Peter and Paul formed a partnership on January 1, 2020, and agreed to share net income and losses 90 percent and 10 percent, respectively. Peter invested cash of P250,000. Paul invested no assets but had a specialized expertise and managed the firm full time. The partnership contract provided for the following: a. Partners' capital accounts are to be credited annually with interest at 5 percent of beginning capital account balances. b. Paul is to be paid a salary of P 10,000 a month. c. Paul is to receive a bonus of 20 percent of income before deduction of salary, bonus and interest on partners' capital account balances. d. Bonus, interest, and Paul salary are considered expenses. The Income Statement for the year ended 2015 for the partnership includes the following: P 964,500 497,000 P 467,500 Revenue Expenses (including salary and interest) Net income What is Paul's share in net income?

Peter and Paul formed a partnership on January 1, 2020, and agreed to share net income and losses 90 percent and 10 percent, respectively. Peter invested cash of P250,000. Paul invested no assets but had a specialized expertise and managed the firm full time. The partnership contract provided for the following: a. Partners' capital accounts are to be credited annually with interest at 5 percent of beginning capital account balances. b. Paul is to be paid a salary of P 10,000 a month. c. Paul is to receive a bonus of 20 percent of income before deduction of salary, bonus and interest on partners' capital account balances. d. Bonus, interest, and Paul salary are considered expenses. The Income Statement for the year ended 2015 for the partnership includes the following: P 964,500 497,000 P 467,500 Revenue Expenses (including salary and interest) Net income What is Paul's share in net income?

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

Peter and Paul formed a partnership on January 1, 2020, and agreed to share net income and losses
90 percent and 10 percent, respectively. Peter invested cash of P250,000. Paul invested no assets
but had a specialized expertise and managed the firm full time. The partnership contract provided
for the following:
a. Partners' capital accounts are to be credited annually with interest at 5 percent of
beginning capital account balances.
b. Paul is to be paid a salary of P 10,000 a month.
c. Paul is to receive a bonus of 20 percent of income before deduction of salary, bonus and
interest on partners' capital account balances.
d. Bonus, interest, and Paul salary are considered expenses.
The Income Statement for the year ended 2015 for the partnership includes the following:
Revenue
P 964,500
Expenses (including salary and interest)
497,000
Net income
P 467,500
What is Paul's share in net income?

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