Partners A, B and C are contemplating using the following profit distribution plan: Salary is to be given to A in the amount of P60,000, with the remainder in an equal rates to all partners. A is guaranteed a minimum profit share of P100,000. a) Profit for the first year is P240,000 b) Profit for the second year is P150,000. Compute for the profit share of partners B and C in both years.

Partners A, B and C are contemplating using the following profit distribution plan: Salary is to be given to A in the amount of P60,000, with the remainder in an equal rates to all partners. A is guaranteed a minimum profit share of P100,000. a) Profit for the first year is P240,000 b) Profit for the second year is P150,000. Compute for the profit share of partners B and C in both years.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 2PA: Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances...

See similar textbooks

Similar questions

A is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus of 10% of net income before salary and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P100,000. What amount of income would be necessary so that A would consider the choices to be equal?
Maxwell is trying to decide whether to accept a salary of P40,000 or salary of P25,000 plus a bonus of 10% of net income after salaries and bonus as a means of allocating profit among partners. Salaries traceable to the other partners are estimated to be P100,000. What amount of income would be necessary so that Maxwell would consider choices to be equal?
Maxwell is trying to decide whether to accept a salary of P40,000 or a salary of $25,000 plus a bonus of 10% of profit after salaries and bonus, as a means of allocating profit among partners. Salaries traceable to the other partners are estimated to be P100,000. What amount of profit would be necessary so that Maxwell would consider the choices to be equal?
Anne is trying to decide whether to accept a salary of P80,000 or a salary of P50,000 plus a bonus of 10% of net income after salary and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P200,000. What amount of income would be necessary so that Anne would consider the choices to be equal?
Bing is trying to decide whether to accept a salary of P120,000 or a salary of P75,000 plus a bonus of 10% of net income after salary and bonus as a means of allocating profit among the partners. Salaries are traceable to other partners are estimated to be P300,000. What amount of income would be necessary so that Bing would consider the choices to be equal?
What amount of income would be necessary so that Irene would consider the choices to be equal?
2. Use the following information for the next three cases: The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively. DA bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. Each partner shall receive 10% interest on average capital investments. TAny remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: AP100,000 B 60,000 C 120,000 Case #1: The partnership earns profit of P100,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #2: The partnership earns profit of P10,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #3: The partnership incurs loss of P20,000. Requirement: Compute for the respective shares of the partners on the…
ELISE and FIORA are considering forming a partnership whereby profits will beallocated through the use of salaries and bonuses. Bonuses will be 10% of net income after total salaries and bonuses. ELISE will receive a salary of P30,000 and a bonus. FIORA has the option of receiving a salary of P40,00 and a 10% bonus or simply receiving a salary of P52,000. Both partners will receive the same amount of bonus. Determine the level of net income that would be necessary so that FIORA would be indifferent to the profit sharing option selected.
The partnership agreement of Angela and Dawn has the following provisions: 1. The partners are to earn 10 percent on the average capital. 2. Angela and Dawn are to earn salaries of $26,000 and $18,000, respectively. 3. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela's average capital is $59,000 and Dawn's is $43,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $90,000 and (b) $28,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign. (a) Distribution of $90,000 income: Profit percentage Average capital Net income Interest on average capital Salary Residual income (deficit) Allocate Total (b) Distribution of $28,000 income: Angela 70 % $ 26,000 Dawn 64,100 $ 102,200 30 % $18,000 $ 5,900 $ 4,300 32,200…
Provide complete solution.
Partner X and Partner Y share profits and losses equally. Partner X and Partner Y receive salary allowances of Php20,000 and Php30,000, respectively, and both partners receive 10% interest on their average capital balances. Total net income for 2021 is Php520,000. If the average capital of Partner X and Partner Y is Php110,000 and Php90,000, what will be the final profit allocations for Partner X in 2021?
The partnership agreement of Angela and Dawn has the following provisions: 1. The partners are to earn 10 percent on the average capital. 2. Angela and Dawn are to earn salaries of $32,000 and $15,500, respectively. 3. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela's average capital is $68,000 and Dawn's is $53,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $81,000 and (b) $26,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? (Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.) Angela Dawn Total (a) Distribution of $81,000 income: Profit percentage % % 0% Average capital Net income Interest on average capital Salary Residual income (deficit) Allocate Total 0 0 $ 0 0 $ 0 $ 0 $ 0 (b) Distribution of $26,000 income: Profit percentage Average capital Net…