Stephanie Calamba and Allan Brillantes decided to form a partnership. They agreed that Calamba will invest P200,000 and Brillantes, P300,000. Calamba will devote full time to the business, and Brillantes on part-time only. The following plans for the division of profits are being considered:Equal divisionIn the ratio of original investmentsIn the ratio of time devoted to the businessInterest of 10% on original investments and the remainder in the ratio of 3:2Interest of 10% on original investments, salary allowances of P340,000 to Calamba and P170,000 to Brillantes, and the remainder equally.Plan (e), except that Calamba is also to be allowed a bonus equal to the 20% of the amount by which profit exceeds the salary allowances. Determine the partners’ share in profit or loss for each of the situations above assuming: (1) Profit of P1,500,000(2) Profit of P660,000

PROFIT OF P 1,500,000 CALAMBA BRILLANTES TOTAL Contribution 2,00,000 3,00,000…

Answered: Stephanie Calamba and Allan Brillantes…

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 9E

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Stephanie Calamba and Allan Brillantes decided to form a partnership. They agreed that Calamba will invest P200,000 and Brillantes, P300,000. Calamba will devote full time to the business, and Brillantes on part-time only. The following plans for the division of profits are being considered:

Equal division
In the ratio of original investments
In the ratio of time devoted to the business
Interest of 10% on original investments and the remainder in the ratio of 3:2
Interest of 10% on original investments, salary allowances of P340,000 to Calamba and P170,000 to Brillantes, and the remainder equally.
Plan (e), except that Calamba is also to be allowed a bonus equal to the 20% of the amount by which profit exceeds the salary allowances.

Determine the partners’ share in profit or loss for each of the situations above assuming:

(1) Profit of P1,500,000

(2) Profit of P660,000

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