4. During 2014, Taylor and Adele created a partnership to own and operate a minimart by contributing P100,000 each. The partnership agreement provided that Taylor and Adele are to receive salaries of P100,000 and P50,000, respectively. Remaining profits will be allocated 60:40. Partnership income for 2014 was P130,000, from which Taylor was allocated with an amount of P88,000 and Adele with P42.000. During 2015, the partners agreed to change their profit and loss sharing agreement. The new agreement allows Taylor a salary of P180,000. Adele will no longer receive any salary. The remainder will be split between the partners equally. At the end of 2015, the partnership reported an income of P250,000. However, it was discovered that a counterbalancing error was made by the partnership's accountant last year, resulting to the understatement of 2014's net income by P40,000 and the overstatement of 2015's net income by the same amount. What should be the capital balances of Taylor and Adele at the end of 2015 after allocating profits and after considering the error? A. Taylor-P299,000; Adele-P81,000 B. Taylor-P307,000; Adele-PZ3,000 C Taylor-P407,000; Adele-P173,000 D. Taylor-P399,000; Adele-P181,000
4. During 2014, Taylor and Adele created a partnership to own and operate a minimart by contributing P100,000 each. The partnership agreement provided that Taylor and Adele are to receive salaries of P100,000 and P50,000, respectively. Remaining profits will be allocated 60:40. Partnership income for 2014 was P130,000, from which Taylor was allocated with an amount of P88,000 and Adele with P42.000. During 2015, the partners agreed to change their profit and loss sharing agreement. The new agreement allows Taylor a salary of P180,000. Adele will no longer receive any salary. The remainder will be split between the partners equally. At the end of 2015, the partnership reported an income of P250,000. However, it was discovered that a counterbalancing error was made by the partnership's accountant last year, resulting to the understatement of 2014's net income by P40,000 and the overstatement of 2015's net income by the same amount. What should be the capital balances of Taylor and Adele at the end of 2015 after allocating profits and after considering the error? A. Taylor-P299,000; Adele-P81,000 B. Taylor-P307,000; Adele-PZ3,000 C Taylor-P407,000; Adele-P173,000 D. Taylor-P399,000; Adele-P181,000
Chapter21: Partnerships
Section: Chapter Questions
Problem 2BCRQ
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Question
Transcribed Image Text:4. During 2014, Taylor and Adele created a partnership to own and operate a minimart by contributing P100,000 each. The
partnership agreement provided that Taylor and Adele are to recelve salaries of P100,000 and P50,000, respectively.
Remaining profits will be allocated 60:40. Partnership income for 2014 was P130,000, from which Taylor was allocated
with an amount of P88,000 and Adele with P42,000. During 2015, the partners agreed to change their profit and loss sharing
agreement. The new agreement allows Taylor a salary of P180,000. Adele will no longer receive any salary. The remainder
will be split between the partners equally. At the end of 2015, the partnership reported an income of P250,000, However, it
was discovered that a counterbalancing error was made by the partnership's accountant last year, resulting to the
understatement of 2014's net income by P40,000 and the overstatement of 2015's net income by the same amount.
What should be the capital balances of Taylor and Adele at the end of 2015 after allocating profits and after considering the
error?
A. Taylor-P299,000; Adele-P81,000
B. Taylor-P307,000; Adele-P23,000
C.Taylor-P407,000; Adele-P173,000
D. Taylor-P399,000; Adele-P181.000
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