Mazin and Marwan commenced business as partners on Jan 1, 2020. They contributed RO 60,000, RO 40,000 as their share of capital. The partners decided to share their profits in the ratio of 4:2. Interest on capital was to be provided @ 7.5% p.a. The profits of the firm after providing salary and interest on capital were RO 40,000. Calculate Interest on Capital of Mr Mazin? a. 4500 b. 13333.33 c. 2800 d. 26666.66

Mazin and Marwan commenced business as partners on Jan 1, 2020. They contributed RO 60,000, RO 40,000 as their share of capital. The partners decided to share their profits in the ratio of 4:2. Interest on capital was to be provided @ 7.5% p.a. The profits of the firm after providing salary and interest on capital were RO 40,000. Calculate Interest on Capital of Mr Mazin? a. 4500 b. 13333.33 c. 2800 d. 26666.66

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Elisa Diaz and Ma. Concepcion Manalo formed a partnership, investing P330,000 and P110,000,…

A: As posted multiple sub parts we are answering only first three sub parts kindly repost the…

Q: Calculate the Sales Growth of the most recent year

A: Sales is the revenue which a company has earned during the year by way of providing the services or…

Q: 3. Partnershin-Distribution of Profit & Loss: Quiser and Abbas formed a partnership on January 1,…

A: Calculation of interest on Partners capital : Quiser = Rs 1,50,000 x 10% = Rs. 15,000 Abbas = Rs…

Q: thership of capital into an existing par on March 1, 2021. On June 1, 2021, the partner contributed…

A: Answer is option b) 51,667

Q: 6. Figueroa and Aguhob are partners in a CPA Review School. They share profits in the ratio of 2:1.…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Ayayai Company estimates that 240.000 direct labor hours will be worked during the coming year.…

A: Variable costs are costs that varies with the change in the level of output whereas fixed costs are…

Q: ẩẩOj Decembeẩ 2ẩ0ẩ20, Antipolo and Bunao formed a partnership, agreeing to share for profits and…

A: Contributions, other than cash, should be measured at the agreed value which is normally the fair…

Q: For Oriole Co., beginning capital balances on January 1, 2022, are Nancy Payne $22,500 and Ann Dody…

A: A partnership is a mutual agreement entered by two or more entities for the purpose, of agreeing to…

Q: Samuel and Darci are partners. The partnership capital for Samuel is $50,000 and for Darci is…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Reena and Raman are partners with capitals of Rs. 3,00,000 and Rs. 1,00,000 respectively. The profit…

A: In the given problem, the partners are entitled to equal profits after appropriations of interest on…

Q: Kristen Lu purchased a used automobile for $18,950 at the beginning of last year and incurred the…

A: Relevant costs are expenses and revenues that directly impact a specific business decision. These…

Q: 14. The income summary of Cabatu and Dacua Partnership for the year ended December 31, 2020 show a…

A: partners capital account prepare

Q: Samuel and Darci are partners. The partnership capital for Samuel is $50,000 and for Darci is…

A: Determine the total amount of new partnership capital.

Concept explainers

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.

Question

Mazin and Marwan commenced business as
partners on Jan 1, 2020. They contributed
RO 60,000, RO 40,000 as their share of
capital. The partners decided to share their
profits in the ratio of 4:2. Interest on capital
was to be provided @ 7.5% p.a. The profits
of the firm after providing salary and interest
on capital were RO 40,000. Calculate
Interest on Capital of Mr Mazin?
Ⓒa. 4500
b. 13333.33
OC. 2800
c.
Ⓒd. 26666.66

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 : Notes

VIEW

Step 2 : Calculation of interest on capital of Mazin

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On January 2,2019, B and P formed a partnership. B contributed capital of P 175,000 and P , P 25,000. They agreed to share profits and losses 80% and 20%, respectively. P is a general manager and works in the partnership in full time. P is given a salary of P 5,000 a month. An interest of 5% of the starting capital is given also to both partners and a bonus to P of 15% of net profit before the salary, interest and the bonus. The condensed statement of comprehensive income of the partnership for the year ended December 31,2019 is as follows: Net sales P 875,000 Cost of Sales 700,000 Gross Profit on Sales P 175,000 Expenses ( including salary, interest and bonus) 143,000 Total comprehensive income P 32,000 The bonus of Perez for the year 2019 is?
2. Use the following information for the next three cases: The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively. DA bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. Each partner shall receive 10% interest on average capital investments. TAny remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: AP100,000 B 60,000 C 120,000 Case #1: The partnership earns profit of P100,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #2: The partnership earns profit of P10,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #3: The partnership incurs loss of P20,000. Requirement: Compute for the respective shares of the partners on the…
What are the answers on questions 5,6,7 and 8?
The balance sheet of partnership of Johnny Tan, Eduardo Chua, and Karol Benito on December 31, 2020, when the partners decided to liquidate showed the following: Assets Liabilities & Capital Cash Liabilities P180,000 500,000 Tan, Loan Tan, Capital (30%) Chua, Capital (40%) Benito, Capital (30%) Total P150,000 80,000 185,000 45,000 220,000 P680,000 Other Assets Total P680,000 Cash is distributed as it becomes available. At the end of the liquidation process, total liquidation expenses incurred and paid amounted to P75,000. Other assets are realized as follows: Cash Proceeds Book Value P 290,000 December 2020 P225,000 215,000 February 2021 210.000 Requirements: 1) Prepare a Statement of Liquidation. 2) Show schedule in support of monthly distributions. 3) Prepare the journal entries to record the liquidation process. 4) Prepare a Cash Priority Program.
What are the answers on questions 1,2,3 and 4?
The following information was obtained from the records of MT Suppliers, a partnership business with Mary and Tanya as partners, on 28 February 2023 (the end of the financial year): Mary's capital balance was R600 000 on 28 February 2023. She increased her capital contribution by R200 000 on 01 December 2022 (and this was recorded). She earns interest at a rate of 15% per annum. Which one of the following reflects Mary's interest on capital for the year ended 28 February 2023? O A. R60 000 B. R82 500 O C. R90 000 OD. R67 500
please answer 41 in detail
Samuel and Darci are partners. The partnership capital for Samuel is $58,900 and that of Darci is $72,100. Josh is admitted as a new partner by investing $54,800 cash. Josh is given a 25% interest in return for his investment. The amount of the bonus to the old partners is a. $54,800 b. $8,350 Oc. $61,933 Od. $0
Samuel and Darci are partners. The partnership capital for Samuel is $50,100 and that of Darci is $89,800. Josh is admitted as a new partner by investing $52,400 cash. Josh is given a 22% interest in return for his investment. The amount of the bonus to the old partners is a. $52,400 b. $64,100 c. $10,094 d. $0
Elisa Diaz and Ma. Concepcion Manalo formed a partnership, investing P330,000 and P110,000, respectively. Determine the partners' participation in the 2019 profit of P420,000 under each of the following independent assumptions: a.) No agreement concerning division of profit. b.) Divided in the ratio of original capital investment. c.) Interest at the rate of 8% allowed on original investments and the remainder divided in the ratio of 2:3. d.) Salary allowances of P50,000 and P70,000, respectively, and the balance to be divided equally. e.) Allowance of interest at the rate of 8% on original investments, salary allowances of P50,000 and P70,000, respectively, and the remainder to be divided equally.
Partners Adan and Eba have capital balances of Paradise partnership of P400,000 and P600,000, respectively. They agree to share profits and losses as follows: Adan Eba As salaries P100,000 P120,000 As interest on capital at the beginning of the year 10% 10% Remaining profits or losses 50% 50% Based on the information above, answer the following: If income for the year was P300,000, what will be the distribution of income to Adan? If net loss for the year was P20,000, what will be the distribution to Eba?
One, Two and Three are partners sharing profits and losses in the ratio of 2:3:5 respectively. The partnership is balance sheet at August 30, 2016 follows:One 40,000 Two 60,000 Three 100,000 A.Assuming that Ako is admitted to purchase interest and paid 40,000 for a 40% interest. 1.How much is the total capital after Ako's Admission? 2.What will be the new share of Three after Ako's Admission? 3.What us the Adjusted capital of Two after Ako's admission? B. Assuming that Ako is admitted by purchase of interest from Three and paid 60,000 for a 30% interest. 1. What will be the new share of Three after Ako's Admission? 2. What amount will be credited to Ako upon his admission? 3. What is the adjusted capital of Thee after Ako's admission C. Assuming that Ako is admitted by investing 40,000 for a 40% interest. No revaluation of assets is to be recognized. 1. How much is the total capital after Ako's Admission? 2. What is the adjusted capital of Three after Ako's admission? 3. What…