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Compute for the ending balances of partners capital accounts

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Reference no: EM132929664

A and B's partnership began operations on April 1, 20x1. On this date. A invested P200,000 cash, while B invested a non cash asset with a carrying amount of P600,000 and a fair value of P400.000.

The partnership agreement stipulates the following:

  • Monthly salary of P8,000 to A, recognized as expense. The monthly salaries are to be paid at each month-end.
  • Bonus to A equal to 10% of profit before salaries and interest but after bonus.
  • 10% annual interest on the weighted average balance of B's capital.
  • Balance is shared equally

B contributed additional P44,000 on July 1, 20xl and made drawings of P24,000 on Dec. 1, 20x1. The partnership reported profit of P588,000 before deductions for bonus and interest.

Requirement:

Problem 1: Compute for the ending balances of the partners' capital accounts.

Reference no: EM132929664

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