Answered: And B formed a partnership. The…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 1PB: The partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a...

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And B formed a partnership. The partnership agreement stipulates the following:
* Annual salary allowances of P100,000 for A and P40,000 for B.
* Bonus to A of 10% of the profit after partners' salaries but before deducting the bonus.
Case 1: The partnership earned profit of P50,000
Requirement: Compute for the respective shares of the partners in the profit.
Case 2: The partnership incurred a loss of P20,000.
Requirement:
a. Compute for the respective shares of the partners in the profit.
b. By what amount did A's capital account change?"

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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