Problem #22 Correction of Errors The partnership agreement of Pangilinan, Gumban and De Guzman provided that profits are to be'divided as follows: Pangilinan is to receive a salary allowance of P100,000 for managing the business. Partners are to receive 10% interest on average capital balances. Remaining profits 'are to be divided in the ratio of 30:30:40 to Pangilinan, Gumban and De Guzman, respectively. Pangilinan had a capital balance of P600,000 at Jan. 1, 2019 and had drawings of P80,000 during the year. Gumban's capital balance on Jan. 1, 2019 was P900,000 and invested an additional P300,000 on Sept. 1, 2019. De Guzman's beginning capital balance was P1,100,000, and she withdrew P100,000 on July 1 but invested an additional P200,000 on Oct. 1, 2019. The partnership had a loss of P120,000 during the year. The bookkeeper allocated the loss as follows: P2,000 to Pangilinan; P(48,000) to Gumban and P(74,000) to De Guzman. Required: 1. Prepare the schedule to allocate the P120,000 loss correctly. 2. Prepare the statement of changes in partners' equity. 3. Prepare the correcting journal entry at Dec. 31, 2019 assuming that the books have been closed.

Problem #22 Correction of Errors The partnership agreement of Pangilinan, Gumban and De Guzman provided that profits are to be'divided as follows: Pangilinan is to receive a salary allowance of P100,000 for managing the business. Partners are to receive 10% interest on average capital balances. Remaining profits 'are to be divided in the ratio of 30:30:40 to Pangilinan, Gumban and De Guzman, respectively. Pangilinan had a capital balance of P600,000 at Jan. 1, 2019 and had drawings of P80,000 during the year. Gumban's capital balance on Jan. 1, 2019 was P900,000 and invested an additional P300,000 on Sept. 1, 2019. De Guzman's beginning capital balance was P1,100,000, and she withdrew P100,000 on July 1 but invested an additional P200,000 on Oct. 1, 2019. The partnership had a loss of P120,000 during the year. The bookkeeper allocated the loss as follows: P2,000 to Pangilinan; P(48,000) to Gumban and P(74,000) to De Guzman. Required: 1. Prepare the schedule to allocate the P120,000 loss correctly. 2. Prepare the statement of changes in partners' equity. 3. Prepare the correcting journal entry at Dec. 31, 2019 assuming that the books have been closed.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

ii.9
Partner capital accounts upon formation of partnership-Goodwill Method Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports net assets of $30,000. Partner B is contributing cash of $45,000. The partners agree that the initial capital of the partnership should be shared equally. What will be the initial balance of the Capital Accounts of the partners assuming that the partners wish to employ the Goodwill Method? Select one: a. Partner A Partner B $90,000 $90,000 b. Partner A Partner B $37,500 $37,500 c. Partner A Partner B $45,000 $45,000 d. Partner A Partner B $30,000 $45,000
9
Question 2 TYT Partnership is established by Teesha and Yeen in January 2018. Teesha contributes RM50,000 to the capital of the partnership while Yeen contributes 4 of Teesha's capital contribution. The interest on capital allocated for each partner is 8% per annum. The partners agreed to share the profit and losses equally. Teesha's salary per month is RM7,500 and is expected to increase 12% starting July 2020. The partnership's trading, profit and loss account for the year ended 31.12.2020 was as follows: RM 1,216,000 (607,000) 609,000 Sales proceeds Less: Cost of sales Gross profit Additional information: a) Included in the sales proceeds is gain on machine disposal RM2,050. b) Items incurred in the business expenses: • Weekly house cleaning for Teesha costing RM5,200; ● Maxis Wi-Fi deposit for office premise RM530; ● Less: Business expenses Net profit for the year ● Purchased office printer RM3,000. Assumed printer is considered as office equipment; Partners' salary RM167,400 and…
Exercise 7: Statement of Partners’ Capital Rommel and Racquel are partners dividing net income as follows: Salary allowance of P5,000 is allowed to Rommel; remainder is divided in the ratio of 4:6. The capital of Rommel and Racquel on January 1, 2019 were P30,000 and P35,000 respectively, Rommel withdrew his salary allowance for 2019 of P5,000 in October. Net income for 2019 amounted to P30,000. Required: Statement of Partners’ capital for 2019.
PROBLEM 1 (FTG REVISED) VAL, KHU, and LAWRENCE are partners in VAKHULAW CO. sharing profits in the ratio of 3:3:2. Investments are P600,000, P400,000, and P300,000, respectively. The partners agreed to admit TYONG-GO on the following basis: TYÖNG-GO is to pay VAL, P400,000 for 1/2 of VAL's interest; TYONG-GO is also to invest P300,000 in the business. The partners agreed that revaluation of assets must be determined based on the agreed capital. The total capital of the partnership is to be P2,000,000, of which TYONG-GO's interest is to be P500,000 upon admission. REQUIRED: 1. Prepare a statement of partners equity that will show the capital balances of VAL, KHU, LAWRENCE and TYONG-GO after admission of TYONG-GÒ, respectively. Present your solution and the statement in good form. 2. Prepare the entries upon admission of TYONG-GO.
24. Show solution in good accounting form
developed in part a(3). etd 189fc64d53a0a6a71 PROBLEM C.11 Dividing Partnership Profit and LossLOC-10 Rothchild Furnishings, Inc., has three partners-Axle, Brandt, and Conrad. At the beginning of the current year their capital balances were: Axle, $180,000; Brandt, $140,000; and Conrad, $80,000. The partnership agreement provides that partners shall receive salary allowances as follows: Axle, $10,000; Brandt, $50,000; and Conrad, $28,000. The partners shall also be allowed 12 percent interest annually on their capital balances. Residual profit or loss is to be divided: Axle, one-half; Brandt, one-third; and Conrad, one-sixth. Instructions Prepare separate schedules showing how income will be divided among the three partners in each of the following cases. The figure given in each case is the annual partnership net income or loss to be allocated among the partners. Round calculations to the nearest dollar. a. Income of $526,000. b. Income of $95,000. c. Loss of $32,000. PROBLEM C.12 Who…
1
3.4 Vir and Housen are partners sharing profits in the ratio of 3:2. As per their agreement, each partner is allowed to withdraw P 30,000 annually. Both partners withdrew this amount during 200C.The net profit in 200C was P 120,000. REQUIRED: Show how the net profit will be divided if the withdrawals are considered as: a. Partners' drawings b. Partners' salaries
3.14 Cue and Peed entered into a partnership on March 1, 200A. They T agreed that Cue, the managing partner was to receive a salary 10 neallowance of P 24,000 per year and a bonus of 10% of the net profit after the salary allowance but before the bonus. The balance is to b e distributed in the ratio of their initial capital. Selected ledger accounts on December 31, 200A prior to adjustments showed the following balances: Salesgns 22ol bns P 300,000 ge gnisda o3,000 ollo) visoo 180,000 1sini s10 48,000 Sales Returns 290sw zunod ts Purchases 1 Operating Expenses bs la01Stni o1o 48,000 200,000 00020,000 1o g 2290x Cue Capital Cue Drawing Peed Capital 0 Peed Drawing Inventories at year-end were bns I 100,000 10,000 as follows: Office supplies, P 810 and merchandise, P 50,000. Prepaid insurance of 0P 1,200 and accrued expenses of P 400 are to be recognized. Depreciation of P 4,000 is to be provided. REQUIRED: Prepare the Statement of Partners ' Equity for the 10- month period ended December…
Exercise 3 -7 1. Martin and Isidore form a partnership with investments of P 1,000,000 and P 500,000 respectively. Compute their share in the net income of P210,000 for six months of the partnership's operation under the following agreement: a. 10% interest is allowed on partners' original investments. b. Allowance of annual salary of P120,000 to Martin and P144,000 to Isidore. c. Balance 2:1 respectively. 2. With the same information in number 1, assuming the partnership incurred a loss of P72,000 for the year instead of a net income of P210,000 for six months.