On Jan. 1, 2006, the Garcia, Pitular and Alfonso Partnership was formed with initial investments by...
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On Jan. 1, 2006, the Garcia, Pitular and Alfonso Partnership was formed with initial investments by the partners as follows: Garcia Pitular Alfonso P2,000,000 1,000,000 1,000,000 According to the partnership agreement, profit or loss is to be divided among the partners as follows: 1. Salaries of P120,000 for Garcia, P60,000 for Pitular and P60,000 for Alfonso. 2. Interest at 5% on the original capital balances. 3. The remainder to be divided among Garcia, Pitular, and Alfonso in a ratio of 4:1:1, respectively. The partnership reported profit of P350,000 for the year ended Dec. 31, 2006. Required: Determine the partners' share in the profit under each of the following independent situations: 1. Partner's salaries and interest on capital balances should be fully allocated and any deficiency between these allocations and profit is to be divided among Garcia, Pitular, and Alfonso in the ratio 4:1:1, respectively. 2. Partner's salaries and interest on capital balances should be made only to the extent that the profit can provide. On Jan. 1, 2006, the Garcia, Pitular and Alfonso Partnership was formed with initial investments by the partners as follows: Garcia Pitular Alfonso P2,000,000 1,000,000 1,000,000 According to the partnership agreement, profit or loss is to be divided among the partners as follows: 1. Salaries of P120,000 for Garcia, P60,000 for Pitular and P60,000 for Alfonso. 2. Interest at 5% on the original capital balances. 3. The remainder to be divided among Garcia, Pitular, and Alfonso in a ratio of 4:1:1, respectively. The partnership reported profit of P350,000 for the year ended Dec. 31, 2006. Required: Determine the partners' share in the profit under each of the following independent situations: 1. Partner's salaries and interest on capital balances should be fully allocated and any deficiency between these allocations and profit is to be divided among Garcia, Pitular, and Alfonso in the ratio 4:1:1, respectively. 2. Partner's salaries and interest on capital balances should be made only to the extent that the profit can provide.
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Related Book For
South Western Federal Taxation 2014 Comprehensive Volume
ISBN: 9781285180922
37th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young
Posted Date:
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