3.12 L, V, and M put up an accounting firm on January 1, 200A. Theircapital balances on December 31, 200A prior to the distribution ofprofits were:LP 225,000275,000125,000VMTheir profit and loss sharing agreement provides for thefollowing allowances:* V is to receive a bonus of 10% of the net profit after bonusbut before interest and salaries.* 10% interest is allowed on a partner's capital in excess ofP 250,000.* Salaries of P 25,000 and P 30,000 shall be allowed to L andM, respectively.* The residual income is to be divided 3:3:4 for L, V, and M,respectively.The partnership earned P 110,000 during theyear 200A.REQUIRED:a. Show how the net income will be divided.b. Give the journal entry to record the division of the net income.

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Description: 3.12 L, V, and M put up an accounting firm on January 1, 200A. Theircapital balances on December 31, 200A prior to the distribution ofprofits were:LP 225,000275,000125,000VMTheir profit and loss sharing agreement provides for thefollowing allowances

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Answered: 3.12 L, V, and M put up an accounting…

Business

Accounting

3.12 L, V, and M put up an accounting firm on January 1, 200A. Their capital balances on December 31, 200A prior to the distribution of profits were:

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter3: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 51P

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