AA and BB are partners with capital accounts that had the following transactions during 2022: AA BB Debit Credit Debit Credit Beginning balance, January 1 P270,000 P280,000 February 28 P80,000 March 1 120,000 April 30 160,000 June 1 P100,000 August 1 140,000 September 30 40,000 October 31 40,000 The partnership agreement provides for the following: Interest of 9% is to be provided to AA Salaries of P4,000 is to be given to BB per quarter A bonus of 25% is to be given to AA based on net income after interest and salaries Remaining balance is to be allocated on a ratio of 40:60. The income summary account has a credit balance of P1,050,000 before profit distribution. BB has a Drawing account amounting to P40,000 which is a withdrawal made by BB in anticipation of future profits on July 1, 2022. How much is the ending capital of BB as of December 31, 2022?
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.
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AA and BB are partners with capital accounts that had the following transactions during 2022:
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|
AA |
BB |
||
|
|
Debit |
Credit |
Debit |
Credit |
|
Beginning balance, January 1 |
|
P270,000 |
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P280,000 |
|
February 28 |
P80,000 |
|
|
|
|
March 1 |
|
|
|
120,000 |
|
April 30 |
|
160,000 |
|
|
|
June 1 |
|
|
P100,000 |
|
|
August 1 |
|
|
|
140,000 |
|
September 30 |
|
40,000 |
|
|
|
October 31 |
|
|
40,000 |
|
The
- Interest of 9% is to be provided to AA
- Salaries of P4,000 is to be given to BB per quarter
- A bonus of 25% is to be given to AA based on net income after interest and salaries
- Remaining balance is to be allocated on a ratio of 40:60.
The income summary account has a credit balance of P1,050,000 before profit distribution. BB has a Drawing account amounting to P40,000 which is a withdrawal made by BB in anticipation of future profits on July 1, 2022.
How much is the ending capital of BB as of December 31, 2022?
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