Problem 32: Pam and Drix formed a partnership in 20x1 to operate a bookkeeping services. Pam contributed the initial capital while Drix managed the business. With the assistance of their consultants, they have arrived at the following agreement: 1. Each partner is allowed to withdraw P1,000 in cash from business every month. Any withdrawal in excess of that figure will be accounted for as a direct reduction to the partners' capital balance. 2. Partnership profits and losses will be allocated each year according to the following plan: Interest of 15% will be accrued by each partner based on the monthly average capital balance for the year. As the managing partner, Drix is to receive credit for a bonus equal to 20% of the year's net income. Any remaining profit or loss will be divided equally between the two partners. Pam and Drix begin the year of 20x1 with capital balances of P150,000 and P30,000, respectively. On April 1 of the year, Pam invested additional P8,000 cash in the business, while on July 1, Drix withdraws P6,000 in excess of the specified drawing allowance. The partners withdraw the amount of cash allowed every month. The partnership reports net income of P30,000 for 20x1. The amount of capital balances of Pam and Drix on December 31, 20x1 will be: a. P167,675; P20,325 b. P155,675; P26,325 c. P158,000; P14,000 d. P159,675; P22,325
Problem 32: Pam and Drix formed a partnership in 20x1 to operate a bookkeeping services. Pam contributed the initial capital while Drix managed the business. With the assistance of their consultants, they have arrived at the following agreement: 1. Each partner is allowed to withdraw P1,000 in cash from business every month. Any withdrawal in excess of that figure will be accounted for as a direct reduction to the partners' capital balance. 2. Partnership profits and losses will be allocated each year according to the following plan: Interest of 15% will be accrued by each partner based on the monthly average capital balance for the year. As the managing partner, Drix is to receive credit for a bonus equal to 20% of the year's net income. Any remaining profit or loss will be divided equally between the two partners. Pam and Drix begin the year of 20x1 with capital balances of P150,000 and P30,000, respectively. On April 1 of the year, Pam invested additional P8,000 cash in the business, while on July 1, Drix withdraws P6,000 in excess of the specified drawing allowance. The partners withdraw the amount of cash allowed every month. The partnership reports net income of P30,000 for 20x1. The amount of capital balances of Pam and Drix on December 31, 20x1 will be: a. P167,675; P20,325 b. P155,675; P26,325 c. P158,000; P14,000 d. P159,675; P22,325
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.9AP
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Transcribed Image Text:Problem 32: Pam and Drix formed a partnership in 20x1 to operate a
bookkeeping services. Pam contributed the initial capital while Drix managed
the business. With the assistance of their consultants, they have arrived at the
following agreement:
1. Each partner is allowed to withdraw P1,000 in cash from business every
month. Any withdrawal in excess of that figure will be accounted for as a
direct reduction to the partners' capital balance.
2. Partnership profits and losses will be allocated each year according to the
following plan:
Interest of 15% will be accrued by each partner based on the monthly
average capital balance for the year.
As the managing partner, Drix is to receive credit for a bonus equal to
20% of the year's net income.
Any remaining profit or loss will be divided equally between the two
partners.
Pam and Drix begin the year of 20x1 with capital balances of P150,000 and
P30,000, respectively. On April 1 of the year, Pam invested additional P8,000
cash in the business, while on July 1, Drix withdraws P6,000 in excess of the
specified drawing allowance. The partners withdraw the amount of cash allowed
every month. The partnership reports net income of P30,000 for 20x1.
The amount of capital balances of Pam and Drix on December 31, 20x1 will be:
a. P167,675; P20,325
b. P155,675; P26,325
c. P158,000; P14,000
d. P159,675; P22,325
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