TM Partnership begins is first operations with the following capital balance: Tan, Capital 200,000 and May, Capital 100,000. According to the partnership agreement, all profits and losses will be distributed as follows: Tan will be allowed a monthly salary of 20,000 and May 10,000. The partners will be allowed with interest equal to 10% of the capital balance as of the first day of the year. Tan will be allowed a bonus of 10% of the net profit after bonus. The remainder will be divided based on the beginning capital for the first year and equally for the second year. Each partner can withdraw up to 10,000 a year. Assume that the net loss for the first year of operations is 15,000 with net income of 55,000 for the second year. Assume further that each partner withdraws the maximum amount from each business period. What is the respective capital balance of each partner at the end of the second year?
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.
- TM
Partnership begins is first operations with the following capital balance: Tan, Capital 200,000 and May, Capital 100,000. According to the partnership agreement, allprofits and losses will be distributed as follows:- Tan will be allowed a monthly salary of 20,000 and May 10,000.
- The partners will be allowed with interest equal to 10% of the capital balance as of the first day of the year.
- Tan will be allowed a bonus of 10% of the net profit after bonus.
- The remainder will be divided based on the beginning capital for the first year and equally for the second year.
- Each partner can withdraw up to 10,000 a year.
Assume that the net loss for the first year of operations is 15,000 with net income of 55,000 for the second year. Assume further that each partner withdraws the maximum amount from each business period. What is the respective capital balance of each partner at the end of the second year?
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