The income summary account has a debit balance of P45,000. The agreement between Emo and Ted include the following terms: • Interest on average capital at 8%; • Salaries of P25,000 and P35,000 are given to Emo and Ted, respectively; Bonus to Ted at 25% of net income after deducting interest and salaries but before deducting the bonus; and Balance is to be divided equally.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question: How much is the net increase/ decrease in Ted's capital account during 2021?

The income summary account has a debit
balance of P45,000. The agreement between
Emo and Ted include the following terms:
Interest on average capital at 8%;
• Salaries of P25,000 and P35,000 are
given to Emo and Ted, respectively;
Bonus to Ted at 25% of net income
after deducting interest and salaries
but before deducting the bonus; and
Balance is to be divided equally.
Transcribed Image Text:The income summary account has a debit balance of P45,000. The agreement between Emo and Ted include the following terms: Interest on average capital at 8%; • Salaries of P25,000 and P35,000 are given to Emo and Ted, respectively; Bonus to Ted at 25% of net income after deducting interest and salaries but before deducting the bonus; and Balance is to be divided equally.
1.
Emo and Ted are partners engaged in a
manufacturing business. Transactions
affecting the partners' capital accounts in
2015 are as follows:
Emo
Credit
P
50,000
30,000
Debit
Ted
Credit
Debit
Jan.,
Bal.
April 1
70,000
20,000
June 30
P
50,000
25,000
45,000
Sept. 1
Oct. 1
60,000
70,000 40,000
Transcribed Image Text:1. Emo and Ted are partners engaged in a manufacturing business. Transactions affecting the partners' capital accounts in 2015 are as follows: Emo Credit P 50,000 30,000 Debit Ted Credit Debit Jan., Bal. April 1 70,000 20,000 June 30 P 50,000 25,000 45,000 Sept. 1 Oct. 1 60,000 70,000 40,000
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