Allocation of profit and loss to partners: Allocation of profit and loss to partners will be in accordance with partnership agreement. If the entity does not have formal partnership agreement, section 401 of the UPA 1997 indicates that profit and losses are distributed equally among partners. Profit distributions are not included in the partnership’s income statement, but recorded directly into partner’s capital accounts, not treated as expense items. To choose: the correct answer to determine M’s share in partnership’s profit.

Question

Want to see the full answer?

Answer 1

Question

Chapter 15, Problem 15.16.6P

To determine

Allocation of profit and loss to partners: Allocation of profit and loss to partners will be in accordance with partnership agreement. If the entity does not have formal partnership agreement, section 401 of the UPA 1997 indicates that profit and losses are distributed equally among partners. Profit distributions are not included in the partnership’s income statement, but recorded directly into partner’s capital accounts, not treated as expense items.

To choose:the correct answer to determine M’s share in partnership’s profit.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Problem 1. Alucard and Chou organized their partnership on 01/01/19. The following entries were made into their capital accounts during 2019. Required: If partnership profits for the year equaled P66,000, indicate the allocations between the partners under the following independent profit-sharing allocation conditions: Interest of 10% is allocated on weighted average capital balance and the remainder is divided equally. A salary of P9,000 will be allocated to Chou; 10% interest on ending capital is allocated to the partners; remainder is divided 60/40 to Alucard and Chou, respectively. Salaries are allocated to Alucard and Chou in the amount of P10,000 and P15,000, respectively and the remainder is allocated in the proportion to weighted average capital balances. A bonus of 10% of partnership profits after bonus is credited to Alucard, a salary of P35,000 is allocated to Chou, a P20,000 salary is allocated to Alucard, 10% interest on weighted capital is allocated, and remainder is…

Martinsburg Town Partnership has two equal partners with capital accounts and outside bases as follows: Partner Capital Account Outside Basis Smith 30,000 40,000 Williams 30,000 40,000 The partnership incurs $20,000 of loss and makes a special allocation of $16,000 of the loss to Smith and $4,000 of the loss to Williams. The same allocation is made for both partnership taxable income and for accounting income/capital account purposes. Which of the following is true about the partnership's allocation of loss? There's nothing obviously wrong with this special allocation The partnership cannot allocate the loss this way because the partnership must allocate losses equally. The tax allocation cannot be allowed because it lacks economic effect Cannot be determined