A and B formed a partnership on March 1 , 20x1. A invested P250,000 and B 150,000. It was agreed that A, will be appointed as the managing partner and he will receive a salary of P60,000 per year and also 10% bonus on the net profit after the adjustment for the salary; the balance of the profit was to be shared in a 62.5:37.5 ratio to A and B, respectively. On December 31, 20x1, the following accounts are available: Cash140,000 Accounts Payable120,000Accounts Receivable134,000 Sales466,000Furniture and Fixtures90,000 A, capital250,000Purchases392,000 B, capital150,000Sales Return and Allowances10,000 A, drawings(40,000)Operating expenses120,000 B, drawings(60,000) On December 31, 20x1 the inventories on hand were P146,000; unused supplies P5,000; prepaid insurance were P1,900 (the entity uses the expense method). The accrued liabilities totaled P3,100 and the depreciation of furniture’s is 20% per year which are not yet included in the operating expenses. The share of A in the net income is: 69,080 is the answer, I need a solution.

Working :- In this problem we have given partner A 's net…

Answered: and B formed a partnership on March 1 ,…

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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A and B formed a partnership on March 1 , 20x1. A invested P250,000 and B 150,000. It was agreed that A, will be appointed as the managing partner and he will receive a salary of P60,000 per year and also 10% bonus on the net profit after the adjustment for the salary; the balance of the profit was to be shared in a 62.5:37.5 ratio to A and B, respectively. On December 31, 20x1, the following accounts are available:

Cash	140,000	Accounts Payable	120,000
Accounts Receivable	134,000	Sales	466,000
Furniture and Fixtures	90,000	A, capital	250,000
Purchases	392,000	B, capital	150,000
Sales Return and Allowances	10,000	A, drawings	(40,000)
Operating expenses	120,000	B, drawings	(60,000)

On December 31, 20x1 the inventories on hand were P146,000; unused supplies P5,000; prepaid insurance were P1,900 (the entity uses the expense method). The accrued liabilities totaled P3,100 and the depreciation of furniture’s is 20% per year which are not yet included in the operating expenses.

The share of A in the net income is: 69,080 is the answer, I need a solution.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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