The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of 12,000 and ₱ 8,000, respectively. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. (Deduct the salaries to the profit, as basis for computation) Each partner shall receive 10% interest on average capital investments. Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C. The average capital investments of partners during the year are as follows: A                  ₱100,000 B                      60,000 C                    120,000   The partnership earns profit of ₱100,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question
The partnership agreement of A, B and C stipulates the following:
  • Partners A and C shall receive annual salaries of 12,000 and ₱ 8,000, respectively.
  • A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. (Deduct the salaries to the profit, as basis for computation)
  • Each partner shall receive 10% interest on average capital investments.
  • Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C.
The average capital investments of partners during the year are as follows:
A                  ₱100,000
B                      60,000
C                    120,000
 
The partnership earns profit of ₱100,000.
 
Requirement: Compute for the respective shares of the partners on the partnership profit.
2. The partnership agreement of A, B and C stipulates the following:
Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively.
A bonus of 10% of profit after salaries but before deduction of bonus shall be given to
Partner A, the managing partner. (Deduct the salaries to the profit, as basis for
computation)
Each partner shall receive 10% interest on average capital investments.
Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and
С.
The average capital investments of partners during the year are as follows:
A
P100,000
В
60,000
C
120,000
The partnership earns profit of P100,000.
Requirement: Compute for the respective shares of the partners on the partnership profit.
Transcribed Image Text:2. The partnership agreement of A, B and C stipulates the following: Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. (Deduct the salaries to the profit, as basis for computation) Each partner shall receive 10% interest on average capital investments. Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and С. The average capital investments of partners during the year are as follows: A P100,000 В 60,000 C 120,000 The partnership earns profit of P100,000. Requirement: Compute for the respective shares of the partners on the partnership profit.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Partnership Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education