On January 1, 2018, A, B and C formed ABC Partnership with original capital contribution of P300,000, P500, 000 and P200,000. A is appointed as managing partner. During 2018, A, B and C made additional investments of P500,000, P200,000 and P300,000, respectively. At the end of 2018, A,B and C made drawings of P200,000, P 100, 000 and P 400, 000, respectively. At the end of 2018, the capital balance of C is reported at P320,000. The profit or loss agreement of the partners is as follows: 10% interest on original capital contribution of the partners Quarterly salary of P40, 000 and P10, 000 for A and B respectively. Bonus to A is equivalent to 20% of net income after interest and salary to all partners Remainder is to be distributed equally among the partners
On January 1, 2018, A, B and C formed ABC Partnership with original capital contribution of P300,000, P500, 000 and P200,000. A is appointed as managing partner. During 2018, A, B and C made additional investments of P500,000, P200,000 and P300,000, respectively. At the end of 2018, A,B and C made drawings of P200,000, P 100, 000 and P 400, 000, respectively. At the end of 2018, the capital balance of C is reported at P320,000. The profit or loss agreement of the partners is as follows: 10% interest on original capital contribution of the partners Quarterly salary of P40, 000 and P10, 000 for A and B respectively. Bonus to A is equivalent to 20% of net income after interest and salary to all partners Remainder is to be distributed equally among the partners
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter12: Accounting For Partnerships And Limited Liability Companies
Section: Chapter Questions
Problem 3PB
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Transcribed Image Text:On January 1, 2018, A, B and C formed ABC Partnership with original capital contribution of P300,000,
P500, 000 and P200,000. A is appointed as managing partner.
During 2018, A, B and C made additional investments of P500,000, P200,000 and P300,000,
respectively. At the end of 2018, A,B and C made drawings of P200,000, P 100, 000 and P 400, 000,
respectively. At the end of 2018, the capital balance of C is reported at P320,000. The profit or loss
agreement of the partners is as follows:
10% interest on original capital contribution of the partners
Quarterly salary of P40, 000 and P10, 000 for A and B respectively.
Bonus to A is equivalent to 20% of net income after interest and salary to all
partners
Remainder is to be distributed equally among the partners
Transcribed Image Text:. What is the partnership profit for the year ended December 31, 2018?
a) 900,000
b) 1,020,000
c) 1,050,000
Orig
30
Add Inv.
d) 960,000
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