Exercise 3: Retirement of a Partner Hector is retiring from the partnership with Fred and Gabby as of July 1, 2019 and is paid P16,000. Their capital balances as of January 1, 2019 and shares in profits are as follows: Capital Balance P20,000 P/L Ratio Fred 30% Gabby 30,000 40 Hector 10,000 30 Hector's drawing for the first half of 2019 amounted to P1,500 and net income for the first half of 2019 amounted to P15,000. Make the entry or entries incidental to the retirement of Hector under each of the following assumptions: a. The asset revaluation of the partnership is recorded b. The additional payment to the retiree is a bonus from the remaining partners.
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- The partnership of Chase and Chloe shares profits and losses in a 70:30 ratio respectively after Chloe receives a $10,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $ 30,000 B. $ 6,000 C. ($10,000)Exercise3: Retirement of a Partner G, H and I are partners whose capital balances as of January 1, 2019 are in the same proportion as their share in profit of 20:30:50. As of January 1, 2019, total partnership assets amount to P150,000 with the liabilities at P60,000. Their additional investments and withdrawals for 2019 are as follows: Additional Investments Drawing G P15,000 P9,000 H 18,000 10,000 I 12,000 H retires as of December 1, 2019, G and I agreed to a settlement for his share in equity plus 10% thereof after three months. Pending settlement, the amount due to H shall bear an interest of 12%. The partnership net income for 2019, prior to the above-mentioned interest, amounts to P32,400. Instructions: Determine the amount due to H as of December 31, 2019. Make the entries incidental to the retirement of H under each of the following assumptions: The additional consideration is to…The capital accounts of Scott and Tucker at the end of the fiscal year 2019 are as follows: Scott, Capital January 1 Balance P210,000 Мay 1 Investment 90,000 October 1 Withdrawal Р60,000 Tucker, Capital January 1 Balance P150,000 April 1 Withdrawal P30,000 The partnership profit for the year ended December 31, 2019 was P300,000. Instruction: Prepare schedule of profit allocation and journal entries to record transfer to profit to the capital accounts under each of the following independent assumptions: 1. Profit is divided 60% to Scott and 40% to Tucker. 2. Profit is divided into ratio of capital balances at the beginning of the period. 3. Profit is divided in the ratio of average capital balance. Interest of 8% is allowed on the average capital and the balance of profit is divided equally. 4. Salaries of P60,000 and P48,000 are allowed to Scott and Tucker, respectively, and the balance of the profit is divided in the ratio of capital balances at the end of the period. 5. 6. Scott is…
- Current Attempt in Progress The Ivanhoe Partnership reported profit of $66,000 for the year ended February 29, 2024. Salary allowances are $49,500 for H. Robinson and $27,500 for S. Lewi. Interest allowances of 5% are calculated on each partner's opening capital account balance. Capital account balances at March 1, 2023, were as follows: H. Robinson $79,000 (Cr.) and S. Lewi $52,000 (Cr.). Any remainder is shared equally, Calculate the division of profit to each partner. Profit allocated to partners H. Robinson S. LewiIncome summary shows a credit balance of 1,800,000 at the end of the first year of operations.1. By what amount will the capital balance of MAR182 be credited on January 1, 2018?2. By what amount will the capital balance of MAR186 be credited on January 1, 2018?3. How much is the total assets of the partnership at the date of formation?4. What is the net effect of the adjustments made on January 1 to MAR186 capital balance?5. What is the weighted average capital of MAR182 in 2018?6. How much is the bonus given to MAR186?7. How much is the share of MAR182 in the partnership net income?8. How much is the share of MAR186 in the partnership net income?9. What is the ending adjusted capital balance of MAR182?10. What is the ending adjusted capital balance of MAR186?Problem: Nadine and Lysa formed a partnership on Jan. 01, 2019. Below the details of their capital accounts for 2019: Nadine, Capital Lysa, Capital 1-Jul 200,000 500,000 1-Jan 300,000 300,000 31-Dec 150,000 450,000 On the same year, the partnership generated a profit of P200,000. Required: Determine the Profit Ratio and the share on profits for Nadine and Lysa on the following agreements: A. If agreement is based on Capital Contributions: Nadine Lysa 1 Profit Ratio 4 Share on Profit B. If agreement is based on Average Capital: Nadine Lysa 5 Profit Ratio Share on Profit 2. CO 3.
- At the end of its first year of operations on December 31, 2019, CAP Company’s accountsshow the following.Partner Drawing CapitalCharlies $15,000 $40,000Andrew 10,000 25,000Patrick 5,000 15,000The capital balance represents each partner’s initial capital investment. Therefore, net incomeor net loss for 2019 has not been closed to the partners’ capital accounts.Instruction(a) Journalize the entry to record the division of net income for 2019 under each of theindependent assumptions shown on the following:(1) Net income is $50,000. Income is shared 5:3:2.(2) Net income is $40,000. Charlies and Andrew are given salary allowances of$15,000 and $10,000, respectively. The remainder is shared equally.(3) Net income is $37,000. Each partner is allowed interest of 10% on beginningcapital balances. Charlies is given an $20,000 salary allowance. The remainderis shared…During the 2020 income year, the Timms Brothers Partnership recorded a net income of $300,000. The business also recorded a net loss of $220,000 during the 2019 income year. If all 4 brothers share equally in partnership profits and losses, what is the income to be distributed to each partner in the 2020 financial year? Select one: a. $75,000 b. $130,000 c. $20,000 d. $55,00011. Amber and Berta share profits and losses equally after a 10% interest on their average capital balances. Consider additional capital contributions and permanent withdrawals as made at the end of the month. Total net income after tax for 2019 is P320,000. (see attached image, kindly answer it based in your knowledge, thank you!) Direction: Give the entries to record the distribution based on the following two independent cases: a) Partners' drawings are not used in determining the average capital balances. b) All changes in capital and drawing should be considered in determining the average capital balances.
- The loan and capital account balances of Hannah, Jean, Jenifer and Kristine Partnership were as follows on October 26, 2020, the date that the partnership began liquidation: Debit Credit Loan, Hannah P20,000 Loan, Jenifer P35,000 Hannah, Capital – 20% 30,000 Jean, Capital – 30% 15,000 Jenifer, Capital – 10% 25,000 Kristine, Capital – 40% 40,000 Required: 1. Prepare a cash priority program. 2. Assume that P20,000 cash is available for the first distribution, determine the cash to be received by the partners. 3. In continuation with the preceding number, another P15,000 cash is available for the next distribution, determine the cash to be received by the partners. Required: Prepare a statement of liquidation with safe payments schedule.11. Amber and Berta share profits and losses equally after a 10% interest on their average capital balances. Consider additional capital contributions and permanent withdrawals as made at the end of the month. Total net income after tax for 2019 is P320,000. (see attached image, kindly answer it based on your knowledge, thank you!) Direction: Give the entries to record the distribution based on the following two independent cases: a) Partner's drawings are not used in determining the average capital balances b) All changes in capital and drawing should be considered in determining the average capital balances. 12. Bert, Ben and Bello are partners in a sports equipment store with capital investments of P150,000, P200,000 and P300,000, respectively. Partnership agreement provides for the following monthly salary of P10,000 to Ben who is the managing partner, 12% interest on capital contributions, remaining profit to be allocated equally. Direction: For Ben to be credited for a…Additional information1. The net profit according to the Profit and Loss account amounted to R500 000 on 28February 2021.2. The partnership agreement made provision for the following:1. Interest on capital must be provided at 15% per annum on the balances in the capitalAccounts from 1 March 2020 to 31 August 2020. With effect from 1 September 2019 the interest rate on capital increases to 18% per annum.2. The partners are entitled to the following monthly salaries: Bobby R11 000Vincent R10 0003. Bobby is entitled to a bonus of 15% of the net profit before any appropriations are made.4. Bobby and Vincent share the remaining profits or losses in the ratio 3:2 respectively.