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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Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. The partners agree that Watts will work one-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to the business; (c) a salary allowance of $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 per year to Lyon, 11% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32,500 net income; and Year 3, $54,167 net income. Required: Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of…
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This topic is about Partnership; Distribution of Profits and Losses. Please only choose the correct letter of answer.
SCORE: NAME: PROFESSOR: SECTION: Problem #15 Determining a New Partner's Investment Cost respectively. P150,000 Accounts Payable Morales, Capital Gamino, Capital Quito, Capital Total Liabilities and Capital 260,000 P 40,000 710,000 Cash 180,000 Other Assets 160,000 P750,000 Total Assets P750,000 Assume that the partnership decided to admit Abello as a new partner with a one. fourth interest. Required: For each of the following independent cases, determine the amount that Abello must contribute in cash or other assets: 1. No goodwill or bonus will be recorded. 2. A bonus of P24,000 is to be paid by Abello and allocated to the prior partners. 3. The partners agreed that total resulting capital should be P820,000 and no goodwill should be recognized. 4. Other assets are written down by P20,000 and a bonus of P40,000 is paid to Abello at the time of admission.
Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. The partners agree that Watts will work one-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to the business; (c) a salary allowance of $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 per year to Lyon, 11% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32,500 net income; and Year 3, $54,167 net income. Required: Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of…
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The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after Tatum receives a $10,000 salary and Brook receives a $15,000 salary. Question Content Area Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: If an amount is zero, enter "0". For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300) A. $60,000 Tatum Brook Total Salaries $fill in the blank 4f61950d2013fee_1 $fill in the blank 4f61950d2013fee_2 $fill in the blank 4f61950d2013fee_3 Remaining income allocation fill in the blank 4f61950d2013fee_4 fill in the blank 4f61950d2013fee_5 fill in the blank 4f61950d2013fee_6 Total division of income $fill in the blank 4f61950d2013fee_7 $fill in the blank 4f61950d2013fee_8 $fill in the blank 4f61950d2013fee_9 B. $25,000 Tatum Brook Total Salaries $fill in the blank 4f61950d2013fee_10 $fill in the blank…
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In a partnership ABC, engaged in the flowershop business, the liabilities of the partners are as follows: A – P20, 0000 B – P50, 000 C – P30, 000.i. Can B engage in the same business? Why or why not? ii. How shall any profit and loss be divided among the partners? iii. Suppose D is an industrial partner. What shall be his share?
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