PROBLEM 6 On March 24, 2020, Pluto and Mars decided to form a partnership Pluto invested P115,000 cash Mars, on the other hand, contributes P110,000 cash and equipment with a book value of P65,000 and a fair value of P70,000 The partnership agreement provided the terms on distribution of income which inclrded the pravisions such as interest allowances for Pluto amounting to P20,000 and for Mars P35,000 Also, partners will receive salary allowances such that Pluto will receive P15,000 and Mars will receive P12,000 The remainder is shared based on fixed ratio of 45% for Pluto and 55% for Mars. The net income reported for the year 2020 is P80,000. Requirements a) Prepare the entry to record each partner's contribution/investment. Indicate the division of net income to each partner có Prepare the entry to distribute the net income
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
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