On Jan. 1, 2016, the Mones, Pitular and Tuazon Partnership was formed with initial investments by the partners as follows: Mones P2,000,000 Pitular 1,000,000 1,000,000 Tuazon According to the partnership agreement, profit or loss is to be divided among the partners as follows: 1. Salaries of P120,000 for Mones, P60,000 for Pitular and P60,000 for Tuazon. 2. Interest at 5% on the original capital balances. 3. The remainder to be divided among Mones, Pitular, and Tuazon in a ratio of 4:1:1, respectively. The partnership reported profit of P350,000 for the year ended Dec. 31, 2016.
On Jan. 1, 2016, the Mones, Pitular and Tuazon Partnership was formed with initial investments by the partners as follows: Mones P2,000,000 Pitular 1,000,000 1,000,000 Tuazon According to the partnership agreement, profit or loss is to be divided among the partners as follows: 1. Salaries of P120,000 for Mones, P60,000 for Pitular and P60,000 for Tuazon. 2. Interest at 5% on the original capital balances. 3. The remainder to be divided among Mones, Pitular, and Tuazon in a ratio of 4:1:1, respectively. The partnership reported profit of P350,000 for the year ended Dec. 31, 2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Determine the partner's share in the profit under each of the following independent situations
Transcribed Image Text:00 Jan. 1, 2016, the Mones, Pitular and Tuazon Partnership was formed with initial
investments by the partners as follows:
Mones
P2,000,000
Pitular
1,000,000
Tuazon
1,000,000
According to the partnership agreement, profit or loss is to be divided among the
partners as follows:
1. Salaries of P120,000 for Mones, P60,000 for Pitular and P60,000 for Tuazon.
2. Interest at 5% on the original capital balances.
3. The remainder to be divided among Mones, Pitular, and Tuazon in a ratio of 4:1:1,
respectively.
The partnership reported profit of P350,000 for the year ended Dec. 31, 2016.
Required:
Determine the partners' share in the profit under each of the following independent
situations:
1. Partner's salaries and interest on capital balances should be fully allocated and any
deficiency between these allocations and profit is to be divided among Mones,
Pitular, and Tuazon in the ratio 4:1:1, respectively.
2. Partner's salaries and interest on capital balances should be made only, to the
extent that the profit can provide.
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