On January 1, 2020, A and B have capital balances of P 200,000 and P 300,000 respectively. On July 1,2020, A invests an additional P 10,000 and B withdraws P 11,600. Profits and losses are divided as follows: - Each of the partners shall be given 3,000 monthly salary; - Interest of 12% on ending capital balances; - Bonus to B of 10% of profit after salary but before interest and bonus if profit exceeds 500,000 for the year. - Any remainder is divided in the ratio of their capital balances at the start of the year. Revenues for the year totaled P 1,000,000 and Expenses amounted 300,000 For the year 2021, the income summary account has a credit balance of P 500,000 and there are no additional investments or withdrawals during the year. How much is B's share in net income/ net losses for the year 2021?
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.
On January 1, 2020, A and B have capital balances of P 200,000 and P 300,000 respectively. On July 1,2020, A invests an additional P 10,000 and B withdraws P 11,600.
- Each of the partners shall be given 3,000 monthly salary;
- Interest of 12% on ending capital balances;
- Bonus to B of 10% of profit after salary but before interest and bonus if profit exceeds 500,000 for the year.
- Any remainder is divided in the ratio of their capital balances at the start of the year.
Revenues for the year totaled P 1,000,000 and Expenses amounted 300,000
For the year 2021, the income summary account has a credit balance of P 500,000 and there are no additional investments or withdrawals during the year.
How much is B's share in net income/ net losses for the year 2021?
A. 303,885.43
B. 196,114.57
C. 108,111.75
D. 180,880.25
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