Striaton Café has three partners: Cilan, Chili, and Cress. On January 1, 2021, the three partners had equity of P250,000, P50,000, and P140,000, respectively. Cilan contributed an additional P50,000 on July 1, 2021. Chili received an annual salary allowance of P88,250 during 2021. The partners' equity accounts are also credited with 10% interest based on average capital balances. Any remaining profit is to be shared in a ratio of 4:3:3. The 2021 profit was P316,000. Amounts equal to the salary and interest allowances are required to be withdrawn by the partners every year-end. Required: a. Determine each partners' share in the profit b. Prepare the journal entries to close the income summary and withdrawals to the partner's equity accounts c. Prepare the statement of changes in partners' equity

Striaton Café has three partners: Cilan, Chili, and Cress. On January 1, 2021, the three partners had equity of P250,000, P50,000, and P140,000, respectively. Cilan contributed an additional P50,000 on July 1, 2021. Chili received an annual salary allowance of P88,250 during 2021. The partners' equity accounts are also credited with 10% interest based on average capital balances. Any remaining profit is to be shared in a ratio of 4:3:3. The 2021 profit was P316,000. Amounts equal to the salary and interest allowances are required to be withdrawn by the partners every year-end. Required: a. Determine each partners' share in the profit b. Prepare the journal entries to close the income summary and withdrawals to the partner's equity accounts c. Prepare the statement of changes in partners' equity

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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