Question
1. Buffet and Munger formed a partnership by investing $150,000 and $200,000 respectively. The partnership had a final profit of $70,000. What is the partners
1. Buffet and Munger formed a partnership by investing $150,000 and $200,000 respectively. The partnership had a final profit of $70,000. What is the partners profit allocation if it is based on the ratio of their original capital investments?
Select one:
Buffet $35,000 and Munger $35,000
Buffet $30,000 and Munger $40,000
Buffet $175,000 and Munger $175,000
Buffet $150,000 and Munger $200,000
2.
What is the dividend paid to shareholders if:
Profit for the year is $80,000
Opening balance of retained earnings is $100,000
Closing balance of retained earnings is $150,000
Select one:
$50,000
$30,000
$100,000
$80,000
3.
Alex and Oliver formed a partnership by investing $220,000 and $180,000 respectively. The partnership had a final profit of $50,000. The partners agree to recognise a $10,000 p.a. salary allowance to Alex and a $8,000 p.a. salary allowance to Oliver. Each partner is entitled to 5% interest on their original investment, any remaining profit is to be shared equally.
What is the profit allocation to Alex and Oliver?
Select one:
Alex $27,000 Oliver $23,000
Alex $23,000 Oliver $27,000
Alex $25,000 Oliver $25,000
None of the above
4.
Buffet and Munger formed a partnership by investing $400,000 and $250,000 respectively. The partnership had a final profit of $120,000. What is journal entry to record the allocation of profit assuming Buffet and Munger agree to a 70:30 sharing of profits? (Use method 1)
Select one:
DR Buffet, Cash $84,000 DR Munger, Cash 36,000 CR Profit distribution $120,000
DR Profit distribution $120,000 CR Buffet, Capital $84,000 CR Munger, Capital $36,000
DR Buffet, Capital $84,000 DR Munger, Capital $36,000 CR Profit distribution $120,000
DR Profit distribution $120,000 CR Buffet, Cash $84,000 CR Munger, Cash $36,000
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