SUBJECT: ADVANCE ACCOUNTING

TOPIC: PARTNERSHIP

PROBLEM 2: JAN 01/18, Allan Capital is 40,000

2. Assume that on January 1, 2018, Allan and Boom formed a partnership with an investment of P30,000 by Allan and P60,000 by Boom. On December 31,2018, after closing all income and expenses accounts, the Income Summary account shows a credit balance of P60,000, representing the profit for the year 2018. Changes in the capital during 2018 are summarized as follows: Changes in Partners' Capital Accounts Allan P40,000 20,000 20,000 (20,000) Boom P60,000 50,000 40,000 Capital balances, January 1, 2018 Additional investments, March 1 Additional investments, August 1 Withdrawal, October 1 Withdrawal November 1 Capital balances, December 31,2018 (50,000) P100.000 P60.000 1.1.4.1.5 6 Required: Prepare a schedule of profit distribution under the following independent agreements on the division of profits: (20 points) a. In the ratio of beginning capital balances. b. In the ratio of weighted average capitals. C. Interest of 12% on weighted average capitals with any net income or loss to be divided equally. d. Assume that partnership of Allan and Boom has a net income of P190,200 before salaries and bonus to partners. The partnership contract provides for the following: 1. Salaries to Allan and Boom, P30,000 each. 2. Interest on capital balances: Allan P7,000 Boom 3,200 3. Bonus to Allan, 20% of net income after bonus. 4. Remaining profit or loss to be divided equally