and C shall receive annual salaries of 12,0 10% of profit after salaries but before dedu ner. er shall receive 10% interest on average cap hing profit or loss shall be shared as follows: apital investments of partners during the yea P100,000 60,000 120,000
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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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- 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 and explain for the respective shares of the partners on the partnership profit.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.The partnership agreement of X, Y, and Z stipulates the following:a. Partners Y and Z shall receive annual salaries of P23,000 and P12,000, respectively.b. A bonus of 15% of profit after salaries but before deduction of bonus shall be given to Partner X, themanaging partner.c. Each partner shall receive 11% interest on average capital investments.d. Any remaining profit or loss shall be shared as follows: 30% to X, and 35% each to Y and Z.The average capital investments of the partners during the year are as follows: X – P125,000; Y – P78,000;and Z – P101,000.Case # 1: The partnership earns profit of P125,000.Case # 2: The partnership earns profit of P9,000.Case # 3: The partnership incurs a loss of P19,000.For items 1-3, refer to Case #11. How much is X's share in the profit/loss?a. P 40,168b. P 40,169c. P 60,170d. P 60,1712. How much is Y's share in the profit/loss?a. P 46,652b. P 46,651c. P 56,653d. P 56,6543. How much is Z's share in the profit/loss?a. P 38,182b. P 38,181c. P…
- The partnership agreement of X, Y, and Z stipulates the following: Partners Y and Z shall receive annual salaries of P23,000 and P12,000, A bonus of 15% of profit after salaries but before deduction of bonus shall be given to Partner X, the managing Each partner shall receive 11% interest on average capital Any remaining profit or loss shall be shared as follows: 30% to X, and 35% each to Y and The average capital investments of the partners during the year are as follows: X – P125,000; Y – P78,000; and Z – P101,000. Case # 3: The partnership incurs a loss of P19,000. 1. How much is X's share in the profit/loss? a. (P 12,482) c. (P7,494) b. P 976 d. (P 19,000) 2. How much is Y's share in the profit/loss? a. (P 12,482) b. P 976 c. (P7,494) (P 19,000) 3. How much is Z's share in the profit/loss? a. (P 12,482) c. (P7,494) b. P 976 d. (P 19,000)2. Use the following information for the next three cases: 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. DA bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner. Each partner shall receive 10% interest on average capital investments. TAny 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: AP100,000 B 60,000 C 120,000 Case #1: The partnership earns profit of P100,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #2: The partnership earns profit of P10,000. Requirement: Compute for the respective shares of the partners on the partnership profit. Case #3: The partnership incurs loss of P20,000. Requirement: Compute for the respective shares of the partners on the…The net loss of a XYZ partnership for the year is P100,000. Partner X is to be given a salary of 5,000 per month. The capital balances of X, Y and Z are P 150,000, P 160,000, and P 140,000, respectively. Interest in the capital balance will be given at a rate of 15%. Bonus of 10% after salaries and interest is given to partner Z. Remaining profit is to be distributed equally to the partners. In the process of journalizing the distribution of the loss, what will be done to the capital of X and in what amount? A. Credited by P 14,250 B. Debited by P 6,666 C. Credited by P 6,666 D. Debited by P 14,250
- F, G and H form a partnership and agree to maintain average investments of P2,500,000, P1,250,000, and P1,250,000, respectively. Interest on the excess or deficiency in a capital contribution is to be computed at 6% per annum. After the interest allowances, F,G, and H are to share any balance in the ratio of 5:3:2. Average amounts invested during the first six months were as follows: F, P3,000,000. G, P1,375,000; and H, P1,000,000. A loss from operations of P62,500 was incurred for the first six months. How is this loss distributed among the partners?Kent Deriquito and Jude Searez are partners of Cebu Vintage Car. The Income and Expense. Summary account before final closing shows a credit balance of P450,000 at the end of the fiścal year. The following were taken from their respective çapital account ledgers: Kent Deriquito Balance 752,000 70,000 50,000 Jan. 1 Oct. 1 Withdrawal Dec. 1 Investment Jude Searez 680,000 80,000 10,000 40,000 Jan. 1 Balance March 1 Investment Nov. Withdrawal %3D Dec. InvestmentFF, GG and HH form a partnership and agree to maintain average investments of P2,500,000, P1,250,000, and P1,250,000, respectively. Interest on the excess or deficiency in a capital contribution is to be computed at 6% per annum. After the interest allowances, FF,GG, and HH are to share any balance in the ratio of 5:3:2. Average amounts invested during the first six months were as follows: FF, P3,000,000. GG, P1,375,000; and HH, P1,000,000. A loss from operations of P62,500 was incurred for the first six months. How is this loss distributed among the partners?
- Partners A, B and C are contemplating using the following profit distribution plan: Salary is to be given to A in the amount of P60,000, with the remainder in an equal rates to all partners. A is guaranteed a minimum profit share of P100,000. a) Profit for the first year is P240,000 b) Profit for the second year is P150,000. Compute for the profit share of partners B and C in both years.The following are the partnership agreement between partners Baby Love & Honey Sweet for their partnership’s profit distribution:A. Each partners shall be entitled for an annual salary of P50,000 each.B. 15% Bonus of partnership profits after salaries to Honey Sweet being a managing partner.C. 20% interest is given to both partners based on average capital ratio.D. Residual profit and loss shall be distributed on the ratio 2:2The ledgers of their capital balances are shown below: Baby Love Debit: July 1. P20,000 Credit: Jan 1. P80,000 Oct 1. P40,000 Honey Sweet Debit: Oct 1. P10,000 Credit: Jan 1. P120,000 May 1. 30,000 The partnership profit for the year is P150,000 before distribution to partners Required: 1. Prepare a Schedule for Profit Distribution.2. Journal entry to record the distribution of profit to partners.Total capital of A and B is $ 2,50,000 and the market rate of interest is 10%. Partners are entitled to receive remuneration of $ 10,000 each. Profits (before partners' remuneration) for the years 2008, 2009, 2010, 2011 and 2012 were $ 70,000, $ 80,500, $ 90,200, $ 71,500 and $ 1,05,000 respectively. Goodwill is to be valued at 3 years' purchase of the last 5 years' super profits. Calculate the goodwill of the firm.