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Chapter 2 #17

The partnership reported a profit of P450,000 for the year ended December 31, 2018. The partners' capital contributions were P300,000 for Alisuag, P500,000 for Go, and P200,000 for Palatino. Under four different situations, the profit is allocated differently among the partners based on their capital contributions, interest earned, salaries paid, and bonus awarded.

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6K views1 page

Chapter 2 #17

The partnership reported a profit of P450,000 for the year ended December 31, 2018. The partners' capital contributions were P300,000 for Alisuag, P500,000 for Go, and P200,000 for Palatino. Under four different situations, the profit is allocated differently among the partners based on their capital contributions, interest earned, salaries paid, and bonus awarded.

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Problem #17

Rules for the Distribution of Profits or Losses

Alisuag, Go, Palatino formed a partnership on Jan 1, 2018 with capital contributions of P300000, P500000, and P200000,
respectively. For the year ended Dec 31, 2018, the partnership reported profit of P450000.

Required:

Determine the partners’ share in the profit under each of the following independent situations and prepare the entry to
record the profit allocation to individual capital accounts:

1. Profit is allocated on the basis of the initial capital contributions.


2. Each partner is allotted an interest of 7% on initial capital contributions and the remainder is divided among
Alisuag, Go, and Palatino in the ratio 4:3:1 respectively.
3. Salaries of P50000, P40000, and P30000 are given to Alisuag, Go, Palatino, respectively; 5% interest on initial
capital contributions, and any remainder is divided in the ratio 4:3:1, respectively.
4. Salaries of P30000, P45000, and P65000 are given to Alisuag, Go, and Palatino, respectively; 5% interest on initial
capital contributions; bonus to Alisuag of 8% of profit after deducting bonus but before deducting salaries and
interest; and any remainder divided equally.

  Alisuag Go Palatino Total


300000.0 500000.0
initial capital contributions 0 0 200000.00 1000000.00
135000.0 225000.0
1. profit 3:5:2 0 0 90000.00 450000.00
2. interest 7% 21000.00 35000.00 14000.00 70000.00
190000.0 142500.0
remainder 4:3:1 0 0 47500.00 380000.00
211000.0 177500.0
profit 0 0 61500.00 450000.00
3. salaries 50000.00 40000.00 30000.00 120000.00
interest 5% 15000.00 25000.00 10000.00 50000.00
140000.0 105000.0
remainder 4:3:1 0 0 35000.00 280000.00
205000.0 170000.0
profit 0 0 75000.00 450000.00
4. salaries 30000.00 45000.00 65000.00 140000.00
interest 5% 15000.00 25000.00 10000.00 50000.00
bonus 8% 33333.33     33333.33
remainder 1:1:1 75555.56 75555.56 75555.56 226666.67
153888.8 145555.5
profit 9 6 150555.56 450000.00

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