Problem :-9 A and B were partners in a firm with a profit sharing ratio of 7:5. A had given a sum of $1,20,000 to the firm as loan on 1st July 2014, and B had given a sum of $ 60,000 to the firm on the same date. Distribute the profit/ losses amongst the partners in each of the following cases assuming that the firm closes the books on December 31st every year and deed is silent to the rate of interest on loan. Case (a) If the trading profit for the year 2014 is $ 6,300 Case (b)If the profits of the firm, before charging any interest amounted to $ 4,500.

Problem :-9 A and B were partners in a firm with a profit sharing ratio of 7:5. A had given a sum of $1,20,000 to the firm as loan on 1st July 2014, and B had given a sum of $ 60,000 to the firm on the same date. Distribute the profit/ losses amongst the partners in each of the following cases assuming that the firm closes the books on December 31st every year and deed is silent to the rate of interest on loan. Case (a) If the trading profit for the year 2014 is $ 6,300 Case (b)If the profits of the firm, before charging any interest amounted to $ 4,500.

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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Q7 Shaun and Morgan are partners in a firm sharing profits and losses equally. On 1st April, 2014, the capitals of the partners were Shaun $ 4,00,000 and Morgan $ 3,00,000. The Profit and Loss Appropriation Account of the firm showed a net profit of $ 7,50,000 for the year ended 31st March, 2015. The terms of Partnership Deed provided the following: Transfer 10% of distributable profits to reserve fund. Interest on Capitals @ 6% per annum. Interest on drawings 6% per annum. Drawings being Shaun $ 80,000 and Morgan $ 60,000. Prepare Profit and Loss Appropriation Account for the year ended 31st March 2015.
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3. Raja and Sam were partners in a firm sharing profits in the ratio of their capitals contributed on commencement of business which were RO. 80,000 and RO. 60,000 respectively. The firm stared business on April 1, 2001. According to the partnership agreement interest on capital and drawings are 12% and 10% p.a. respectively. Raja and Sam are to get a monthly salary of RO. 2,000 and RO. 3,000 respectively. The profits for year ended March 31, 2002 before making above appropriation was RO. 100,300. The drawings of Raja and Sam were RO. 40,000 and RO. 50,000, respectively. Interest on drawings amounted to RO. 2,000 for Raja and RO 2,500 for Sam. Prepare Profit and Loss Appropriation Account and partners' capital accounts assuming that their capitals are fluctuating.
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Villanueva and Mulles are partners sharing profits in the ratio 3:2. On Jan. 1, 2018, Lucena joined the partnership and the new profit sharing ratio is as follows: Villanueva 40%, Mulles 30% and Lucena 30%. Profits for the year ended June 30,2018 were: 6 months ended Dec. 31, 2017 P300,0006 months ended June 30, 2018 P450,000 An irrecoverable debt of P50,000 was written off in the six months to June 30 in computing the P450,000 profit. It was agreed that this expense should be borne by Villanueva and Mulles only. What is Villanueva’s total profit share for the year ended June 30, 2018?
Required information [The following information applies to the questions displayed below.] Ries, Bax, and Thomas invested $80,000, $112,000, and $128,000, respectively, in a partnership. During its first calendar year, the firm earned $249,000. Required: Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to allocate the $249,000 net income under each of the following separate assumptions. 3. The partners agreed to share income and loss by providing annual salary allowances of $66,000 to Ries, $56,000 to Bax, and $80,000 to Thomas; granting 10% interest on the partners' beginning capital investments; and sharing the remainder equally. Complete this question by entering your ans below. Appropriation General of profits Journal Allocate $249,000 net income by providing annual $66,000 to Ries, $56,000 to Bax, and $80,000 to interest on the partners' beginning capital investm remainder equally. Supporting Calculations Net income Salary allowances…