Problem 2: Partners' capital account A and B formed a partnership and began operation on March 1, 20-. A invested P100,000 cash while B invested equipment with a book value of P300,000 and a fair value of P180,000. On August 31, 20x1, A invested additional cash if P20,000. The partnership agreement stipulated the following: a. Monthly salary of P2,000 and P10,000 to A and B respectively, recognized as expenses. b. 20% bonus on profit before salaries and interest but after bonus to B. c. 12% annual interest on the beginning capital balance of A. d. Remainder to be divided equally. The monthly salaries are withdrawn by the partners at each month-end. The partnership profit of P210,000 during the period before deduction of bonus and interest. Required: Compute the ending balances of each of the partners capital account.
Problem 2: Partners' capital account A and B formed a partnership and began operation on March 1, 20-. A invested P100,000 cash while B invested equipment with a book value of P300,000 and a fair value of P180,000. On August 31, 20x1, A invested additional cash if P20,000. The partnership agreement stipulated the following: a. Monthly salary of P2,000 and P10,000 to A and B respectively, recognized as expenses. b. 20% bonus on profit before salaries and interest but after bonus to B. c. 12% annual interest on the beginning capital balance of A. d. Remainder to be divided equally. The monthly salaries are withdrawn by the partners at each month-end. The partnership profit of P210,000 during the period before deduction of bonus and interest. Required: Compute the ending balances of each of the partners capital account.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 2:
Partners' capital account A and B formed a partnership and began operation on March 1, 20-. A invested
P100,000 cash while B invested equipment with a book value of P300,000 and a fair value of P180,000.
On August 31, 20x1, A invested additional cash if P20,000. The partnership agreement stipulated the
following:
a. Monthly salary of P2,000 and P10,000 to A and B respectively, recognized as expenses.
b. 20% bonus on profit before salaries and interest but after bonus to B.
c. 12% annual interest on the beginning capital balance of A.
d. Remainder to be divided equally. The monthly salaries are withdrawn by the partners at each
month-end. The partnership profit of P210,000 during the period before deduction of bonus and
interest.
Required: Compute the ending balances of each of the partners capital account.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F49a9f7e1-b44c-42e9-8fe6-287376b1b416%2F9f2929b4-a8c9-4603-a658-659e2017b039%2F3feoq8n_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 2:
Partners' capital account A and B formed a partnership and began operation on March 1, 20-. A invested
P100,000 cash while B invested equipment with a book value of P300,000 and a fair value of P180,000.
On August 31, 20x1, A invested additional cash if P20,000. The partnership agreement stipulated the
following:
a. Monthly salary of P2,000 and P10,000 to A and B respectively, recognized as expenses.
b. 20% bonus on profit before salaries and interest but after bonus to B.
c. 12% annual interest on the beginning capital balance of A.
d. Remainder to be divided equally. The monthly salaries are withdrawn by the partners at each
month-end. The partnership profit of P210,000 during the period before deduction of bonus and
interest.
Required: Compute the ending balances of each of the partners capital account.
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