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 The monthly salaries are withdrawn by the partners at each month-end.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 The monthly salaries are withdrawn by the partners at each month-end.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
Related questions
Question
100%

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 The monthly salaries are withdrawn by the partners at each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.
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON

Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education