LT and AM have capital account balances at the beginning of the year of P40,000 and P45,000, respectively. They share net income and losses as follows: a. 8% interest on beginning capital balances. b. Salary allowance of P15,000 to LT and P7,500 to AM. c. Remainder in 3:2 ratio. The partnership reported net income of P10,000 for the year, before interest and salary allowances to partners. What are the profit share of LT and AM, respectively? a. P6,620 and P3,380 c. P6,500 and P3,500 b. P6,630 and P3,380 d. P6,000 and P4,000
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.
LT and AM have capital account balances at the beginning of the year of P40,000 and
P45,000, respectively. They share net income and losses as follows:
a. 8% interest on beginning capital balances.
b. Salary allowance of P15,000 to LT and P7,500 to AM.
c. Remainder in 3:2 ratio.
The
allowances to partners. What are the profit share of LT and AM, respectively?
a. P6,620 and P3,380 c. P6,500 and P3,500
b. P6,630 and P3,380 d. P6,000 and P4,000
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