When EPSILON Ltd. is established, its capital amounts to 120.000€ and partner A has a 70% share and partner B a 30% share. Partner A's share includes ordinary partnership shares, while Partner B's share includes preference partnership shares. For each partnership interest, the partners will pay 30% above its value. The payment by the partners was made in cash. The relevant journal entries are required to be made

When EPSILON Ltd. is established, its capital amounts to 120.000€ and partner A has a 70% share and partner B a 30% share. Partner A's share includes ordinary partnership shares, while Partner B's share includes preference partnership shares. For each partnership interest, the partners will pay 30% above its value. The payment by the partners was made in cash. The relevant journal entries are required to be made

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 9E

See similar textbooks

Similar questions

The following are the partnership agreement between partners Baby Love & Honey Sweet for their partnership’s profit distribution:A. Each partners shall be entitled for an annual salary of P50,000 each.B. 15% Bonus of partnership profits after salaries to Honey Sweet being a managing partner.C. 20% interest is given to both partners based on average capital ratio.D. Residual profit and loss shall be distributed on the ratio 2:2The ledgers of their capital balances are shown below: Baby Love Debit: July 1. P20,000 Credit: Jan 1. P80,000 Oct 1. P40,000 Honey Sweet Debit: Oct 1. P10,000 Credit: Jan 1. P120,000 May 1. 30,000 The partnership profit for the year is P150,000 before distribution to partners Required: 1. Prepare a Schedule for Profit Distribution.2. Journal entry to record the distribution of profit to partners.
The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of 12,000 and ₱ 8,000, respectively. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. (Deduct the salaries to the profit, as basis for computation) Each partner shall receive 10% interest on average capital investments. Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: A ₱100,000 B 60,000 C 120,000 The partnership earns profit of ₱100,000. Requirement: Compute for the respective shares of the partners on the partnership profit.
LL, MM and PP are partners with capitals of P40,000; P25,000 and P15,000 respectively. Thepartnership agreement provides that each partner shall be allowed 5% interest on his capital, that LLshall be allowed an annual salary of P8,500, and that MM shall be entitled to a minimum of P14,000per annum including amounts allowed as interest on capital and as share of profit. Profit after interestand salary allowances is to be divided between LL, MM and PP as 5:3:2 respectively. What amountmust be earned by the partnership during 2021 before charges for interest or salary if LL is to receivean aggregate of P20,000 to include interest, salary, and share of profit? a. P38,000b. P50,000c. P38,550d. P35,880
ABC partnership began its first year of operations with the following capital balances: A, Capital: P143,000 B, Capital: P104,000 C, Capital: P143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: A was to be awarded an annual salary of P26,000 with P13,000 salary assigned to C Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year The remainder was to be assigned on a basis 5:2:3, respectively Each partner was allowed to withdraw up to P13,000 per year Assume that the net loss for the first year of operations was P26,000 with net income of P52,000 in the second year. Assume further that each partner withdrew the maximum amount from the business each year. Question: What was A, B, and C's share of income or loss for the year?
On January 1, 2023, AA and BB formed AB partnership with a total agreed capital of P5,000,000 and a capital interest ratio of 70:30. The following were ascertained during the year as to distribution of profits and losses: • AA will receive quarterly salaries of P100,000 5% interest on initial capital will be provided Any remainder will be shared by their capital contribution ratio At the end of the year, the partnership had a P500,000 credit balance in its income summary account. How much is the share of AA in the partnership income (loss)?
GWS and BCP organized the GB Partnership on January 1, 2018. The following entries were made in their capital accounts during 2018. Debit Credit GWS, Capital: January 1 April 1 October 1 P315,000 P105,000 175,000 Debit Credit ВСР, Саpital: January 1 March P413,000 1 September 1 November 1 52,500 105,000 94,500 Required: А. If the partnership profit for the year 2018 computed before salaries or interest is P217,000, determine its distribution between the partners under each of the following independent profit-sharing agreements: (1) Interest at 6% is allowed on average capital investments and the remainder of the profit is divided equally. (2) A salary of P126,000 is to be credited to BCP, 6% interest is allowed on each partner on his ending capital balance and the remainder of the profit in the ratio of 3:2. Salaries are allowed GWS and BCP in amounts of P119,000 and P133,000, respectively, and the remaining profit or resulting loss is divided in the ratio of average capital balance.…
For Crane Co., beginning capital balances on January 1, 2022, are Nancy Payne $21,200 and Ann Dody $17,200. During the year, drawings were Payne $7,000 and Dody $5,900. Net income was $26,500, and the partners share income equally. (a) Prepare the partners' capital statement for the year. (List Items that increase partners' capital first.) (b) : eTextbook and Medial Save for Later $ $ CRANE CO. Partners' Capital Statement N. Payne Prepare the owners' equity section of the balance sheet at December 31, 2022. CRANE CO. Partial Balance Sheet $ $ A. Dody Attempts: 0 of 5 used Total Submit Answer
Partners A and B formed a partnership on January 1, 2020 where Partner A invested P500,000 while Partner B invested P300,000. Profit and loss as agreed upon by partners is to be shared in the ratio of the original capital. The drawing accounts of Partners A and B have debit balances of P24,000 and P12,000 respectively. Net income for the period ending December 31, 2020 amounted to P180,200. What is capital balance of Partner B for the year ending December 31, 2020?
HRM Partnership begins its first year of operations with the following capital balances A, capital P32,000 C, capital 16,000 According to the partnership agreement, all profits will be distributed as follows • A monthly salary of P 3,200 and P 1,600 to A & C respectively. • The partners will be allowed with interest equal to 10% of the capital balances of the first day of the year. A bonus of 10% of the net income after bonus to A. • The remainder will be divided on the basis of the beginning capital for the first year and equally for the second year Each partner is allowed to withdraw up to P 1,600 a year. Assume that the net loss for the first year of operations ions is P2,400 with net income of P 8,800 in the following year. Assume further that each partner withdraws the maximum amount from the business each period. The capital balances of A at the end of the second year is The capital balances of B at the end of the second year is
2. Use the following information for the next three cases: The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively. DA bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. Each partner shall receive 10% interest on average capital investments. TAny remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: AP100,000 B 60,000 C 120,000 Case #1: The partnership earns profit of P100,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #2: The partnership earns profit of P10,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #3: The partnership incurs loss of P20,000. Requirement: Compute for the respective shares of the partners on the…
For Oriole Co., beginning capital balances on January 1, 2022, are Nancy Payne $22,500 and Ann Dody $18,800. During the year, drawings were Payne $7,300 and Dody $4,700. Net income was $27,800, and the partners share income equally. (a) Prepare the partners' capital statement for the year. (List items that increase partners' capital first.) ◄► P $ +A ORIOLE CO. Partners' Capital Statement N. Payne $ A. Dody LA LA $ Total
P, A and L formed a partnership and have average capital balances of P195,000, 246,000 and 294,000 each respectively for 2018. Their articles of co-partnership provide that the operating income be shared among the partners as follows: as salary, P20,000 for P, P22,000 for A, and P15,000 for L; interest of 10% on the average capital during 2018 for the three partners; a 10% bonus to A; and the remainder in the ratio 2:4:4, respectively. The operating income for the year ending December 31, 2018 after partners’ salaries and bonus amount to P105,000. The partnership agreement also states that L should receive a minimum of P60,000 as his share in partnerhsip operations. What is the net income for the year and the share of P in the net income? A. 22,300 C. 44,800 B. 25,800 D. 45,800