f. The partners agreed to share income by paying salaries of $80,000 to Thomas and P56,000 to Lopez, allowing interest of 10.5 percent on their original investments, and dividing the remainder by 60 percent for Thomas and 40% for Lopez.
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.
![In January 2013, Edi Thomas and George Lopez agreed to produce and sell chocolate candies
under the company name T&L Chocolates. Thomas contributed P580,000 in cash to the business.
Lopez contributed the building and equipment, valued at P480,000 and P230,000, respectively.
The partnership had an income of P675,000 during 2013 but was less successful during 2014,
when income was only P580,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe5fb8ec7-7823-4dc2-86ac-d84d862360ff%2F0bfebf81-fed1-40b1-8655-2de14b420dd7%2F903i6jd_processed.png&w=3840&q=75)
![f. The partners agreed to share income by paying salaries of P80,000
to Thomas and P56,000 to Lopez, allowing interest of 10.5 percent on
their original investments, and dividing the remainder by 60 percent for
Thomas and 40% for Lopez.
DISTRIBUTION OF INCOME BASED ON AGREED AMOUNT OF SALARY PER
PARTNER, INTEREST ON INITIAL INVESTMENT AND THE REMAINDER ON
SPECIFIC PERCENTAGES.
2013
Income of Partner
Income Distributed
675,000.00
Total Income For Distribution
Distribution of Salaries:
George Lopez
(61)
Edi Thomas
(62)
(63)
Remaining Income After Salaries
(64)
Distribution of Interest:
George Lopez
(65)
Edi Thomas
(66)
(67)
Remaining Income After Salaries and Interest
Distribution of Remaining Amount:
George Lopez
(68)
Edi Thomas
(69)
(70)
Remaining income
(71)
Income of Partners
(72)
(73)
P
675,000.00
2014
Income of Partner
Income Distributed
Total Income For Distribution
P
580,000.00
Distribution of Salaries:
George Lopez
(74)
Edi Thomas
(75)
(76)
Remaining Income After Salaries
(77)
Distribution of Interest:
George Lopez
(78)
Edi Thomas
(79)
(80)
Remaining Income After Salaries and Interest
Distribution of Remaining Amount:
George Lopez
(81)
Edi Thomas
(82)
(83)
(84)
Remaining income
Income of Partners
(85)
(86)
580,000.00
P](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe5fb8ec7-7823-4dc2-86ac-d84d862360ff%2F0bfebf81-fed1-40b1-8655-2de14b420dd7%2Ftcpqbn_processed.png&w=3840&q=75)
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