Question
Korra, Aang, and Roku are partners sharing profits on a 2:3:5 ratio. On January 1, 2021, Kyoshi was admitted into the partnership with a 20%
Korra, Aang, and Roku are partners sharing profits on a 2:3:5 ratio. On January 1, 2021, Kyoshi was admitted into the partnership with a 20% share in profits. The old partners shall continue to participate in profits in proportion to their original ratios.
For the year 2021, the partnership books showed a profit of P450,000. It was ascertained, however, that the following errors were made:
Accrued expenses not recorded at the end of 2020 | 5,000 |
Overstatement of 2020 ending inventory | 48,000 |
Goods received and inventoried in 2020 but the related purchases not recorded | 20,000 |
Income received in advance (unearned income), not recorded at the end of 2020 | 10,000 |
Prepaid expenses not recorded at the end of 2020 | 3,000 |
Assume the tax rate is 30%.
Required:
1. How much is the adjusted net income of the partnership after income tax?
2. How much would each of the following receive as his/her share in the adjusted net income
a. Korra
b. Aang
c. Roku
d. Kyoshi
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