Partnership Dissolution: Problem 1 Lucio, Henry and John are partners sharing profits and losses of 40%, 40% and 20%, respectively. The December 31, 2017 balance sheet of the partnership before any profit allocation was summarized as follows: ASSETS Cash 90,000 60,000 75,000 22,500 Inventories Equipment Trademark Liabilities and Capital Accounts Payable John, Loan Lucio, Capital Henry, Capital John, Capital 7,500 5,000 100,000 90,000 45,000 The income summary account has a credit balance of P25,000 for the year 2017. On January 1, 2018, a partner has decided to retire from the partnership and by mutual agreement among partners; the following have been arrived at: > Inventories amounting to P10,000 is considered obsolete and must be written off. > Equipment should be adjusted to their current value of P50,000 > Trademarks are written-off immediately before the retirement. It was agreed that the partnership will pay the retiring partner for his interest in the partnership inclusive of loan balance. 1. If John retired and received P45,000 as a retirement price, how much will be the bonus to or (from) Henry? Your answer

Partnership Dissolution: Problem 1 Lucio, Henry and John are partners sharing profits and losses of 40%, 40% and 20%, respectively. The December 31, 2017 balance sheet of the partnership before any profit allocation was summarized as follows: ASSETS Cash 90,000 60,000 75,000 22,500 Inventories Equipment Trademark Liabilities and Capital Accounts Payable John, Loan Lucio, Capital Henry, Capital John, Capital 7,500 5,000 100,000 90,000 45,000 The income summary account has a credit balance of P25,000 for the year 2017. On January 1, 2018, a partner has decided to retire from the partnership and by mutual agreement among partners; the following have been arrived at: > Inventories amounting to P10,000 is considered obsolete and must be written off. > Equipment should be adjusted to their current value of P50,000 > Trademarks are written-off immediately before the retirement. It was agreed that the partnership will pay the retiring partner for his interest in the partnership inclusive of loan balance. 1. If John retired and received P45,000 as a retirement price, how much will be the bonus to or (from) Henry? Your answer

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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Dividing partnership income Carmelo Fernandez and Bobby Morett formed a partnership, investing $187,500 and $62,500, respectively. Determine their participation in the year's net income of $290,000 under each of the following independent assumptions: a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3. d. Salary allowances of $38,000 and $45,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 5% on original investments, salary allowances of $38,000 and $45,000, respectively, and the remainder divided equally. Fernandez Morett a. b. C. d. e.
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Ending Partner balances Burns and Allan have formed a partnership and invested $20.000 and $40,000, respectively. They have agreed to share profits as follows: 1) Burns is to receive a "salary" of $20.000 and Allan is to receive a "salary" of $30,000. 2) $30.000 is to be allocated according to their original capital contributions to the partnership. 3) The remainder is to be allocated 2:3 respectively Assuming that the business had a loss of $15000, allocate the loss to Burns and Allan.