Blessing and Linda formed a partnership by investing P220,000 and P380,000, respectively. At he end of its first year of operations, the partnership has realized a profit of P400,000. nstructions: determine the distribution of profit under each of the following independent assumptions: 1. The partnership agreement does not mention profit sharing 2. Profit is divided in the ratio of the original investments. 3. Interest at 10% is to be allowed on the original capital investments and the balance to be divided equally. 4. Salaries of P75,000 and P55,000 respectively and the balance to be divided equally. 5. Interest at 12% is to be allowed on the original capital investments, salaries of P225,000 and P275,000 to partners, respectively and the balance to be divided in the ratio 2:3. In case of insufficient net income, however, this has to be distributed in the salary ratio. While if there is a net loss, then it has to be distributed equally. You may modify your answer sheet to fit your solution. Follow the Instructions strictly. Answer what Is asked only. Note:

Blessing and Linda formed a partnership by investing P220,000 and P380,000, respectively. At he end of its first year of operations, the partnership has realized a profit of P400,000. nstructions: determine the distribution of profit under each of the following independent assumptions: 1. The partnership agreement does not mention profit sharing 2. Profit is divided in the ratio of the original investments. 3. Interest at 10% is to be allowed on the original capital investments and the balance to be divided equally. 4. Salaries of P75,000 and P55,000 respectively and the balance to be divided equally. 5. Interest at 12% is to be allowed on the original capital investments, salaries of P225,000 and P275,000 to partners, respectively and the balance to be divided in the ratio 2:3. In case of insufficient net income, however, this has to be distributed in the salary ratio. While if there is a net loss, then it has to be distributed equally. You may modify your answer sheet to fit your solution. Follow the Instructions strictly. Answer what Is asked only. Note:

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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Exercise 3-2 (Division of Profit; Interest on Average Capital) Danica and Jenson are partners. Their capital accounts during the fiscal year 2019 were as follows: Danica, Capital 120,000 1/1 Jenson, Capital 3/1 180,000 1/n 1,200,000 140,000 100,000 9/1 800,000 160,000 60,000 4/1 7/1 11/1 10/1 Profit of the partnership is P250,000 for the year. Determine the partners shared profit under the following assumptions: 1. Each partner is to be credited 12% interest on his average capital. 2. Any remaining profit or loss is to be divided equally.
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answer the requirements with complete solution
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A-6
Direction: Answer the following questions in problem 3: [1,2,3,4,]
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