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Stew and Peed entered into a partnership on March 1, 2017 investing P 2,000,000 and P 1,000,000 respectively. They agreed that Stew is thé managing partner and is to receive a salary allowance of P 240,000 per year and a bonus of 10% of the net profit after deducting

Stew and Peed entered into a partnership on March 1, 2017 investing P 2,000,000 and P 1,000,000 respectively. They agreed that Stew is thé managing partner and is to receive a salary allowance of P 240,000 per year and a bonus of 10% of the net profit after deducting

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stew and Peed entered into a partnership on March 1, 2017 investing P 2,000,000 and P 1,000,000 respectively. They agreed that Stew is thé managing partner and is to receive a salary allowance of P 240,000 per year and a bonus of 10% of the net profit after deducting salary but before bonus. The balance is to be divided in the ratio of their original capital. Selected ledger account balances as of December 31, 2017 before adjustments showed the following: Stew, Capital Stew, Drawing Peed, Capital Peed, Drawing Sales P 2,000,000 200,000 1,000,000 100,000 3,000,000 30,000 1,800,000 480,000 Sales returns and allowances Purchases Operating expenses Inventories on December 31, 2017 were as follows: Office supplies, P 8,100; merchandise, P 500,000. Prepaid insurance of P 12,000 and accrued expenses of P 4,000 were recognized. Depreciation expense of P 40,000 was also provided. Required: 1. Determine the profit or loss of the partnership. Assuming 30% income tax rate. 2. Prepare a schedule showing the distribution of partnership profit or loss. Prepare a Statement of Changes in Partners' Equity for the period ended December 31 2017. 3.
Transcribed Image Text:Stew and Peed entered into a partnership on March 1, 2017 investing P 2,000,000 and P 1,000,000 respectively. They agreed that Stew is thé managing partner and is to receive a salary allowance of P 240,000 per year and a bonus of 10% of the net profit after deducting salary but before bonus. The balance is to be divided in the ratio of their original capital. Selected ledger account balances as of December 31, 2017 before adjustments showed the following: Stew, Capital Stew, Drawing Peed, Capital Peed, Drawing Sales P 2,000,000 200,000 1,000,000 100,000 3,000,000 30,000 1,800,000 480,000 Sales returns and allowances Purchases Operating expenses Inventories on December 31, 2017 were as follows: Office supplies, P 8,100; merchandise, P 500,000. Prepaid insurance of P 12,000 and accrued expenses of P 4,000 were recognized. Depreciation expense of P 40,000 was also provided. Required: 1. Determine the profit or loss of the partnership. Assuming 30% income tax rate. 2. Prepare a schedule showing the distribution of partnership profit or loss. Prepare a Statement of Changes in Partners' Equity for the period ended December 31 2017. 3.
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