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

See similar textbooks

Similar questions

The partnership agreement of Alix, Gise, and Bosco provides for the following income ratio: (a) Alix, the managing partner, receives a salary allowance of $108,000, (b) each partner receives 15% interest on average capital investment, and (c) remaining net income or loss is divided equally. The average capital investments for the year were: Alix $600,000, Gise $1,200,000, and Bosco $1,800,000. If partnership net income is $540,000, the amount allocated to Alix should be a. $90,000. Ch10,11,12 Principles of Accounting I b. $162,000. c. $180,000. d. $198,000.
Additional information1. The net profit according to the Profit and Loss account amounted to R500 000 on 28February 2021.2. The partnership agreement made provision for the following:1. Interest on capital must be provided at 15% per annum on the balances in the capitalAccounts from 1 March 2020 to 31 August 2020. With effect from 1 September 2019 the interest rate on capital increases to 18% per annum.2. The partners are entitled to the following monthly salaries: Bobby R11 000Vincent R10 0003. Bobby is entitled to a bonus of 15% of the net profit before any appropriations are made.4. Bobby and Vincent share the remaining profits or losses in the ratio 3:2 respectively.
The partnership agreement of Angela and Dawn has the following provisions: 1. The partners are to earn 10 percent on the average capital. 2. Angela and Dawn are to earn salaries of $26,000 and $18,000, respectively. 3. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela's average capital is $59,000 and Dawn's is $43,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $90,000 and (b) $28,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign. (a) Distribution of $90,000 income: Profit percentage Average capital Net income Interest on average capital Salary Residual income (deficit) Allocate Total (b) Distribution of $28,000 income: Angela 70 % $ 26,000 Dawn 64,100 $ 102,200 30 % $18,000 $ 5,900 $ 4,300 32,200…
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 14 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones $ 100,000 King 200,000 Lane 300,000 The partnership earned $48,000 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.)
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
Item No. 22 is based on the following information: Kung and Fu are partners whose average capitals during 200B were P 500,000 and P 300,000, respectively. Their profit and loss sharing agreement had the following provisions: o Salaries: Kung, P 12,000 per month; Fu, P 15,000 per month; o 10% interest on the average capital; 12% bonus to Fu based on the profit after treating all allowances as expenses; and o Balance after allowances: Equally. 22. If the profit for the calendar year ended December 31, 200B was P 260,000, how much was the share of Fu? a. P 122,000. c. P 138,000. b. P 132,000. d. P 142,000.
A and B formed a Partnership on January 1, 2020. Partner A’s contributed capital amounted to P40,000, while partner B’s contributed capital amounted to P20,000. The Partnership agreement provides for the following: Capital accounts are to be credited annually with interest at 5% of the beginning capital. Partner B is to be paid salary of P6,000 quarterly. 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, P105,000Expenses (including salary, interest, and bonus), 30,000Net income, 75,000 What is partner's B 2020 bonus? Group of answer choices 9,273 7,500 9,333 11,333
The net loss of a XYZ partnership for the year is P100,000. Partner X is to be given a salary of 5,000 per month. The capital balances of X, Y and Z are P 150,000, P 160,000, and P 140,000, respectively. Interest in the capital balance will be given at a rate of 15%. Bonus of 10% after salaries and interest is given to partner Z. Remaining profit is to be distributed equally to the partners. In the process of journalizing the distribution of the loss, what will be done to the capital of X and in what amount? A. Credited by P 14,250 B. Debited by P 6,666 C. Credited by P 6,666 D. Debited by P 14,250
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 20 percent of the business’s profit. Each partner receives 15 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2018 were as follows: How much of the $90,000 partnership profit for 2018 should be assigned to each partner?
Sophia and Anna are partners operating a chain of retail stores. The partnership agreement provides for the following: · Annual salaries to Sophia of P40,000 and P30,000 to Anna. · 12% interest on average capital balances. · Bonus to Sophia of 20% of net income before salaries and bonus but after interest on capital. · Residual income in the ratio 25% to Sophia and 75% to Anna. The Income Summary account for year 2018 shows a credit balance of P244,000 before any allocations. Average capital balances for Sophia and Anna are P100,000 and P150,000, respectively. How much must be the share of Sophia on the partnership net income?