Efren and Frenz operate The Gourmet Restaurant as a partnership. Their partnership agreement has the following provisions for sharing profits and losses: A. Income is distributed only as far as it is available. B. Available income is to be distributed in the following sequence: 1. Efren, who is the chef, gets a salary of P25,000 a year; Frenz, who is still learning, gets a salary of 10,000 2. Interest is imputed on the average capital balances 15 percent. 3. Any remaining profits and losses are to be shared equally. The average capital balances during the year were P20,000 for Efren and P50,000 for Frenz. If the partnership come for the year is P17,500, it should be distributed to the partners as follows:

Efren and Frenz operate The Gourmet Restaurant as a partnership. Their partnership agreement has the following provisions for sharing profits and losses: A. Income is distributed only as far as it is available. B. Available income is to be distributed in the following sequence: 1. Efren, who is the chef, gets a salary of P25,000 a year; Frenz, who is still learning, gets a salary of 10,000 2. Interest is imputed on the average capital balances 15 percent. 3. Any remaining profits and losses are to be shared equally. The average capital balances during the year were P20,000 for Efren and P50,000 for Frenz. If the partnership come for the year is P17,500, it should be distributed to the partners as follows:

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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