Answered: On July 1, 2018, Bisana invested an…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Rubio and Bisana established a trading. They share profits equally after allowing salaries of P40,000 per year for Rubio and interest on partner’s capital at 5% per year. On Jan. 1, 2018, their capital balances are as follows: Rubio, P200,000 and Bisana, P100,000.

On July 1, 2018, Bisana invested an additional P100,000 and Rubio’s salary was discontinued. The partnership profit for the year ended Dec. 31,2018 was P337,500. What was Rubio’s total profit share for the year ended Dec. 31, 2018?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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