On January 1, 2020, Mike, Jay and Bong organized MJB partnership by investing P5M, 2M and P3M for capital interest ratio of 4:5:1 respectively. Bong has been appointed as managing partner. During year 2020, MJB partnership reported net income of P3,000,000. Their profit/loss distribution and drawing agreement are presented below:20% interest on beginning capitalP10,000, P20,000 and P50,000 monthly salary, respectively25% bonus of net income after interest and salary to managing partnerThe remainder will be divided equally among the partners.The partners must withdraw at the end of the year 50% of their share in net income for the period.What is the capital balance of Bong on December 31, 2020?

The calculation of capital balance of Bong on December 31, 2020 is shown hereunder : Capital…

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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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On January 1, 2020, Mike, Jay and Bong organized MJB partnership by investing P5M, 2M and P3M for capital interest ratio of 4:5:1 respectively. Bong has been appointed as managing partner. During year 2020, MJB partnership reported net income of P3,000,000. Their profit/loss distribution and drawing agreement are presented below:

20% interest on beginning capital
P10,000, P20,000 and P50,000 monthly salary, respectively
25% bonus of net income after interest and salary to managing partner
The remainder will be divided equally among the partners.
The partners must withdraw at the end of the year 50% of their share in net income for the period.

What is the capital balance of Bong on December 31, 2020?

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