On April 1, 2020, Lana, Brent and Marie formed LBM Partnership with original contributions ofP400,000, P100,000 and P500,000, respectively. The articles of co-partnership provides that profit orloss shall be distributed under the following terms:• Lana, Brent and Marie shall be entitiled to monthly salaries of P1,000, P2,000 and P3,000 eachrespectively.• 10% return on the original capital contribution.• As managing partner, Brent shall receive bonus equal to 20% of net income after salaries andinterest but before bonus.• The remainder shall be distributed on the basis of original capital ratio.During the year, the partners regularly withdraw 1⁄4 of their monthly salary. The December 31, 2020statement of financial position of LBM Partnership shows that the capital balance of Lana is P531,080.What is the share of Brent in the partnership net income?A. 108,038.75 C. 105,820B. 106,070 D. 103,195

On April 1, 2020, Lana, Brent and Marie formed LBM Partnership with original contributions ofP400,000, P100,000 and P500,000, respectively. The articles of co-partnership provides that profit orloss shall be distributed under the following terms:• Lana, Brent and Marie shall be entitiled to monthly salaries of P1,000, P2,000 and P3,000 eachrespectively.• 10% return on the original capital contribution.• As managing partner, Brent shall receive bonus equal to 20% of net income after salaries andinterest but before bonus.• The remainder shall be distributed on the basis of original capital ratio.During the year, the partners regularly withdraw 1⁄4 of their monthly salary. The December 31, 2020statement of financial position of LBM Partnership shows that the capital balance of Lana is P531,080.What is the share of Brent in the partnership net income?A. 108,038.75 C. 105,820B. 106,070 D. 103,195

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 9E

See similar textbooks

Similar questions

A and B formed a partnership on February 28, 2022 by contributing P430,000 and P570,000, respectively. The operations of the partnership for 2022 resulted to a profit of P375,000. Partners A and B agreed to the following allocation scheme: a. Weekly salary allowance of P1,000 is to be given to Partner A; b. 5% interest is to be credited to the partners; c. Bonus of 10% based on profit after salaries and interest to B. d. Residual income is to be allocated equally. How should the profit be allocated to A and B, respectively?
On January 1, 2021, Kobe, Lebron, and Michael formed a partnership with respective capital contribution of P2,000,000, P5,000,000, and P3,000,000. The articles of co-partnership provides that profit or loss shall be distributed accordingly: a. 20% interest on original capital contribution. b. P30,000 monthly salary for Kobe and P50,000 monthly salary for Michael. c. The remainder shall be distributed on the basis of original capital contribution ratio. On December 31, 2021, Kobe and Lebron made withdrawals of P500,000 and P1,000,000, respectively. the statement of financial position of the partnership shows that Lebron’s capital on December 31, 2031 is P6,500,000. What is the capital balance of Kobe on December 31, 2021
The partnership contract for the SDF and MGB Partnership, a generat partnership, provided for annual salaries of P140,000 and P175,000 to SDF and MGB, respectively, with the resulting profit or loss to be divided equally. 1. Profit before salaries for the year ended June 30, 2018 was P315,000. Required: Give the entry to transfer income summary account balance to drawing accounts of the partners.
On March 1, 2020, JM and KK formed a partnership with each contributing the following assets (see attached image) 1. The building is subject to mortgage loan of P800,000, which is to be assumed by the partnership agreement provides that JM and KK share profits and losses 30% and 70%, respectively. On March 1, 2020 the balance in KK's capital account should be: A. 3,700,000 C. 2,900,000B. 3,045,000 D. 2,485,000 2. Assume that the mortgage loan is not assumed by the partnership and the partners agree to withdraw or contribute additional cash to make their capital balances agree with their profit and loss ratio. On March 1, how much cash should be invested/(withdrawn) by KK? A. (1,215,000) C. (655,000)B. (415,000) D. 655,000
Part II: Problems 1. On January 1, 2021, Kaye, Erika and April formed a partnership with original capital contribution ratio or 4:5:1 for total agreed capitalization of P5,000,000. The profit or loss ratio agreement provides that profits shall be distributed in the ratio of 3:2:5 while losses shall be distributed in the ratio of 6:1:3. During 2021, the partnership reported net income of P2,000,000 with Kaye and Erika withdrawing P500,000 and P300,000, respectively. During 2022, the partnership reported net loss of P1,000,000 with Erika and April withdrawing P200,000 and P400,000 respectively. What is the adjusted capital balances of each partner on December 31, 2022?
The partnership contract for the SDF and MGB Partnership, a general partnership, provided for annual salaries of P140,000 and P175,000 to SDF and MGB, respectively, with the resulting profit or loss to be divided equally. • Profit before salaries for the year ended June 30, 2021 was P315,000. Required: Give the journal entry to transfer income summary account balance to drawing accounts of the partners.
On January 1, 2023, AA and BB formed AB partnership with a total agreed capital of P5,000,000 and a capital interest ratio of 70:30. The following were ascertained during the year as to distribution of profits and losses: • AA will receive quarterly salaries of P100,000 5% interest on initial capital will be provided Any remainder will be shared by their capital contribution ratio At the end of the year, the partnership had a P500,000 credit balance in its income summary account. How much is the share of AA in the partnership income (loss)?
AB Partnership’s operation for the year 2022 resulted in a profit of P180,000. Their profit sharing agreement provided the following:a. Salaries of P15,000 and P25,000 is to be given to A and B respectively;b. 15% of profit after salaries but before bonus is to be given to Partner B;c. The balance is to be divided using the 3:2 ratio, respectively.How much profit is to be allocated to B?
David and Isac are in partnership, sharing profits 3:2. On 1 July 2020 Casey joins the partnership. Under the new partnership agreement profits will be shared by David, Isac, and Casey 5:3:2 respectively with the following annual salaries. Isac £30,000 pa Casey £38,000 pa Profit accrues evenly over the year. The partnership profit for the year at 31 Dec 2020 was £450,000. What was the allocated profit as 31 Dec 2020 for David, Isac, and Casey?
The partnership agreement of Axel, Berg & Cobb provides for the year-end allocation of net income in the following order: • First, Axel is to receive 10% of net income up to P100,000 and 20% over P100,000. . Second, Berg and Cobb each are to receive 5% of the remaining income over P150,000. • The balance of income is to be allocated equally among the three partners. The partnership's 2020 net income was P250,000 before any allocations to partners. What amount should be allocated to Axel?
The partnership agreement of AAA, BBB and CCC provides for the year-end allocation of net income in the following order: • First, AAA is to receive 10% of net income up to P100,000 and 20% over P100,000 Second, BBB and CCC each are to receive 5% of the remaining income over P150,000 • The balance of income is to be allocated equally among the three partners The partnership's 2009 net income was P250,000 before any allocations to partners. What amount should be allocated to BBB?
1. (a) The partnership of Fatimah and Anisa commenced on 1 January 2020 and accounts are prepared to 31 December annually. Their partnership recorded a profit before appropriation of RM60,000. The partnership agreement provided for the following: Interest on capital and drawings 3% per annum for each partner Fatimah's drawings RM4,200 Anisa's drawings RM1,400 Fatimah's capital contribution RM14,000 Anisa's capital contribution RM7,000 Salary: Fatimah Share on divisible income / (loss): Fatimah Anisa RM28,000 2/3 1/3 Required: Prepare a profit and loss appropriation account. (b) How does the tax treatment apply to the partnership?