X and Y formed a partnership on March 1, 2018 and agreed to share profit 80% and 20%, respectively. X invested cash of P150,000. Y invested no assets but has a specialized expertise and manages the firm full time. There were no other investments nor withdrawals during the year. The partnership contract provides for the following: • Capital accounts are to be credited annually with interest at 10% or original capital contribution. • Y is to be paid a monthly salary of P3,000 • Y is to receive a bonus of 20% of profit before deducting interest on capital, salary and the bonus • Bonus, interest and salary are to be considered as expense of the partnership The 2018 condensed income statement for the partnership includes the following: Revenues 550,000 Expenses (including salary, interest and bonus) (375,000) Net Income 175,000 How much is the bonus given to Y? ________
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.
X and Y formed a partnership on March 1, 2018 and agreed to share profit 80% and 20%, respectively. X
invested cash of P150,000. Y invested no assets but has a specialized expertise and manages the firm full
time. There were no other investments nor withdrawals during the year. The partnership contract
provides for the following:
• Capital accounts are to be credited annually with interest at 10% or original capital contribution.
• Y is to be paid a monthly salary of P3,000
• Y is to receive a bonus of 20% of profit before deducting interest on capital, salary and the bonus
• Bonus, interest and salary are to be considered as expense of the partnership
The 2018 condensed income statement for the partnership includes the following:
Revenues 550,000
Expenses (including salary, interest and bonus) (375,000)
Net Income 175,000
How much is the bonus given to Y? ________
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