Required: For each of the following independent income-sharing agreements, prepare an income distribution schedule. a. Salaries are P15,000 to East, P20,000 to North, and P18,000 to West. East receives a bonus of 5 percent of net income after deducting his bonus. Interest is 10 percent of ending capital balances. Any remainder is divided by East, North, and West in a 3:3:4 ratio. Net income was P78,960. b. Interest is 10 percent of weighted average capital balances. Salaries are P24,000 to East, P21,000 to North, and P25,000 to West. North receives a bonus of 10 percent of net income after deducting the bonus and his salary. Any remainder is divided equally. Net income was P68,080. c. West receives a bonus of 20 percent of net income after deducting the bonus and the salaries. Salaries are P21,000 to East, P18,000 to North, and P15,000 to West. Interest is 10 percent of beginning capital balances. Any remainder is divided by East, North, and West in an 8:7:5 ratio. Net income was P92,940.
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.
Required: For each of the following independent income-sharing agreements, prepare an
income distribution schedule.
a. Salaries are P15,000 to East, P20,000 to North, and P18,000 to West. East receives a
bonus of 5 percent of net income after deducting his bonus. Interest is 10 percent of ending
capital balances. Any remainder is divided by East, North, and West in a 3:3:4 ratio. Net
income was P78,960.
b. Interest is 10 percent of weighted average capital balances. Salaries are P24,000
to East, P21,000 to North, and P25,000 to West. North receives a bonus of 10 percent of net
income after deducting the bonus and his salary. Any remainder is divided equally. Net income
was P68,080.
c. West receives a bonus of 20 percent of net income after deducting the bonus and the
salaries. Salaries are P21,000 to East, P18,000 to North, and P15,000 to West. Interest is 10
percent of beginning capital balances. Any remainder is divided by East, North, and West in
an 8:7:5 ratio. Net income was P92,940.
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