Problem #2Partners Lazaro, Mario, Nestor and Orlando share profits in the ratio of 40%, 30%, 15%and 15%, respectively. The partnership agreement provides that in the event of the death of apartner, the firm shall continue until the end of the fiscal period. Profits shall be considered tohave earned proportionately during the period and the deceased partner's capital shall beadjusted by his share of the profit or loss to the date of death. From the date of death until thedate of settlement with the estate there shall be added interest of 10% computed on the adjustedcapital. The remaining partners shall continue to divide profits in the old ratio. Payment to theestate shall be made within two years from the date of the partner's death.As of January 1, 2019, the capital balances of the partners were as follows:LazaroP 84,000Mario75,000Nestor48,000Orlando45,000P252,000Orlando died on September 30, 2019. The books of the partnership were closed as ofDecember 31, ariving at a credit balance of P45,000 for the Income and Expense SummaryAccount. On December 31, 2019, Nestor notified the remaining partners that he was retiring fromthe partnership and was willing to accept in settlement of his interest the balance of his capitalaccount after the distribution of profits less 25%.The remaining partners accepted his offer and issued a 90-day, 10% note to Nestor inpayment of his interest.InstructionsMake all the entries to reflect the above on the books of the partnership as follow:a. Close Orlando, Capital to a Liability accountb. Distribute the profit on September 30, 2019c. Record the interest accruing as of December 31, 2019d. Distribute the balance of the profit to the remaining partnerse. Retirement of Nestor

The question is related to Partnership Accounting.The details are given. Required a. Close, orlando…

Problem #2 Partners Lazaro, Mario, Nestor and Orlando share profits in the ratio of 40%, 30%, 15% and 15%, respectively. The partnership agreement provides that in the event of the death of a partner, the firm shall continue until the end of the fiscal period. Profits shall be considered to have earned proportionately during the period and the deceased partner's capital shall be adjusted by his share of the profit or loss to the date of death. From the date of death until the date of settlement with the estate there shall be added interest of 10% computed on the adjusted capital. The remaining partners shall continue to divide profits in the old ratio. Payment to the estate shall be made within two years from the date of the partner's death. As of January 1, 2019, the capital balances of the partners were as follows: Lazaro P 84,000 Mario 75,000 48,000 45,000 Nestor Orlando P252,000 Orlando died on September 30, 2019. The books of the partnership were closed as of December 31, ariving at a credit balance of P45,000 for the Income and Expense Summary Account.

Problem #2 Partners Lazaro, Mario, Nestor and Orlando share profits in the ratio of 40%, 30%, 15% and 15%, respectively. The partnership agreement provides that in the event of the death of a partner, the firm shall continue until the end of the fiscal period. Profits shall be considered to have earned proportionately during the period and the deceased partner's capital shall be adjusted by his share of the profit or loss to the date of death. From the date of death until the date of settlement with the estate there shall be added interest of 10% computed on the adjusted capital. The remaining partners shall continue to divide profits in the old ratio. Payment to the estate shall be made within two years from the date of the partner's death. As of January 1, 2019, the capital balances of the partners were as follows: Lazaro P 84,000 Mario 75,000 48,000 45,000 Nestor Orlando P252,000 Orlando died on September 30, 2019. The books of the partnership were closed as of December 31, ariving at a credit balance of P45,000 for the Income and Expense Summary Account.

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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