The partnership run by Evans, Fitch, and Gaul has a complicated profit-and-loss sharing arrangement. On December 31, 2006, each partner had an average capital balance of P300, 000 for Evans, P250,000 for Fitch, and P325,000 for Gaul. Each partner receives an allotment of 8% of the interest. A salary allotment of P10, 000 and P15, 000 is given to Evans and Fitch, respectively. Gaul will be given a bonus equal to 10% of the initial amount of net income if partnership net income exceeds P25, 000 after the salary allocations have been taken into account (but before the interest allocations have been taken into account). All residual revenue is distributed to Evans, Fitch, and Gaul in the proportions of 2:3:5. How much of the partnership's revenue, supposing it to be P250, 000, must be assigned to Gaul?

The partnership run by Evans, Fitch, and Gaul has a complicated profit-and-loss sharing arrangement. On December 31, 2006, each partner had an average capital balance of P300, 000 for Evans, P250,000 for Fitch, and P325,000 for Gaul. Each partner receives an allotment of 8% of the interest. A salary allotment of P10, 000 and P15, 000 is given to Evans and Fitch, respectively. Gaul will be given a bonus equal to 10% of the initial amount of net income if partnership net income exceeds P25, 000 after the salary allocations have been taken into account (but before the interest allocations have been taken into account). All residual revenue is distributed to Evans, Fitch, and Gaul in the proportions of 2:3:5. How much of the partnership's revenue, supposing it to be P250, 000, must be assigned to Gaul?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Jenkins, Willis, and Trent invested $252,000, $441,000, and $567,000, respectively, in a partnership. During its first year, the firm recorded profit of $639,000. d- The partners agreed to share profit by providing annual salary allowances of $123,000 to Jenkins, $133,000 to Willis, and $68,000 to Trent; allowing 10% interest on the partners’ beginning investments; and sharing the remainder equally. Record to close income summary account.
Bruce, Parker and May formed a partnership. Their capital balances showed the following. Bruce Capital P252,000; Parker, Capital-P126,000; May, Capital-P42,000. Their profit and loss ratio are 6:3:1. The partners decide to sell 20 percent of their interest to Violet for a total payment of P120,000 Violet will pay the money directly to the other partners. How much was the bonus debited or credited in partner Bruce’s capital account?
Meman
Bruce, Parker and May formed a partnership. Their capital balances showed the following: Bruce, Capital P252,000; Parker, Capital- P126,000; May, Capital- P42,000. Their profit and loss ratio are 6:3:1. The partners decide to sell 20 percent of their interest to Violet for a total payment of P120,000. Violet will pay the money directly to the other partners. How much was the bonus debited or credited in paetner Bruce's capital accounts?
Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or loss is to be divided equally. Assuming net income for the current year is $189,000, the journal entry to allocate net income is: dit Fo Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit Taylor, Capital, $94,500. Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit Taylor, Capital, $23,000. Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital, $140,160. Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit Taylor, Capital, $55,000. Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit Farmer, Capital, $55,000.
BRAIN and FREEZE have capital balances of P750,00 and P500,000 and share in partnership profits and losses in the ratio of 3:2 each respectively. On November 30, 20x10, the partners admitted HURTS into the partnership by investing P200,000 cash and a machine to be used by the partnership for a 20% interest. After HURT's admission, BRAIN's capital increased by 10%. What is the fair value of the machine invested by HURT in the partnership?
A, B and C are partners sharing profits in the ratio of 3:3:2. On June 30, their capital balances are as follows: A, 720, 000; B, 480, 000 and C, 360, 000. Dong will directly purchase 1/3 of A’s interest for 250, 000 and no bonus or goodwill is to be recognize before the direct purchase of A’s interest. In addition, Dong is also to invest 380, 000 cash in the partnership. The total capital of the partnership after the admission is to be 2, 000, 000. Dong’s interest after his admission by direct purchase and investment is to be 30%. c. What is the capital balance of A after the admission by direct purchase and admission by investment of Dong? d.What is the capital balance of B after the admission by direct purchase and admission by investment of Dong?
Magalang, Matulungin, Masipag and Matapat are partners sharing earnings in the ratio of 3:6:9:12. The balance of their capital accounts on June 30, 2021 are as follows: Magalang – P2,000; Matulungin –P50,000; Masipag – P50,000; Matapat – P18,000 The partners decided to liquidate, and they accordingly convert the non-cash assets into P46, 400 of cash. After paying the liabilities amounting toP16,000, they have P70,000 to divide. Assume all partners are solvent. How much is the total assets of the partnership?Required to answer. Single choice. a. P126,000 b. P39,600 c. P86,400 d. P16,000
Ebanks, Brown, and Thomas are partners. They carry on a business jointly as EBT surveyors and share profits and losses in the ratio 25:45: 30. The trading account profit as at 31 December 2021 was $6,500,000 after charging a nominal tax of $750,000. Notes: The partners receive interest on their capital accounts at 9.5 % on the balance of their partner capital at the end of the budget year. The interest on the capital account was not included in the income statement. Include in the income statement is $80,000 salary per month for each partner. The partnership paid motor vehicle expenses for vehicles owned by the partners as follows: Ebanks -$ 50,000 Brown - $80,000 Thomas - $130,000 The partners did not use the vehicles for the partnership business. Profit on disposal was $180,000. Depreciation on plant and machinery for the year was $900,000. In recognition of the new IFRS 9 standard, a provision for bad…
Dolfo and Poldo formed a partnership. Dolfo contributed cash of P600,000, desktop computer of P70,000 and printer that cost P30,000. The fair value of computer is 50,000 while the printer has a fair value of P20,000. Dolfo has notes payable on the computer and printer of P10,000 to be assumed by the partnership. Dolfo is to have 60% capital interest in the partnership. Poldo contributed P500,000 only. The partners agreed to share in the partnership profits and losses in the ratio of 2:3 for Dolfo and Poldo respectively. How much is the net investment of Dolfo?
Xavier, Young, and Zane operate a partnership with a complex profit and loss sharing agreement. The average capital balance for each partner on December 31, 2021 is P300,000 for Xavier, P250,000 for Young, and P325,000 for Zane. An 8% interest allocation is provided to each partner based on the average capital balance on December 31, 2021. Xavier and Young receive salary allocations of P10,000 and P15,000, respectively. If partnership net income is above P25,000, after the salary allocations are considered (but before the interest allocations are considered), Zane will receive a bonus of 10% of the original amount of net income. All residual income is allocated in the ratios of 23.5 to Xavier, Young, and Zane, respectively. If the the partnership net income for 2021 is P250,000, the total share of Xavier, Young and Zane, respectively are:
heng invested $108,000 and Murray invested $208,000 in a partnership. They agreed to share incomes and losses by allowing a $62,000 per year salary allowance to Zheng and a $42,000 per year salary allowance to Murray, plus an interest allowance on the partners' beginning-year capital investments at 10%, with the balance to be shared equally. Assuming net income for the current year is $109,000, the journal entry to allocate net income is: Debit Income Summary, $109,000; Credit Zheng, Capital, $54,500, Credit Murray, Capital, $54,500. Debit Income Summary, $109,000; Credit Zheng, Capital, $36,600, Credit Murray, Capital, $72,400. Debit Zheng, Capital, $59,500, Debit Murray, Capital, $49,500; Credit Income Summary, $109,000; Debit Income Summary, $109,000; Credit Zheng, Capital, $59,500, Credit Murray, Capital, $49,500. Debit Income Summary, $109,000; Credit Zheng, Capital, $42,900, Credit Murray, Capital, $66,100.