5. The partnership agreement of Santiago and Generales provided that interest of I0% per annum is to be credited to each partner on the basis of average capital balances. A summary of Generales' capital account for the year ended Dec. 31, 2020 follows: P280,000 Balance, Jan. 1 Additional Investments, July 1 80,000 (30,000) Withdrawal, August 1 Balance, Dec. 31 P330,000 The amount of interest that should eventually be credited to Generales' capital is a. P30,500. b. P33,000. C. P30,750. d. P34,500.
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.
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