On August 1, 2016, A and B formed a partnership. A contributed inventory of P500,000, with a fair value of P300,000 while B contributed cash of P250,000 and a land that cost her P900,000 and a fair value of P1,250,000. The partnership did not assume the mortgage attached to the property worth P250,000. The partners agree to allocate profits and losses as follows: • Each partner shall receive 5% interest on their beginning capital balance. • A will receive a salary of P8,000 per month for managing the business. • The remainder will be divided equally on the first year of operation and 60% and 40% on subsequent years. • A and B is allowed to withdraw P5,000 per month. Any withdrawal is treated as direct reduction of capital. In 2016, the partnership has a net income of P100,000. On July 1, 2017, C was admitted in the partnership by investing P800,000 for a 25% interest. No revaluation of assets is to be recorded. After the admission of C, the partners agreed to divide profits, as follows: Each partner shall receive 5% interest on the amount of her beginning capital • All partners will receive a salary of P2,000 per month. • The balance to be divided 45% to A, 30% to B and 25% to C. Each partner is allowed to withdraw P2,000 per month. Any withdrawal is treated as a direct reduction of capital. In 2017, the partnership earned a profit of P300,000 evenly throughout the year. How much is the capital balance of A, B and C on December 31, 2017?
On August 1, 2016, A and B formed a partnership. A contributed inventory of P500,000, with a fair value of P300,000 while B contributed cash of P250,000 and a land that cost her P900,000 and a fair value of P1,250,000. The partnership did not assume the mortgage attached to the property worth P250,000. The partners agree to allocate profits and losses as follows: • Each partner shall receive 5% interest on their beginning capital balance. • A will receive a salary of P8,000 per month for managing the business. • The remainder will be divided equally on the first year of operation and 60% and 40% on subsequent years. • A and B is allowed to withdraw P5,000 per month. Any withdrawal is treated as direct reduction of capital. In 2016, the partnership has a net income of P100,000. On July 1, 2017, C was admitted in the partnership by investing P800,000 for a 25% interest. No revaluation of assets is to be recorded. After the admission of C, the partners agreed to divide profits, as follows: Each partner shall receive 5% interest on the amount of her beginning capital • All partners will receive a salary of P2,000 per month. • The balance to be divided 45% to A, 30% to B and 25% to C. Each partner is allowed to withdraw P2,000 per month. Any withdrawal is treated as a direct reduction of capital. In 2017, the partnership earned a profit of P300,000 evenly throughout the year. How much is the capital balance of A, B and C on December 31, 2017?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On August 1, 2016, A and B formed a partnership. A contributed inventory of P500,000, with a fair value of P300,000 while B
contributed cash of P250,000 and a land that cost her P900,000 and a fair value of P1,250,000. The partnership did not
assume the mortgage attached to the property worth P250,000.
The partners agree to allocate profits and losses as follows:
Each partner shall receive 5% interest on their beginning capital balance.
A will receive a salary of P8,000 per month for managing the business.
The remainder will be divided equally on the first year of operation and 60% and 40% on subsequent years.
A and B is allowed to withdraw P5,000 per month. Any withdrawal is treated as direct reduction of capital.
In 2016, the partnership has a net income of P100,000. On July 1, 2017, C was admitted in the partnership by investing
P800,000 for a 25% interest. No revaluation of assets is to be recorded.
After the admission of C, the partners agreed to divide profits, as follows:
Each partner shall receive 5% interest on the amount of her beginning capital
All partners will receive a salary of P2,000 per month.
The balance to be divided 45% to A, 30% to B and 25% to C.
Each partner is allowed to withdraw P2,000 per month. Any withdrawal is treated as a direct reduction of capital.
In 2017, the partnership earned a profit of P300,000 evenly throughout the year.
How much is the capital balance of A, B and C on December 31, 2017?
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