EXERCISE 6-12. Problem Solving 3. Alger is trying to decide whether to accept a salary allowance of P80,000 or a salary allowance of P50,000 plus a bonus of 10% of net income after salary and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P200,000. You are required to determine the amount of partnership net income that would be necessary so that Alger would be indifferent between the two.

EXERCISE 6-12. Problem Solving 3. Alger is trying to decide whether to accept a salary allowance of P80,000 or a salary allowance of P50,000 plus a bonus of 10% of net income after salary and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P200,000. You are required to determine the amount of partnership net income that would be necessary so that Alger would be indifferent between the two.

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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Case 2 X, Y and Z were the partners in a partnership firm. The following information were relating to the business at the end of the year 2019: I. Capital balance of partners X, Y, Z as on 1" January, 2019 was RO 120000, RO 80000 and RO 60000 respectively. Current account balance of partners as on 1" January, 2019: X: RO 45500 (Cr). ii. Y: RO 32600 (Dr) Z: RO 22100 (Cr) Drawings taken by the partners during the year was: X: RO 8800 Y: RO 7500 Z: RO 5400 Interest on drawings was @ 7% and interest on capital was RO 5% Partner X entitied to a salary of RO 3200 per year and Partner Y entitled to a salary of RO 150 per month. iv. V. vi. Partner has earned a commission of RO 3800 vil. Partner Z has paid an additional capital of RO 7000 and partner X has withdrawn the capital of RO 24000 vill. There was a profit of RO 45000 which was transferred from profit and loss appropriation account and partners X, Y, Z shared that profit in the ratio of 3:4:3 respectively. Question: Prepare partners'…
3. Partnership Income Distribution: For partnerships G, If partner C’s total share of the partnership’s net income 300,000 and Partner C’s Interest on original Capital Balance is 80,000 and Partner C’s share of the remainder of the partnership’s net income is 120,000, how much is Partner C’s allowance? A. 120,000 B. 100,000 C. 80,000 D. 60,000 E. None of the above
Exercise 7: Statement of Partners’ Capital Rommel and Racquel are partners dividing net income as follows: Salary allowance of P5,000 is allowed to Rommel; remainder is divided in the ratio of 4:6. The capital of Rommel and Racquel on January 1, 2019 were P30,000 and P35,000 respectively, Rommel withdrew his salary allowance for 2019 of P5,000 in October. Net income for 2019 amounted to P30,000. Required: Statement of Partners’ capital for 2019.
3.16 After six months of operations, the partnership of Pat, Neri, and Cip made a profit of P 372,000 after deducting the partners' interest and salary allowances but before the bonus allowance of 3.16 After six months of operations, the partnership of Pat, Neri a Cip made a profit of P 372,000 after deducting the partners interest and salary allowances but before the bonus allowance e Cip, the managing partner. Their original investments on January 1, 200G were P 200,000, P 300,000, and P 500,000 for Pat, Neri, and Cin respectively. Later, they agreed to adjust their capitals as follows: P 240,000 360,000 400,000 P 1,000,000 Pat Neri Cip Total Their partnership contract contains the following provisions as to the profit and loss sharing ratio: 6% interest will be allowed on the original capital%; Annual salaries: P 120,000 144,000 180,000 • Cip is entitled to a bonus of 20% of the net profit after the interest and salary allowances but before the bonus. Remainder of the profit is to…
Direction: Answer the following questions in problem 3: [6,7,8]
developed in part a(3). etd 189fc64d53a0a6a71 PROBLEM C.11 Dividing Partnership Profit and LossLOC-10 Rothchild Furnishings, Inc., has three partners-Axle, Brandt, and Conrad. At the beginning of the current year their capital balances were: Axle, $180,000; Brandt, $140,000; and Conrad, $80,000. The partnership agreement provides that partners shall receive salary allowances as follows: Axle, $10,000; Brandt, $50,000; and Conrad, $28,000. The partners shall also be allowed 12 percent interest annually on their capital balances. Residual profit or loss is to be divided: Axle, one-half; Brandt, one-third; and Conrad, one-sixth. Instructions Prepare separate schedules showing how income will be divided among the three partners in each of the following cases. The figure given in each case is the annual partnership net income or loss to be allocated among the partners. Round calculations to the nearest dollar. a. Income of $526,000. b. Income of $95,000. c. Loss of $32,000. PROBLEM C.12 Who…
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QUESTION 1 Kumaresan and Cheng are watch repairmen who want to form a partnership and open a jewellery store. An attorney prepares their partnership agreement, which indicates that assets invested in the partnership will be recorded at their fair market value and that liabilities will be assumed at book value. The assets contributed by each partner and the liabilities assumed by the partnership are as the following: Assets Kumaresan Cheng Total 40,000 52,000 4,000 1,000 20,000 30,000 20,000 3,000 500 70,000 72,000 7,000 1,500 30,000 Cash Accounts receivable Allowance for uncollectable accounts Supplies Equipment Liabilities Accounts payable 10,000 32,000 9,000 41,000 REQUIRED: Prepare the journal entries necessary to record the original investments of Kumaresan and Cheng in the partnership.
EXERCISE 4. Journal Entries - Cash, non-cash, and industry contributions. Prepare and upload the journal entries to record contributions of Kim and Krislam into the partnership under the following independent assumptions: 1. Cash contribution amounting to $45,000 each. 2. Kim contributed $35,000 cash and a store equipment with carrying value of $27,000. Krislam contributed $15,000 cash and a delivery vehicle with a fair market value of $195,000. Kim and Krislam agreed that each depreciable asset is overvalued by $4,000. 3. Kim contributed $10,000 cash and furniture and fixtures with carrying value of $32,000. Krislam contributed $5,000 cash and a building with a fair market value of $295,000 and an unpaid mortgage of $27,500. Kim and Krislam agreed that building is undervalued by $9,000. 4. Kim contributed $25,000 cash, a store equipment with fair market value of $47,000, and delivery vehicle with a fair market value of $175,000. Krislam, an industrial partner, was to contribute her…
Required information Important Note! Before you start working on this problem, watch the Hint video. This video shows you exactly how to work this problem. [The following information applies to the questions displayed below.] ** Ramer and Knox began a partnership by investing $68,000 and $102,000, respectively. During its first year, the partnership earned $205,000. Prepare calculations showing how the $205,000 income is allocated under each separate plan for sharing Income and loss. Important Notel Before you start working on this problem, watch the Hint video. This video shows you exactly how to work this problem. 1. The partners did not agree on a plan, and therefore share Income equally Ramer Knox Show Transcribed Text
1. %3D 1. Problem 1: Ted. Ronald and Geno formed a partnership, whereby each of them contributed P30.000.00 They agreed that should the partnership realize profit, the same shall be distributed in the following proportions: Ted, as managing partner Ronald 40% 30% 30% Geno After a year of operation, the partnership's profit amounted to P100,000.00. How much will be the share of each partner? 37