Answered: Problem 1. Alucard and Chou organized…

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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Problem 1. Alucard and Chou organized their partnership on 01/01/19. The following entries were made into their capital accounts during 2019.

Required: If partnership profits for the year equaled P66,000, indicate the allocations between the partners under the following independent profit-sharing allocation conditions:

Interest of 10% is allocated on weighted average capital balance and the remainder is divided equally.
A salary of P9,000 will be allocated to Chou; 10% interest on ending capital is allocated to the partners; remainder is divided 60/40 to Alucard and Chou, respectively.
Salaries are allocated to Alucard and Chou in the amount of P10,000 and P15,000, respectively and the remainder is allocated in the proportion to weighted average capital balances.
A bonus of 10% of partnership profits after bonus is credited to Alucard, a salary of P35,000 is allocated to Chou, a P20,000 salary is allocated to Alucard, 10% interest on weighted capital is allocated, and remainder is split equally.

Problem 1. Alucard and Chou organized their partnership on 01/01/19. The following entries were made
into their capital accounts during 2019.
Alucard, capital
Chou, capital
BB
BB
25,000
1/1
35,000
3/1
10,000
6/1
10,000
9/1 10,000
10/1
5,000
11/1
5,000
ЕВ
50,000
12/1
8,000
ЕВ
28,000
Required: If partnership profits for the year equaled P66,000, indicate the allocations between the
partners under the following independent profit-sharing allocation conditions
1. Interest of 10% is allocated on weighted average capital balance and the remainder is divided
equally.
2. A salary of P9,000 will be allocated to Chou; 10% interest on ending capital is allocated to the
partners; remainder is divided 60/40 to Alucard and Chou, respectively.
3. Salaries are allocated to Alucard and Chou in the amount of P10,000 and P15,000, respectively
and the remainder is allocated in the proportion to weighted average capital balances.
4. A bonus of 10% of partnership profits after bonus is credited to Alucard, a salary of P35,000 is
allocated to Chou, a P20,000 salary is allocated to Alucard, 10% interest on weighted capital is
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allocated, and remainder is split equally.

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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