# The partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a \$7,000 salary and Sue receives a \$6,500 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. \$10,000 B. \$5,000 C. (\$12,000) In addition, show the resulting entries to each partner’s capital account.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 15, Problem 1PB
Textbook Problem
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## The partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a \$7,000 salary and Sue receives a \$6,500 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is:A. \$10,000B. \$5,000C. (\$12,000)In addition, show the resulting entries to each partner’s capital account.

To determine

Concept introduction:

Journal Entry: It helps company or any business to record the transaction in double entry system. Every transaction has two effects one is debit and another is credit.

Partnership: Two or more person start a business in which they share profit or loss in agreed ratio and work on behalf of each other.

To calculate:

Schedule of distribution of partners profit or loss.

### Explanation of Solution

 Schedule Showing distribution of profit Particulars Case 1 Case 2 Case 3 Profit or Loss 10000 5000 -12000 Less: Salary of Both Partner 13500 13500 13500 Total Profit -3500 -8500 -25500 Profit of 1st partner -1750 -4250 -12750 Profit of 2nd partner -1750 -4250 -12750

The above profit is distributed in partners in ratio 50:50.

Salary of partner= 7000+ 6500= 13500

Case 1

 Partner's Capital Account Particulars Magda Sue Particulars Magda Sue By Bal B/d 0 0 By Profit & Loss -1750 -1750 By Salary 7000 6500 To Bal c/d 5250 4750 7000 6500 7000 6500 Case 2 ...

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