Partners' capital account A and B formed a partnership and began operation on March 1, 20-....

 

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Partners' capital account A and B formed a partnership and began operation on March 1, 20-. A invested P100,000 cash while B invested equipment with a book value of P300,000 and a fair value of P180,000. On August 31, 20x1, A invested additional cash if P20,000. The partnership agreement stipulated the following: a. Monthly salary of P2,000 and P10,000 to A and B respectively, recognized as expenses. b. 20% bonus on profit before salaries and interest but after bonus to B. c. 12% annual interest on the beginning capital balance of A. d. Remainder to be divided equally. The monthly salaries are withdrawn by the partners at each month-end. The partnership profit of P210,000 during the period before deduction of bonus and interest. Required: Compute the ending balances of each of the partners capital account. Partners' capital account A and B formed a partnership and began operation on March 1, 20-. A invested P100,000 cash while B invested equipment with a book value of P300,000 and a fair value of P180,000. On August 31, 20x1, A invested additional cash if P20,000. The partnership agreement stipulated the following: a. Monthly salary of P2,000 and P10,000 to A and B respectively, recognized as expenses. b. 20% bonus on profit before salaries and interest but after bonus to B. c. 12% annual interest on the beginning capital balance of A. d. Remainder to be divided equally. The monthly salaries are withdrawn by the partners at each month-end. The partnership profit of P210,000 during the period before deduction of bonus and interest. Required: Compute the ending balances of each of the partners capital account.

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Partner As capital account Beginning balance P100000 cash investment Addit... View the full answer