided that one of the partners is eligible to get salary of OMR 25,000.How much is the Net Profit of the partnership firm available for appropriation?
The partnership contract of Robert Florence and Karen Partnership provided for the sharing of net income and losses as follows:A) Salaries of $30,000 to Robert, $28,000 to Florence and $26,000 to Karen.B) Interest of 10% a year on average capital balances.C) Any residual income or loss in the ration of 3:5:2 to Robert, Florence, and Karen respectively. The net income for the year is $140,000. The average capital balances were $60,000 for Robert, $40,000 for Florence and $100,000 for Karen. Prepare a journal entry to distribute the profit. Show details of the calculation in the space provided.
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: o Capital accounts are to be credited annually with interest at 5% of the beginning capital. o Partner B is to be paid salary of P2,000 a month. o 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 30,000 71,000 Expenses (including salary, interest, and bonus) Net income Determine the amount of bonus.
7. The partnership agreement of Hi and Rap provides that interest at 14% per year is to be credited to each partner on the basis of weighted average capital balances. A summaryof Rap capital account for the year ended December 31, 2015, is as follows:Balance, January 1 P210,000Additional investment, July 1 60,000Withdrawal, August 1 (22,500)Balance, December 31 P247,500What amount of interest should be credited to Rap’s capital account for 2015?