Distribution of Profits and Losses: 2. Rene, Michael and Kevin are partners in an accounting firm. Their capital account balance at year-end were Rene, P90,000; Michael, P120,000; and Kevin, P160,000. They share profit and losses on a 4:4:2 ratio after considering the following terms: a. Kevin is to receive a bonus of 10% of net income. b. Interest of 5% shall be paid on partner's capital. c. Salaries of P8,000 and P10,000 shall be paid to partners Rene and Kevin respectively. Assuming a net income of P84,000 for the year. REQUIRED: Prepare the following: A. Profit or Loss Distribution Table B. Corresponding JOURNAL ENTRY to distribute profit or loss

Distribution of Profits and Losses: 2. Rene, Michael and Kevin are partners in an accounting firm. Their capital account balance at year-end were Rene, P90,000; Michael, P120,000; and Kevin, P160,000. They share profit and losses on a 4:4:2 ratio after considering the following terms: a. Kevin is to receive a bonus of 10% of net income. b. Interest of 5% shall be paid on partner's capital. c. Salaries of P8,000 and P10,000 shall be paid to partners Rene and Kevin respectively. Assuming a net income of P84,000 for the year. REQUIRED: Prepare the following: A. Profit or Loss Distribution Table B. Corresponding JOURNAL ENTRY to distribute profit or loss

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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Bee, Cee and Dee, accountants, agree to form a partnership and to share profits in the ratio of 5:3:2. They also agreed that Dee is to be lowed a salary of P 28,000 and that Cee is to be guaranteed P 21,000 as his share of the profits. During the first year of operation, service revenue are P 180,000, while expenses total P 96,000. What amount of net income should be credited to Bee's capital account? What amount of net income should be credited to Dee's capital account?
Exercise 3-1 (Divislon of Profit using Ratios) Bong. Bueno, and Bunny formed a partnership and have capital balances of P350,000, P250,000 and P200,000, respectively. They devoted time to personally managed their partnership as follows: Bong Bueno Bunny three-fourths time one-half time one-fourth time Instructions: Determine the participation of the partners in the profit of P1,000,000 if profit is divided: 1. In the ratio of capital investments 2. In the ratio of time devoted in the business Follow the instructions strictly
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5. only. Max and Kenneth are partners in an eatery business with balances of P250,000 and P150,000 respectively. Partnership agreement calls for: 12% interest on capital, P6,000 monthly salary for Max as managing partner, remaining profit to be divided equally by the two partners. You are given the following independent situations: a) Result of a one year operation is a net profit of P170,000 after tax. Result of a one year operation was a net loss of P240,000. b) c) Result of a one year operation was a net profit of P120,000 before tax of 20%. d) Result of a six-month operation was a net profit of P110,250 before tax of 20%. e) Result of a three-month operation was a net loss of P75,000. Direction: Record the distribution based on the aforementioned situations supported by profit/loss allocation table.
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Two partners Tom and Jerry have the following details of their accounts for the year ended 31 December 2021. Capital accounts: Current accounts: Salaries: Drawings: Profit sharing ratio: Net profit before appropriation £100,000 £ Tom 8,000 3,000cr 10,000 25,000 3 £ Jerry 6,000 1,000 dr 30,000 30,000 1 Required: Prepare the relevant income statement and statement of financial position extracts.
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