I - PROBLEM SOLVING:Eugene and Alfred are partners in their Ghost Fighting business.Alfred is the managing partner. As of December 2020, their capital accountshowed the following:Eugene Capital_45000 300000 1-JanAlfred Capital90000450000 1-Jan1-Jul-Apr1-Dec3000030000 1-Apr1-Dec105000150000 1-Jun105000 1-Nov195000 1-0ct75000 435000195000 795000|CASE I: Assuming the partnership earned a net profit of P360,000.CASE II: Assuming the partnership incurred a net los of P60,000Required: On your answer sheet (yellow pad), using the following agreements,distribute the profit and losses in Case I & II to Eugene & Alfred.Make a journal entry after your computation.1) Equally2:4 ratio to Eugene and Alfred, respectively3)2)4)5)6) Based on average capital balances60%:40% ratio respectivelyBased on beginning capital balancesBased on ending capital balancesUsing Case I only, the partners agreed to divide the net profit by:a) allowing 10% interest on average capitalb) allowing salary to Alfred amounting to P60,000.c) Alfred will receive a 10% bonus on net income.7)d) Balance/remainder to be distributed 60:40 respectively I - PROBLEM SOLVING:Eugene and Alfred are partners in their Ghost Fighting business.Alfred is the managing partner. As of December 2020, their capital accountshowed the following:Eugene CapitalAlfred Capital1-Jul450003000001-Jan1-Apr900004500001-Jan1-Dec30000300001-Apr1-Dec1050001500001-Jun1050001-Nov1950001-0ct75000435000195000795000CASE I: Assuming the partnership earned a net profit of P360,000.CASE II: Assuming the partnership incurred a net loss of P60,000Required: On your answer sheet (yellow pad), using the following agreements,distribute the profit and losses in Case I & II to Eugene & Alfred.Make a journal entry after your computation.1)2)3)Equally2:4 ratio to Eugene and Alfred, respectively60%:40% ratio respectively4)5)6)Based on beginning capital balancesBased on ending capital balancesBased on average capital balancesUsing Case I only, the partners agreed to divide the net profit by:a) allowing 10% interest on average capitalb) allowing salary to Alfred amounting to P60,000.с)7)Alfred will receive a 10% bonus on net income.d)Balance/remainder to be distributed 60:40 respectively

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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I - PROBLEM SOLVING: Eugene and Alfred are partners in their Ghost Fighting business. Alfred is the managing partner. As of December 2020, their capital account showed the following: Eugene Capital_ 45000 300000 1-Jan Alfred Capital 90000450000 1-Jan 1-Jul -Apr 1-Dec 30000 30000 1-Apr 1-Dec 105000 150000 1-Jun 105000 1-Nov 195000 1-0ct 75000 435000 195000 795000| CASE I: Assuming the partnership earned a net profit of P360,000. CASE II: Assuming the partnership incurred a net los of P60,000 Required: On your answer sheet (yellow pad), using the following agreements, distribute the profit and losses in Case I & II to Eugene & Alfred. Make a journal entry after your computation. 1) Equally 2:4 ratio to Eugene and Alfred, respectively 3) 2) 4) 5) 6) Based on average capital balances 60%:40% ratio respectively Based on beginning capital balances Based on ending capital balances Using Case I only, the partners agreed to divide the net profit by: a) allowing 10% interest on average capital b) allowing salary to Alfred amounting to P60,000. c) Alfred will receive a 10% bonus on net income. 7) d) Balance/remainder to be distributed 60:40 respectively

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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