Exercise 2: Division of Income(I attached the question for Exercise 1 so please check it out. Thanks)Assume that in Exercise 1, the partnership of Bong and Lapira realized a net income of P17,400. How much must be the share of each partner therein under each of the following methods of dividing net income?Net income is divided based on the beginning capital ratio.Net income is divided based on the ending capital ratio.Net income is divided based on the average capital ratio.Interest of 12% is allowed on average capital with the remainder divided in the ratio of 6:4 between Bong and Lapira, respectively.Interest of 10% is allowed on average capital, salary allowance of P8,000 is given to Lapira, remainder to be divided in the ratio of 3:7 between Bong and Lapira. Exercise 1: Computation of Average CapitalYou are required to compute for the average capital of Bong and Lapira based on thefollowing postings to their accounts for 2019:Lapira, Capital18,000 | Jan. 1Bong CapitalJan. 160,000Oct. 145,000Sept 3030,000Bong, PersonalLapira, PersonalJan. 112,000Oct. 316,000 | Jan. 124,000Aug. 115,000 Exercise 2: Division of IncomeAssume that in Exercise 1, the partnership of Bong and Lapira realized a net income of P17,400.How much must be the share of each partner therein under each of the following methods ofdividing net income?a. Net income is divided based on the beginning capital ratio.b. Net income is divided based on the ending capital ratio.Net income is divided based on the average capital ratio.c.d. Interest of 12% is allowed on average capital with the remainder divided in the ratio of6:4 between Bong and Lapira, respectively.e. Interest of 10% is allowed on average capital, salary allowance of P8,000 is given to Lapira,remainder to be divided in the ratio of 3:7 between Bong and Lapira.

Beginning capital of Bong (Jan 1)= P 60,000 Beginning capital of Lapira (Jan 1) =P 45,000 As a…

Answered: Exercise 2: Division of Income Assume…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Exercise 2: Division of Income

(I attached the question for Exercise 1 so please check it out. Thanks)

Assume that in Exercise 1, the partnership of Bong and Lapira realized a net income of P17,400. How much must be the share of each partner therein under each of the following methods of dividing net income?

Net income is divided based on the beginning capital ratio.
Net income is divided based on the ending capital ratio.
Net income is divided based on the average capital ratio.
Interest of 12% is allowed on average capital with the remainder divided in the ratio of 6:4 between Bong and Lapira, respectively.
Interest of 10% is allowed on average capital, salary allowance of P8,000 is given to Lapira, remainder to be divided in the ratio of 3:7 between Bong and Lapira.

Exercise 1: Computation of Average Capital
You are required to compute for the average capital of Bong and Lapira based on the
following postings to their accounts for 2019:
Lapira, Capital
18,000 | Jan. 1
Bong Capital
Jan. 1
60,000
Oct. 1
45,000
Sept 30
30,000
Bong, Personal
Lapira, Personal
Jan. 1
12,000
Oct. 31
6,000 | Jan. 1
24,000
Aug. 1
15,000

Exercise 2: Division of Income
Assume that in Exercise 1, the partnership of Bong and Lapira realized a net income of P17,400.
How much must be the share of each partner therein under each of the following methods of
dividing net income?
a. Net income is divided based on the beginning capital ratio.
b. Net income is divided based on the ending capital ratio.
Net income is divided based on the average capital ratio.
c.
d. Interest of 12% is allowed on average capital with the remainder divided in the ratio of
6:4 between Bong and Lapira, respectively.
e. Interest of 10% is allowed on average capital, salary allowance of P8,000 is given to Lapira,
remainder to be divided in the ratio of 3:7 between Bong and Lapira.

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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