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 A, Capital 600,000 B, Capital 1,000,000 1,600,000 Profit or loss ratios 40% 60% 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: 20x2 20x1 80,000 100,000 Accrued income Prepaid asset 140,000 200,000 Accrued expense Unearned income 160,000 240,000 60,000 40,000 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 A, Capital 600,000 B, Capital 1,000,000 1,600,000 Profit or loss ratios 40% 60% 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: 20x2 20x1 80,000 100,000 Accrued income Prepaid asset 140,000 200,000 Accrued expense Unearned income 160,000 240,000 60,000 40,000 How much is the share of A in the 20x2 profit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
Capital accounts
A, Capital
B, Capital 1,000,000
1,600,000
Profit or loss ratios
600,000
40%
60%
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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