Partnership books showed net profit for the six months ended December 31, 2014 was P180,000. However, upon review of partnership records, the following errors were disclosed: a. Accrued expenses not recorded at year end- P6,000 b. Income received in advance, not adjusted- P10,000 c. Unused portion of 1 year insurance paid- P5,000. d. Income already earned, not yet recorded- P15,000. How much is the adjusted profits before profit distribution? a. 180,000 b. 194,000 c. 195,000 d. 184,000
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.
Partnership books showed net profit for the six months ended December 31, 2014 was P180,000.
However, upon review of partnership records, the following errors were disclosed:
a. Accrued expenses not recorded at year end- P6,000
b. Income received in advance, not adjusted- P10,000
c. Unused portion of 1 year insurance paid- P5,000.
d. Income already earned, not yet recorded- P15,000.
How much is the adjusted profits before profit distribution?
a. 180,000
b. 194,000
c. 195,000
d. 184,000
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