WW and RR share profits and losses equally, WW and RR receive salary allowances of P20 000 and P30 000 respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month regardless of when the capital contributions and capital withdrawals were made, and partners drawings are not used in determining the average capital balances. Total net income for 20x5 is P120 000. WW RR January 1 Capital Balances ...............................................P100 000 P120 000 Yearly Drawings (P1500 a month) .................................... 18 000 18 000 Permanent withdrawals of capital: June 3 .................................................... (12 000) May 2 .................................................... (15 000) Additional investments of capital: July 3 ..................................................... 40 000 October 2 ................................................ 50 000 What is the weighted average capital for WW and RR respectively for 20x5
WW and RR share profits and losses equally, WW and RR receive salary allowances of P20 000 and P30 000 respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month regardless of when the capital contributions and capital withdrawals were made, and partners drawings are not used in determining the average capital balances. Total net income for 20x5 is P120 000. WW RR January 1 Capital Balances ...............................................P100 000 P120 000 Yearly Drawings (P1500 a month) .................................... 18 000 18 000 Permanent withdrawals of capital: June 3 .................................................... (12 000) May 2 .................................................... (15 000) Additional investments of capital: July 3 ..................................................... 40 000 October 2 ................................................ 50 000 What is the weighted average capital for WW and RR respectively for 20x5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
Question
WW and RR share profits and losses equally, WW and RR receive salary allowances of P20 000 and P30 000
respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are
calculated at the beginning of each month regardless of when the capital contributions and capital withdrawals
were made, and partners drawings are not used in determining the average capital balances. Total net income for
20x5 is P120 000.
WW
RR
January 1 Capital Balances ...............................................P100 000 P120 000
Yearly Drawings (P1500 a month) .................................... 18 000 18 000
Permanent withdrawals of capital:
June 3 .................................................... (12 000)
May 2 .................................................... (15 000)
Additional investments of capital:
July 3 ..................................................... 40 000
October 2 ................................................ 50 000
What is the weighted average capital for WW and RR respectively for 20x5
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