The partnership run by Evans, Fitch, and Gaul has a complicated profit-and-loss sharing arrangement. On December 31, 2006, each partner had an average capital balance of P300, 000 for Evans, P250,000 for Fitch, and P325,000 for Gaul. Each partner receives an allotment of 8% of the interest. A salary allotment of P10, 000 and P15, 000 is given to Evans and Fitch, respectively. Gaul will be given a bonus equal to 10% of the initial amount of net income if partnership net income exceeds P25, 000 after the salary allocations have been taken into account (but before the interest allocations have been taken into account). All residual revenue is distributed to Evans, Fitch, and Gaul in the proportions of 2:3:5. How much of the partnership's revenue, supposing it to be P250, 000, must be assigned to Gaul?
The partnership run by Evans, Fitch, and Gaul has a complicated profit-and-loss sharing arrangement. On December 31, 2006, each partner had an average capital balance of P300, 000 for Evans, P250,000 for Fitch, and P325,000 for Gaul. Each partner receives an allotment of 8% of the interest. A salary allotment of P10, 000 and P15, 000 is given to Evans and Fitch, respectively. Gaul will be given a bonus equal to 10% of the initial amount of net income if partnership net income exceeds P25, 000 after the salary allocations have been taken into account (but before the interest allocations have been taken into account). All residual revenue is distributed to Evans, Fitch, and Gaul in the proportions of 2:3:5. How much of the partnership's revenue, supposing it to be P250, 000, must be assigned to Gaul?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 20P
Related questions
Question
Transcribed Image Text:The partnership run by Evans, Fitch, and Gaul has a complicated profit-and-loss sharing arrangement. On
December 31, 2006, each partner had an average capital balance of P300, 000 for Evans, P250,000 for
Fitch, and P325,000 for Gaul. Each partner receives an allotment of 8% of the interest. A salary allotment
of P10,000 and P15, 000 is given to Evans and Fitch, respectively. Gaul will be given a bonus equal to
10% of the initial amount of net income if partnership net income exceeds P25, 000 after the salary
allocations have been taken into account (but before the interest allocations have been taken into
account). All residual revenue is distributed to Evans, Fitch, and Gaul in the proportions of 2:3:5.
How much of the partnership's revenue, supposing it to be P250, 000, must be assigned to Gaul?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,