Problem 2. The partnership agreement of Wanwan, Layla and Claude provides for the year-end allocation of net income in the following order:First, Wanwan is to receive 10% of net income up to P200,000 and 20% over 200,000Second, Layla and Claude are each too receive 5% of the remaining income over P300,000.The balance of income is to be allocated equally among the three partners.The partnership income was P500,000 before any allocations to partners. What amount should be allocated to each partner?

A partnership is a legal entity formed through a contractual agreement between two or more persons…

Answered: Problem 2. The partnership agreement of…

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 2. The partnership agreement of Wanwan, Layla and Claude provides for the year-end allocation of net income in the following order:

First, Wanwan is to receive 10% of net income up to P200,000 and 20% over 200,000
Second, Layla and Claude are each too receive 5% of the remaining income over P300,000.
The balance of income is to be allocated equally among the three partners.

The partnership income was P500,000 before any allocations to partners. What amount should be allocated to each partner?

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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