Rhea Diaz and Fe De la Cruz Partnership had a profit of P500,000 for the year ended 2019 the first year of operations. the partnership contract provided that each partner may withdraw P10,000 on the last day of each month; both partners did so during the year. the drawings are recorded by debits to the partners' drawing accounts and shall not be considered in the division of profits or loss. it is the intention of the partners that each partner's share in the profits or loss be either credited or debited to the drawing account. Diaz invested P400,000 on Jan 1, 2019 and an additional P200,000 on April 1, 2019. De la Cruz invested P600,000 on Jan 1, 2019 and withdrew P200,000 on July 1. These transactions are summarized below: Summary of Accounts Diaz, Capital De la Cruz, Capital Jan. 1- P400,000 Jul. 1- 200,000 Jan. 1- 600,000 Apr. 1- 200,000 Diaz, Drawing De la Cruz, Drawing Jan.-Dec. P120,000 Jan.-Dec. P120,000 Income Summary Dec. 31 - P500,000 How should the profit distributions under the diffirent profit sharing above be recorded under the following case? 1 Based on partners' capital contributions a. ratio of original capital b. ratio of original capital balances at the beg. of the year c. ratio of capital balances at the end of the year
Rhea Diaz and Fe De la Cruz Partnership had a profit of P500,000 for the year ended 2019 the first year of operations. the partnership contract provided that each partner may withdraw P10,000 on the last day of each month; both partners did so during the year. the drawings are recorded by debits to the partners' drawing accounts and shall not be considered in the division of profits or loss. it is the intention of the partners that each partner's share in the profits or loss be either credited or debited to the drawing account. Diaz invested P400,000 on Jan 1, 2019 and an additional P200,000 on April 1, 2019. De la Cruz invested P600,000 on Jan 1, 2019 and withdrew P200,000 on July 1. These transactions are summarized below: Summary of Accounts Diaz, Capital De la Cruz, Capital Jan. 1- P400,000 Jul. 1- 200,000 Jan. 1- 600,000 Apr. 1- 200,000 Diaz, Drawing De la Cruz, Drawing Jan.-Dec. P120,000 Jan.-Dec. P120,000 Income Summary Dec. 31 - P500,000 How should the profit distributions under the diffirent profit sharing above be recorded under the following case? 1 Based on partners' capital contributions a. ratio of original capital b. ratio of original capital balances at the beg. of the year c. ratio of capital balances at the end of the year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
100%
Transcribed Image Text:PROBLEM
Rhea Diaz and Fe De la Cruz Partnership had a profit of P500,000 for the year ended
2019 the first year of operations. the partnership contract provided that each partner may withdraw
P10,000 on the last day of each month; both partners did so during the year. the drawings are
recorded by debits to the partners' drawing accounts and shall not be considered in the division
of profits or loss. it is the intention of the partners that each partner's share in the profits or loss
be either credited or debited to the drawing account.
Diaz invested P400,000 on Jan 1, 2019 and an additional P200,000 on April 1, 2019. De
la Cruz invested P600,000 on Jan 1, 2019 and withdrew P200,000 on July 1.
These transactions are summarized below:
Summary of Accounts
Diaz, Capital
De la Cruz, Capital
Jan. 1- P400,000
Jul. 1- 200,000 Jan. 1- 600,000
Apr. 1- 200,000
Diaz, Drawing
De la Cruz, Drawing
Jan.-Dec. P120,000
Jan.-Dec. P120,000
Income Summary
Dec. 31 - P500,000
How should the profit distributions under the diffirent profit sharing above be recorded under the
following case?
1| Based on partners' capital contributions
a. ratio of original capital
b. ratio of original capital balances at the beg. of the year
c. ratio of capital balances at the end of the year
d. ratio of average capital balances
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education