Sam, Lam, Lim are partners with a capital investment of P20,000-P30,000- P40,000 respectively. On December 31 2019 after a year of operation, the partnership made a net profit of P80,000. Required: Compute for the division of net profit under each of the enumerated methods of dividing profit and losses. Give the journal entry to close the net profit to capital accounts under each method. 1. Ratio of partner's capital at the beginning of period 2. Interest of 12% allowed on partners capital equity and the balance divided equally 3. Salaries of Sam is P600, Lam P700 and Lim P800 for each partner and the balance is divided equally

Sam, Lam, Lim are partners with a capital investment of P20,000-P30,000- P40,000 respectively. On December 31 2019 after a year of operation, the partnership made a net profit of P80,000. Required: Compute for the division of net profit under each of the enumerated methods of dividing profit and losses. Give the journal entry to close the net profit to capital accounts under each method. 1. Ratio of partner's capital at the beginning of period 2. Interest of 12% allowed on partners capital equity and the balance divided equally 3. Salaries of Sam is P600, Lam P700 and Lim P800 for each partner and the balance is divided equally

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 1PA: The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after...

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The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after Tatum receives a 10,000 salary and Brook receives a 15,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $40,000 B. $25,000 C. ($5,000) In addition, show the resulting entries to each partners capital account. Tatums capital account balance is $50,000 and Brooks is $60,000.
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