The partnership run by Evans, Fitch, and Gaul has a complicated profit-and-loss sharing arrangement. On December 31, 2006, each partner had an average capital balance of P300, 000 for Evans, P250,000 for Fitch, and P325,000 for Gaul. Each partner receives an allotment of 8% of the interest. A salary allotment of P10, 000 and P15, 000 is given to Evans and Fitch, respectively. Gaul will be given a bonus equal to 10% of the initial amount of net income if partnership net income exceeds P25, 000 after the salary allocations have been taken into account (but before the interest allocations have been taken into account). All residual revenue is distributed to Evans, Fitch, and Gaul in the proportions of 2:3:5. How much of the partnership's revenue, supposing it to be P250, 000, must be assigned to Gaul?

The partnership run by Evans, Fitch, and Gaul has a complicated profit-and-loss sharing arrangement. On December 31, 2006, each partner had an average capital balance of P300, 000 for Evans, P250,000 for Fitch, and P325,000 for Gaul. Each partner receives an allotment of 8% of the interest. A salary allotment of P10, 000 and P15, 000 is given to Evans and Fitch, respectively. Gaul will be given a bonus equal to 10% of the initial amount of net income if partnership net income exceeds P25, 000 after the salary allocations have been taken into account (but before the interest allocations have been taken into account). All residual revenue is distributed to Evans, Fitch, and Gaul in the proportions of 2:3:5. How much of the partnership's revenue, supposing it to be P250, 000, must be assigned to Gaul?

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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