Aquila partnership began its first year of operations with the following capital balances: N, Capital: P143,000 A, Capital: P104, 000 C, Capital: P143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: -N was to be awarded an annual salary of P26,000 with P13,000 salary assigned to C -Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year. -The remainder was to be assigned on a 4:3:3 basis, respectively. -Each partner was allowed to withdraw up to P13,000 per year. Assume that the net loss for the first year of operations was P36,000 with net income of P42,000 in the second year. Assume further that each partner withdrew the maximum amount fiom the business each year. A. What was C's share of income or loss for the first year? B. What was the balance in C's capital account at the end of the second year?
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.
Aquila partnership began its first year of operations with the following capital balances:
N, Capital: P143,000
A, Capital: P104, 000
C, Capital: P143,000
The Articles of Partnership stipulated that
-N was to be awarded an annual salary of P26,000 with P13,000 salary assigned to C
-Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year.
-The remainder was to be assigned on a 4:3:3 basis, respectively.
-Each partner was allowed to withdraw up to P13,000 per year.
Assume that the net loss for the first year of operations was P36,000 with net income
of P42,000 in the second year. Assume further that each partner withdrew the maximum amount fiom the business each year.
A. What was C's share of income or loss for the first year?
B. What was the balance in C's capital account at the end of the second year?
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