The following are the capital account balances and profit and loss ratios of the partners in AB Partnership as of January 1, 20x2: Capital accounts Profit or loss ratios A, Capital B, Capital 1,000,000 600,000 40% 60% 1,600,000 On January 1, 20x2, C was admitted to the partnership when he acquired 20% interest in the net assets and profits of the firm for a P400,000 investment. The bonus method was used to record C's admission into the partnership. For the year 20x2, the partnership earned profit of P4,000,000. However, it was discovered that the following items were overstated: 20x1 20x2 Accrued income 80,000 100,000 Prepaid asset Accrued expense 140,000 200,000 160,000 60,000 240,000 40,000 Unearned income How much is the share of A in the 20x2 profit?
The following are the capital account balances and profit and loss ratios of the partners in AB Partnership as of January 1, 20x2: Capital accounts Profit or loss ratios A, Capital B, Capital 1,000,000 600,000 40% 60% 1,600,000 On January 1, 20x2, C was admitted to the partnership when he acquired 20% interest in the net assets and profits of the firm for a P400,000 investment. The bonus method was used to record C's admission into the partnership. For the year 20x2, the partnership earned profit of P4,000,000. However, it was discovered that the following items were overstated: 20x1 20x2 Accrued income 80,000 100,000 Prepaid asset Accrued expense 140,000 200,000 160,000 60,000 240,000 40,000 Unearned income How much is the share of A in the 20x2 profit?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:The following are the capital account balances and profit and loss ratios of the partners in AB
Partnership as of January 1, 20x2:
Profit or loss ratios
Capital accounts
A, Capital
B, Capital 1,000,000
600,000
40%
60%
1,600,000
On January 1, 20x2, C was admitted to the partnership when he acquired 20% interest in the
net assets and profits of the firm for a P400,000 investment. The bonus method was used to
record C's admission into the partnership.
For the year 20x2, the partnership earned profit of P4,000,000. However, it was discovered that
the following items were overstated:
20x1
20x2
Accrued income
80,000
100,000
Prepaid asset
Accrued expense
140,000
200,000
160,000
240,000
Unearned income
60,000
40,000
How much is the share of A in the 20x2 profit?
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