PROBLEMRhea Diaz and Fe De la Cruz Partnership had a profit of P500,000 for the year ended2019 the first year of operations. the partnership contract provided that each partner may withdrawP10,000 on the last day of each month; both partners did so during the year. the drawings arerecorded by debits to the partners' drawing accounts and shall not be considered in the divisionof profits or loss. it is the intention of the partners that each partner's share in the profits or lossbe either credited or debited to the drawing account.Diaz invested P400,000 on Jan 1, 2019 and an additional P200,000 on April 1, 2019. Dela Cruz invested P600,000 on Jan 1, 2019 and withdrew P200,000 on July 1.These transactions are summarized below:Summary of AccountsDiaz, CapitalDe la Cruz, CapitalJan. 1- 400,000Jul. 1- 200,000Jan. 1- 600,000Apr. 1- 200,000Diaz, DrawingDe la Cruz, DrawingJan. - Dec. 120,000Jan. - Dec. 120,000Income SummaryDec. 31 - 500,000How should the profit distributions under the different profit sharing above be recorded underthe following case?Based on partners' capital contributionsa. ratio of original capital balances at the beg. of the yearb. ratio of capital balances at the end of the yearc. ratio of average capital balances

a. The Ratio of Original Capital Balances at the beginning of the year will be calculated as…

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a. ratio of original capital balances at the beg. of the year b. ratio of capital balances at the end of the year

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 57P

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Question

PROBLEM
Rhea Diaz and Fe De la Cruz Partnership had a profit of P500,000 for the year ended
2019 the first year of operations. the partnership contract provided that each partner may withdraw
P10,000 on the last day of each month; both partners did so during the year. the drawings are
recorded by debits to the partners' drawing accounts and shall not be considered in the division
of profits or loss. it is the intention of the partners that each partner's share in the profits or loss
be either credited or debited to the drawing account.
Diaz invested P400,000 on Jan 1, 2019 and an additional P200,000 on April 1, 2019. De
la Cruz invested P600,000 on Jan 1, 2019 and withdrew P200,000 on July 1.
These transactions are summarized below:
Summary of Accounts
Diaz, Capital
De la Cruz, Capital
Jan. 1- 400,000
Jul. 1- 200,000
Jan. 1- 600,000
Apr. 1- 200,000
Diaz, Drawing
De la Cruz, Drawing
Jan. - Dec. 120,000
Jan. - Dec. 120,000
Income Summary
Dec. 31 - 500,000
How should the profit distributions under the different profit sharing above be recorded under
the following case?
Based on partners' capital contributions
a. ratio of original capital balances at the beg. of the year
b. ratio of capital balances at the end of the year
c. ratio of average capital balances

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