AA and BB are partners engaged in a manufacturing business. Transactions affecting the partners’ capital accounts in 2022 are as follows: AA BB Debit Credit Debit Credit Beg. Balance P250,000 P350,000 April 1 150,000 100,000 June 30 125,000 250,000 September 1 225,000 300,000 October 1 350,000 200,000 The income summary has a debit balance of P225,000. Agreement between AA and BB are as follows: Interest on average capital at 8%. Salaries of P125,000 and P175,000 are given to AA and BB, respectively. Bonus to BB at 25% of net income after deducting interest and salaries but before deducting bonus. Balance is to be divided equally. How much is the net increase (decrease) in BB’s capital account in 2022?
AA and BB are partners engaged in a manufacturing business. Transactions affecting the partners’ capital accounts in 2022 are as follows: AA BB Debit Credit Debit Credit Beg. Balance P250,000 P350,000 April 1 150,000 100,000 June 30 125,000 250,000 September 1 225,000 300,000 October 1 350,000 200,000 The income summary has a debit balance of P225,000. Agreement between AA and BB are as follows: Interest on average capital at 8%. Salaries of P125,000 and P175,000 are given to AA and BB, respectively. Bonus to BB at 25% of net income after deducting interest and salaries but before deducting bonus. Balance is to be divided equally. How much is the net increase (decrease) in BB’s capital account in 2022?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.22E
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AA and BB are partners engaged in a manufacturing business. Transactions affecting the partners’ capital accounts in 2022 are as follows:
|
|
AA |
BB |
||
|
|
Debit |
Credit |
Debit |
Credit |
|
Beg. Balance |
|
P250,000 |
|
P350,000 |
|
April 1 |
|
150,000 |
100,000 |
|
|
June 30 |
125,000 |
|
|
250,000 |
|
September 1 |
225,000 |
|
|
300,000 |
|
October 1 |
|
350,000 |
200,000 |
|
The income summary has a debit balance of P225,000.
Agreement between AA and BB are as follows:
- Interest on average capital at 8%.
- Salaries of P125,000 and P175,000 are given to AA and BB, respectively.
- Bonus to BB at 25% of net income after deducting interest and salaries but before deducting bonus.
- Balance is to be divided equally.
How much is the net increase (decrease) in BB’s capital account in 2022?
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