Required: Determine the ending capital balances of both partners based on the following independent assumptions on allocating profits and losses. A P9,600 incentive to Mona, and the remainder to be allocated on the ratio of 1:2, respectively. It is also agreed that Lisa is guaranteed to receive at least P35,000 in case the partnership yields profit. 1. A 6% interest based on average capital balances, a monthly salary of P10,000 each to Mona and Lisa, and the remainder to be allocated equally. 2. A 10% interest on their ending capital balances, a bonus of 11% to Lisa based on profits after deducting the bonus, and the remainder to be divided in a 3:2 ratio, respectively. 3.
Required: Determine the ending capital balances of both partners based on the following independent assumptions on allocating profits and losses. A P9,600 incentive to Mona, and the remainder to be allocated on the ratio of 1:2, respectively. It is also agreed that Lisa is guaranteed to receive at least P35,000 in case the partnership yields profit. 1. A 6% interest based on average capital balances, a monthly salary of P10,000 each to Mona and Lisa, and the remainder to be allocated equally. 2. A 10% interest on their ending capital balances, a bonus of 11% to Lisa based on profits after deducting the bonus, and the remainder to be divided in a 3:2 ratio, respectively. 3.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:Problem
Below are the capital changes occurred on MonaLisa
Partnership for the first year of operations:
Date
Mona, Capital
Lisa, Capital
Jan. 1 (original
investment)
P88,000
P69,000
Apr. 1
(3,000)
Jun. 1
14,000
Oct. 1
6,000
(4,500)
During the first year, the partnership earned net
income of P66,600. Temporary withdrawals of P100
cash per month were agreed by both partners, and
they both started withdrawing cash in July, and
consistently made it monthly until year-end.
Required:
Determine the ending capital balances of both
partners based on the following independent
assumptions on allocating profits and losses.
A P9,600 incentive to Mona, and the remainder
to be allocated on the ratio of 1:2, respectively. It is
also agreed that Lisa is guaranteed to receive at least
P35,000 in case the partnership yields profit.
1.
A 6% interest based on average capital balances,
a monthly salary of P10,000 each to Mona and Lisa,
and the remainder to be allocated equally.
2.
A 10% interest on their ending capital balances, a
bonus of 11% to Lisa based on profits after deducting
the bonus, and the remainder to be divided in a 3:2
ratio, respectively.
3.
Annual salary of P180,000 to Mona and
P120,000 to Lisa, a bonus of 10% to Mona based on
profits after salaries, and the remainder to be allocated
equally.
4.
An 8% interest based on original investments,
annual salary of P18,720 each partner, a 5% bonus to
Lisa based on profits after interests and salaries, and
the remainder to be allocated equally.
5.
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