Sophia and Anna are partners operating a chain of retail stores. The partnership agreement provides for the following: · Annual salaries to Sophia of P40,000 and P30,000 to Anna. · 12% interest on average capital balances. · Bonus to Sophia of 20% of net income after allowance for salaries, interest, and bonus. · Residual income in the ratio 25% to Sophia and 75% to Anna. The Income Summary account for year shows a credit balance of P244,000 before any allocations. Average capital balances for Sophia and Anna are P100,000 and P150,000, respectively. How much must be the share of Sophia on the partnership net income?
Sophia and Anna are partners operating a chain of retail stores. The partnership agreement provides for the following: · Annual salaries to Sophia of P40,000 and P30,000 to Anna. · 12% interest on average capital balances. · Bonus to Sophia of 20% of net income after allowance for salaries, interest, and bonus. · Residual income in the ratio 25% to Sophia and 75% to Anna. The Income Summary account for year shows a credit balance of P244,000 before any allocations. Average capital balances for Sophia and Anna are P100,000 and P150,000, respectively. How much must be the share of Sophia on the partnership net income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sophia and Anna are partners operating a chain of retail stores. The partnership agreement provides for the following:
· Annual salaries to Sophia of P40,000 and P30,000 to Anna.
· 12% interest on average capital balances.
· Bonus to Sophia of 20% of net income after allowance for salaries, interest, and bonus.
· Residual income in the ratio 25% to Sophia and 75% to Anna.
The Income Summary account for year shows a credit balance of P244,000 before any allocations. Average capital balances for Sophia and Anna are P100,000 and P150,000, respectively.
How much must be the share of Sophia on the partnership net income?
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