Ange partnership begins its first year of operations with the following capital balances: Ange, Capital P70,000 Bill, Capital P90,000 Cayne, Capital P110,000 The articles of partnership stipulate that profits and losses be assigned in the following manner: Each partner is allocated interest equal to 10% of the beginning capital. Bill is allocated compensation of P2,000 per month. Any remaining profits of losses are allocated on a 4:2:4 basis, respectively. Each partner is allowed to withdraw up to P3,000 cash per year. Assuming that the net income, is 50,000 and that each partner withdraws the maximum amount allowed, what is the balance of the capital of partner Ange at the end of that year?
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.
Ange partnership begins its first year of operations with the following capital balances:
Ange, Capital P70,000
Bill, Capital P90,000
Cayne, Capital P110,000
The articles of partnership stipulate that profits and losses be assigned in the following manner:
- Each partner is allocated interest equal to 10% of the beginning capital.
- Bill is allocated compensation of P2,000 per month.
- Any remaining
profits of losses are allocated on a 4:2:4 basis, respectively. - Each partner is allowed to withdraw up to P3,000 cash per year.
Assuming that the net income, is 50,000 and that each partner withdraws the maximum amount allowed, what is the balance of the capital of partner Ange at the end of that year?
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