EXERCISE 1 The capital balances of Hobbs and Shaw at January 1, 2022 are P96,000 and...

Transcribed Image Text:

EXERCISE 1 The capital balances of Hobbs and Shaw at January 1, 2022 are P96,000 and P224,000 respectively in Goggles Company. On March 1, 2022, Hobbs invested an additional P30,000. During the year, Hobbs and Shaw withdrew P72,000 and P60,000 respectively. The company earned a net income of P180,000. There was no stipulation in the partnership agreement as to the profit and loss sharing but it was provided that beginning capital balances will earn 10% interest. 1. Calculate the distribution of net income showing necessary computations. 2. Give the journal entries to close the income summary and the drawing accounts. 3. Compute the ending capital balances as of December 31, 2022. EXERCISE 1 The capital balances of Hobbs and Shaw at January 1, 2022 are P96,000 and P224,000 respectively in Goggles Company. On March 1, 2022, Hobbs invested an additional P30,000. During the year, Hobbs and Shaw withdrew P72,000 and P60,000 respectively. The company earned a net income of P180,000. There was no stipulation in the partnership agreement as to the profit and loss sharing but it was provided that beginning capital balances will earn 10% interest. 1. Calculate the distribution of net income showing necessary computations. 2. Give the journal entries to close the income summary and the drawing accounts. 3. Compute the ending capital balances as of December 31, 2022.

Answer rating: 100% (QA)

1 Calculation of Distribution of Net Income To calculate the distribution of net income we need to consider the capital balances at the beginning of t... View the full answer