Sam, Lam, Lim are partners with a capital investment of P20,000-P30,000- P40,000 respectively. On December 31 2019 after a year of operation, the partnership made a net profit of P80,000. Required: Compute for the division of net profit under each of the enumerated methods of dividing profit and losses. Give the journal entry to close the net profit to capital accounts under each method. 1. Ratio of partner's capital at the beginning of period 2. Interest of 12% allowed on partners capital equity and the balance divided equally 3. Salaries of Sam is P600, Lam P700 and Lim P800 for each partner and the balance is divided equally
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.
Step by step
Solved in 2 steps with 1 images
