ASSIGNMENT 02:The account balances in the books of Academia Partnership at the end of its first yearof operations on December 31, 2019 are as follows:756,000186,000Accounts receivableTodoroki, drawing600,000144,000Accounts payableTodoroki, capitalDenki, capitalCash489,000Denki, drawing54,000582,750Gen. expenses-others756,000Interest expense26,250Interest income21,000Notes payable360,000Notes receivable120,000Purchases4,920,000Purchase discount138,000Purch. returns & allow.99,000Sales5,100,000Sales salaries480,000Store furniture222,000Store supplies36,000Taxes and licenses36,000The data requiring adjustments as of December 31, 2019 and agreements relating todivision of partnership profit or loss are as follows:1. Inventories: merchandise, P1,406,000; supplies, P16,5002.Depreciation of store furniture, 10% a year. Additions to store furniture weremade on March 1 costing P54,0003. Accrued advertising, P9,5004. Prepaid taxes and licenses, P10,0005. Accrued taxes and licenses, P10,500Accrued interest on notes payable, P3,7506.7. Accrued interest on notes receivable, P6,0008. Uncollectible accounts receivable, P9,3009. Income tax, 30%10. Todoroki and Denki agree to divide earnings as follows:a. Interest at 10% on beginning capital balancesb. Salaries to the managing partner Todoroki of P100,000c. Remaining profit or loss to be divided equallyInstructions: On December 31, 2019, prepare an income statement, a statement ofchanges in partner's equity, and statement of financial position

Income Statement The purpose of preparing the income statement is to know the net income which are…

Answered: c. Remaining profit or loss to be…

c. Remaining profit or loss to be divided equally Instructions: On December 31, 2019, prepare an income statement, a statement of changes in partner's equity, and statement of financial position

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 7SPA

See similar textbooks

Similar questions

19 AA and BB are partners with capital accounts that had the following transactions during 2022: AA BB Debit Credit Debit Credit Beginning balance, January 1 P270,000 P280,000 February 28 P80,000 March 1 120,000 April 30 160,000 June 1 P100,000 August 1 140,000 September 30 40,000 October 31 40,000 The partnership agreement provides for the following: Interest of 9% is to be provided to AA Salaries of P4,000 is to be given to BB per quarter A bonus of 25% is to be given to AA based on net income after interest and salaries Remaining balance is to be allocated on a ratio of 40:60. The income summary account has a credit balance of P1,050,000 before profit distribution. BB has a Drawing account amounting to P40,000 which is a withdrawal made by BB in anticipation of future profits on July 1, 2022. How much is the…
At the end of its first year of operations on December 31, 2019, CAP Company’s accountsshow the following.Partner Drawing CapitalCharlies $15,000 $40,000Andrew 10,000 25,000Patrick 5,000 15,000The capital balance represents each partner’s initial capital investment. Therefore, net incomeor net loss for 2019 has not been closed to the partners’ capital accounts.Instruction(a) Journalize the entry to record the division of net income for 2019 under each of theindependent assumptions shown on the following:(1) Net income is $50,000. Income is shared 5:3:2.(2) Net income is $40,000. Charlies and Andrew are given salary allowances of$15,000 and $10,000, respectively. The remainder is shared equally.(3) Net income is $37,000. Each partner is allowed interest of 10% on beginningcapital balances. Charlies is given an $20,000 salary allowance. The remainderis shared…
Partners Arias, Bobadilla and Briones share profits and losses 50:30:20, respectively. The statement of financial position at April 30, 2019 follows: Cash P 40,000 Accounts Payable P100,000 Other Assets 360,000 Arias, Capital 74,000 Bobadilla, Capital 130,000 Briones, Capital 96,000 Total 400,000 Total P400,000 The assets and liabilities are recorded and presented at their respective fair values. Banzon is to be admitted as a new partner with a 20% capital interest and a 20% share of profits and losses in exchange for a cash contribution. No goodwill or bonus is to be…
Income summary shows a credit balance of 1,800,000 at the end of the first year of operations.1. By what amount will the capital balance of MAR182 be credited on January 1, 2018?2. By what amount will the capital balance of MAR186 be credited on January 1, 2018?3. How much is the total assets of the partnership at the date of formation?4. What is the net effect of the adjustments made on January 1 to MAR186 capital balance?5. What is the weighted average capital of MAR182 in 2018?6. How much is the bonus given to MAR186?7. How much is the share of MAR182 in the partnership net income?8. How much is the share of MAR186 in the partnership net income?9. What is the ending adjusted capital balance of MAR182?10. What is the ending adjusted capital balance of MAR186?
As of July 1, 2020, MM and AA decided to form a partnership. Their balance sheets on this date are: Cash Accounts Receivable Allowance for doubtful accounts Merchandise Inventory Machinery and Equipment Total P705,000 MM AA P 38,000 255,000 (30,000) 202,000 270,000 P735,000 240,000 495,000 P735,000 P 15,000 680,000 (140,000) - 150,000 Accounts Payable MM, capital AA, capital Total P705,000 135,000 570,000 - The partners agreed that the machinery and equipment of MM is under depreciated by P15,000 and that of AA by P45,000. Allowances for doubtful accounts is to be set up amounting to P120,000 for MM and P40,000 for AA. The partnership agreement provides for the profit and loss ratio and capital interest of 60% to MM and 40% to AA with AA’s capital as base. How much cash must MM invest to bring the partner's capital balances proportionate to their profit and loss ratio?
The information below relates to “NOT partnership business” for the year ended 31st December, 2019Nyamekye Oliver TwistGH¢’000 GH¢’000 GH¢’000Capital Introduced 20,000 30,000 40,000Drawings 10,000 15,000 20,000i. Nyamekye is entitled to a salaries amounted to GH¢ 9,350,000 per annum, sharing Profit or loss on the basis of capital contributed.ii. Net profit for the period ended 31st December, 2019 was GH¢ 38,500,000. Interest on drawings and Capital are 5% and 10% per annum respectively. All expenses and incomes accrue evenly.iii. Oliver advanced a loan amounted to GH¢ 300,000,000 to “NOT Partnership Business” on 1stSeptember, 2019 but charged an interest of 12.5% per annum on the loan.iv. Twist Retired on 31st December, 2019 but granted his net worth in the partnership business as a loan to the business charging Interest of 9% per annum on the loan.Required a. Prepare Profit or Loss Appropriation for the year ended 31/12/2019. b. Partners’ Capital Account for the year ended 31/12/2019…
The following information was taken from the books of Newcastle Enterprises. Balances in the general ledger of Newcastle Enterprises for the financial year ended 29 February 2020. (attatched 4.JPG) Appropriations according to the partnership agreement for the financial year ended 29 February 2020: Interest on capital must be appropriated at 5% per annum. Capital account balances remain constant. Interest on drawings must be appropriated at 12% per annum. Assume drawings were made 3 months prior to the end of the financial year. Interest on current accounts must be appropriated at 7% per annum (on opening balances). 4. Both partners must receive an annual salary at the end of the financial year as follows: - M. Manchester – R65 000 - L. Liverpool – R45 000 5. L. Liverpool must receive an annual bonus of R10 000 at the end of the financial year. 6. R35 000 must be transferred to the replacement reserve at the end of the financial year. 7. The remaining…
The following information was taken from the books of Newcastle Enterprises. Balances in the general ledger of Newcastle Enterprises for the financial year ended 29 February 2020. See attatched 4.JPG Appropriations according to the partnership agreement for the financial year ended 29 February 2020: Interest on capital must be appropriated at 5% per annum. Capital account balances remain constant. Interest on drawings must be appropriated at 12% per annum. Assume drawings were made 3 months prior to the end of the financial year. Interest on current accounts must be appropriated at 7% per annum (on opening balances) 4. Both partners must receive an annual salary at the end of the financial year as follows: - M. Manchester – R65 000 - L. Liverpool – R45 000 5. L. Liverpool must receive an annual bonus of R10 000 at the end of the financial year. 6. R35 000 must be transferred to the replacement reserve at the end of the financial year. 7. The remaining profit…
On January 02, 2019, the business assets and liabilities of Gail Anne & Precious were as follows: Gail AnnePrecious CashP28,000P62,000 Receivables 200,000 600,000 Inventories 120,000 200,000 PPE 650,000 535,000 Other Assets 2,000 3,000 Accounts Payable 180,000 250,000 Notes Payable 200,000 350,000 Gail Anne and Precious agreed to form a partnership by contributing their net assets subject to the following adjustments: ➢ Receivables of P20,000 in Gail Anne’s books and P40,000 in Precious’ books are uncollectible ➢ Inventories of P6,000 and P7,000 in the respective books of Gail Anne and Precious are worthless ➢ Other assets in both books are to be written off ➢ Accrued interest on notes payable equal to 10% is to be established. The note payable of Gail Anne was dated August 01, 2018 while that of Precious, was dated April 01, 2018. The balances of selected accounts after the formation are: Assets…
1. As of July 1, 2020, MM and AA decided to form a partnership. Their balance sheets on this date are: Cash P 15,000 P 38,000Accounts Receivable 680,000 255,000Allowance for doubtful accounts (140,000) (30,000)Merchandise Inventory 202,000Machinery and Equipment 150,000 270,000Total P705,000 P735,000 Accounts Payable 135,000 240,000MM, capital 570,000AA, capital - 495,000Total P705,000 P735,000 The partners agreed that the machinery and equipment of MM is under depreciated by P15,000 and that of AA by P45,000. Allowances for doubtful accounts is to be set up amounting to P120,000 for MM and P40,000 for AA. The partnership agreement…
Homework Activity 1 A, B and C are in Partnership sharing profits and losses in the ratio of 2:1:1. During the year ending 31st Dec 2019, the business made a profit of RO 64,000 before providing Interest on capital : A 2,000, B 1500, C 1000 Interest on drawings: A 200, B 150, C 100 Salary to Partners A 500 B 700 C 600 Commission to Partners A 200 B 300 C 400 Prepare a profit and loss appropriation account to show the distribution of profit among the partners.
At the end of its first year of operations on December 31, 2019, CAP Company’s accounts show the following. PartnerDrawing ($)Capital ($)Charlies15,00040,000Andrew10,00025,000Patrick5,00015,000 The capital balance represents each partner’s initial capital investment. Therefore, net income or net loss for 2019 has not been closed to the partners’ capital accounts. Instruction (a) Journalize the entry to record the division of net income for 2019 under each of the independent assumptions shown on the following: (1) Net income is $50,000. Income is shared 5:3:2. (2) Net income is $40,000. Charlies and Andrew are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally. (3) Net income is $37,000. Each partner is allowed interest of 10% on beginning capital balances. Charlies is given a $20,000 salary allowance. The remainder is shared equally. No.Details$$1Income account50,000 Charlies capital account (50,000 x 5/10) 25,000 Andrew capital…