Problem 1 At the end of the its first year of operations on December 31, 2020, HEART ATTACK Company's accounts show the following: Partner Mr. Chicharon Mr. Bulalo Mr. L. Kawali Drawings P 23,000 P 14,000 P 10,000 Capital P 48,000 P 30,000 P 25,000 The capital balances represents each partner's initial capital investment. Therefore, net income or net loss for 2020 has not been closed to the partners' capital accounts. Instructions: a. Journalize the entry to record the division of net income for the year 2020 under each of the following independent assumptions. 1. Net income is P 30,000. Income is shared 6:3:1 2. Net income is P 40,000, Mr. Chicharon and Mr. Bulalo are given salary allowances of P 15,000 and P 10,000, respectively. The remainder is shared equally. 3. Net income is P 19,000. Each partner is allowed interest of 10% on beginning capital balances. Mr. Chicharon is given a P 15,0000 salary allowance. The remainder is shared equally b. Prepare a schedule showing the division of net income under assumption (3) above. c. Prepare a partner's capital statement for the yar under assumptions (3) above.
Problem 1 At the end of the its first year of operations on December 31, 2020, HEART ATTACK Company's accounts show the following:
Partner Mr. Chicharon Mr. Bulalo Mr. L. Kawali
Drawings P 23,000 P 14,000 P 10,000
Capital P 48,000 P 30,000 P 25,000
The capital balances represents each partner's initial capital investment. Therefore, net income or net loss for 2020 has not been closed to the partners' capital accounts.
Instructions:
a.
1. Net income is P 30,000. Income is shared 6:3:1
2. Net income is P 40,000, Mr. Chicharon and Mr. Bulalo are given salary allowances of P 15,000 and P 10,000, respectively. The remainder is shared equally.
3. Net income is P 19,000. Each partner is allowed interest of 10% on beginning capital balances. Mr. Chicharon is given a P 15,0000 salary allowance. The remainder is shared equally
b. Prepare a schedule showing the division of net income under assumption (3) above.
c. Prepare a partner's capital statement for the yar under assumptions (3) above.
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