Solution-By what amount should ramos capital account change

By what amount should ramos capital account change

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Reference no: EM133010658

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Q1. Partners A and B have a profit and loss agreement with the following provisions: salaries of P20,000 and P25,000 for A and B respectively; a bonus to A of 10% of net income after bonus; and interest of 20% on average capital balances of P40,000 and P50,000 for A and B, respectively. Any remainder is to be split equally. If the partnership had net income of P88,000, how much should be allocated to Partner A?

a. P36,000

b. P44,500

c. P50,000

d. P43,500

Q2. Ramos, Campos and Ocampo are partners with average capital balances in 2011 of P240,000, P120,000 and P80,000, respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of P60,000 to Ramos and P40,000 to Campos, the residual profit or loss is divided equally. In 2011, the partnership sustained a P66,000 loss before interest and salaries to partners. By what amount should Ramos' capital account change?

a. P70,000 decrease

b. P84,000 decrease

c. P22,000 decrease

d. P14,000 increase

Reference no: EM133010658

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By what amount should ramos capital account change

Reference no: EM133010658

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