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Problem 1 At the end of the its first year of operations on December 31, 2020, HEART ATTACK Company's accounts show the following: Capital P 48,000 P 30,000 P 25,000 Partner Drawings Mr. Chicharon P 23,000 P 14,000 P 10,000 Mr. Bulalo Mr. L. Kawali 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: Capital P 48,000 P 30,000 P 25,000 Partner Drawings Mr. Chicharon P 23,000 P 14,000 P 10,000 Mr. Bulalo Mr. L. Kawali 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 1 At the end of the its first year of operations on December 31, 2020, HEART ATTACK Company's accounts show the following: Capital P 48,000 P 30,000 P 25,000 Partner Drawings Mr. Chicharon P 23,000 P 14,000 P 10,000 Mr. Bulalo Mr. L. Kawali 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.
Transcribed Image Text:Problem 1 At the end of the its first year of operations on December 31, 2020, HEART ATTACK Company's accounts show the following: Capital P 48,000 P 30,000 P 25,000 Partner Drawings Mr. Chicharon P 23,000 P 14,000 P 10,000 Mr. Bulalo Mr. L. Kawali 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.
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