On January 1, 20x4, the dental partnership of LL, CC and RR was formed when the partners contributed P20, 000, P60, 000 and P50,000, respectively, Over the next three years, the business reported net income and (loss) as follows: 20x4, P(30, 000); 20x5, P20, 000 and 20x6, P40, 000. During this period, each partner withdrew cash of P10, 000 per year. RR invested an additional P12,000 in cash on February 9, 20x5. At the time that the partnership was created the three partners agreed to allocate all profits and losses according to a specified plan written as follows:  Each partner is entitled to interest computed at the rate of 12% per year based on the individual capital balances at the beginning of that year.  Because of prior work experience, LL is entitled to an annual salary allowance of P12, 000 and Cc is credited with P8, 000 per year.  Any remaining profit will be split as follows: LL, 20%; CC, 40%; and RR, 40%. If a loss remains, the balance will be allocated: LL, 30%; CC, 50% and RR, 20%.  Determine the ending capital balance for Partner LL as the end of 20X4

SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter6: Losses And Loss Limitations
Section: Chapter Questions
Problem 20P
icon
Related questions
Question

43

On January 1, 20x4, the dental partnership of LL, CC and RR was formed when the partners contributed P20, 000, P60, 000 and P50,000, respectively, Over the next three years, the business reported net income and (loss) as follows: 20x4, P(30, 000); 20x5, P20, 000 and 20x6, P40, 000. During this period, each partner withdrew cash of P10, 000 per year. RR invested an additional P12,000 in cash on February 9, 20x5. At the time that the partnership was created the three partners agreed to allocate all profits and losses according to a specified plan written as follows: 

  • Each partner is entitled to interest computed at the rate of 12% per year based on the individual capital balances at the beginning of that year. 
  • Because of prior work experience, LL is entitled to an annual salary allowance of P12, 000 and Cc is credited with P8, 000 per year. 
  • Any remaining profit will be split as follows: LL, 20%; CC, 40%; and RR, 40%. If a loss remains, the balance will be allocated: LL, 30%; CC, 50% and RR, 20%. 

Determine the ending capital balance for Partner LL as the end of 20X4 

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
Recommended textbooks for you
SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:
9780357391266
Author:
Nellen
Publisher:
Cengage
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
Accounting
ISBN:
9780357161548
Author:
Raabe
Publisher:
Cengage
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College