Ruel and Renan have a capital balances at the beginning of the year of P600,000 and P675,000, respectively. They share profit as follows 1. Interest of 8% on beginning capital balances 2 Salary allowances of P225,000 to Bueno and P115,000 to Renan 3. Balance in the ratio of 3.2. The partnership realized a profit of P375,000 during the current year before interest and salary allowances to partners. Instructions: 1. Show how the profit of P375,000 should be divided behween Ruel and Renan 2. Assuming that Ruel and Renan simply agree to share proft in a 32 ratio with a minimum of P175,000 guaranteed to Renan, show the profit of P375,000 should be divided. 3 Give the journal entry to record the division of profit in No. 1 4 Give the journal entry to record the division of profit in no. 2 lote: After the journal entries show your computations in good form.
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.
Step by step
Solved in 3 steps
