Exercise 3-6 (Division of Profit; Interest on Capital, Salary Allowance, and Bonus to Managing Partner) Becky and Lala formed a partnership on January 2, 2019 and agreed to share profit 90% and 10%, respectively. Becky invested cash of P200,000. Lala invested no assets but has a
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.
![Exercise 3-6 (Division of Profit; Interest on Capital, Salary Allowance, and Bonus to
Managing Partner)
Becky and Lala formed a partnership on January 2, 2019 and agreed to share profit 90% and
10%, respectively. Becky invested cash of P200,000. Lala invested no assets but has a
specialized expertise and manages the firm full time. There were no withdrawals during the
year. The partnership contract provides for the following:
1. Capital accounts are to be credited annually with the interest at 10% of beginning
capital.
2. Lala is to be paid a salary of P8,000 a month.
3. Lala is to receive a bonus of 25% of profit calculated before deduction of salary and
interest on capital accounts.
4. Bonus, interest, and Lala's salary are to be considered as expenses.
The fiscal year 2014 income statement for the partnership includes the following:
P701,600
379.600
P322.000
Revenue
Expenses (including salary, interest and bonus)
Profit
Instructions: Determine the amount of bonus to be credited to Lala.
You may modify your answer sheet to fit your solution.
Follow the Instructions strictly. Answer what is asked only.
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