A, B and C are partners with average capital balances during 2018 of P470,000. P230,000, and P160,000, respectively. The partners receive 10% interest on their average capital balances; after deducting salaries of P120,000 to A and P80,000 to C, the residual profits or loss divided in a 3:2:5 ratio. In 2018, the partnership had a net loss of P100,000 before the interest and salaries to partners. 1. By what amount should A's and C's capital account change- increase (decrease)? 2. If the partnership had a loss of P100,000 after the interest and salaries to partners, by what amount should B's capital account change- increase (decrease)?
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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