The income for 2021 is P51,750 before charging partners' salary allowances and before payment of Interest on average balances at the agreed rate of 4% per annum. Annual salary allocations are P6,250 to Ruby, P4,375 to Sapphire, and P3,125 to Emerald. The balance of the profits is to be allocated at the rate of 60% to Ruby, 10% to Sapphire, and 30% to Emerald. It is intended to distribute cash to the partners so that, after credits and allocations have been made as indicated in the preceding paragraph, the balances in the partners' accounts will be proportionate to their residual profit- sharing ratios. None of the partners is to invest additional cash, but they wish to distribute the lowest possible amount of cash. How much are capital balances of Ruby Sapphire and Emerald, respectively

The income for 2021 is P51,750 before charging partners' salary allowances and before payment of Interest on average balances at the agreed rate of 4% per annum. Annual salary allocations are P6,250 to Ruby, P4,375 to Sapphire, and P3,125 to Emerald. The balance of the profits is to be allocated at the rate of 60% to Ruby, 10% to Sapphire, and 30% to Emerald. It is intended to distribute cash to the partners so that, after credits and allocations have been made as indicated in the preceding paragraph, the balances in the partners' accounts will be proportionate to their residual profit- sharing ratios. None of the partners is to invest additional cash, but they wish to distribute the lowest possible amount of cash. How much are capital balances of Ruby Sapphire and Emerald, respectively

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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Concept explainers

Employee Benefits

In an organization employees are the most important resource and most important asset. They can lead an organization to the sky or can be the reason for unsuccessful of business. Therefore, it is very much important that employees of an organization should be satisfied by the environment of the organization and most importantly with the salary, wages incentives, etc.

Question

Ruby, Sapphire, and Emerald have been partners throughout 2021. Their average balances and their
balances at the end of the year before closing the nominal accounts are as follows:
Average Balances
Ruby - P48,750
Sapphire - 3,650
Emerald 2,125
Balances 12/31/2021
Ruby - 35,000
Sapphire - 5,900
Emerald - 850(debit balance)
The income for 2021 is P51,750 before charging partners' salary allowances and before payment of
Interest on average balances at the agreed rate of 4% per annum. Annual salary allocations are P6,250
to Ruby, P4,375 to Sapphire, and P3,125 to Emerald. The balance of the profits is to be allocated at the
rate of 60% to Ruby, 10% to Sapphire, and 30% to Emerald.
It is intended to distribute cash to the partners so that, after credits and allocations have been made as
indicated in the preceding paragraph, the balances in the partners' accounts will be proportionate to
their residual profit- sharing ratios. None of the partners is to invest additional cash, but they wish to
distribute the lowest possible amount of cash.
How much are capital balances of Ruby, Sapphire and Emerald, respectively.

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