Answered: What is the share of partner B in the…

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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A, B, and C are partners sharing profit on a 7:2:1 ratio. On January 1, 2005, D was admitted into the partnership with 15% share in profits. The old partners continue to participate in profits in their original ratios.

For the year 2005, the partnership showed a profit of P15,000. However, it was discovered that the following items were omitted in the firm’s book:

	2004	2005
Accrued expense		PHP1050
Accrued income		PHP875
Prepaid expenses	PHP1400
Unearned income	PHP1225

What is the share of partner B in the 2005 net profit?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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