Required: Prepare a statement of profit distribution for each of the following independent profit-sharing agreements: a. In the average capital ratio. b. Interest on average capital at 9 percent, salaries of P60,000 to Robin and Hood, respectively, a bonus to Robin of 25 percent of net income after interest and salaries but before the bonus, and the balance equally. c. Interest at 10 percent on the amount by which the ending capital balance exceeds the beginning balance and the balance equally. d. Salaries of P80,000 and P120,000 to Robin and Hood, respectively, a bonus to Robin of 25 percent of net income after salaries and the bonus, and the balance equally.
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: Prepare a statement of profit distribution for each of the following independent
profit-sharing agreements:
a. In the average capital ratio.
b. Interest on average capital at 9 percent, salaries of P60,000 to Robin and Hood,
respectively, a bonus to Robin of 25 percent of net income after interest and salaries but
before the bonus, and the balance equally.
c. Interest at 10 percent on the amount by which the ending capital balance exceeds the
beginning balance and the balance equally.
d. Salaries of P80,000 and P120,000 to Robin and Hood, respectively, a bonus to Robin of
25 percent of net income after salaries and the bonus, and the balance equally.
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