Reference no: EM132960895
Problem - Edward, Glenn and Ramel, formed a partnership on July 1, 2018 with the following investments:
Edward 200,000, Glenn 300,000 and Ramel 450,000
The partnership agreement stated that profits and losses are to be shared equally by the partners after consideration for the following:
a. Annual salaries to partners: P60,000 for Edward; P48,000 for Glenn and P36,000 for Ramel.
b. 10% interest on average capital.
c. 10% net profit after salaries and interest as bonus to Edward as the managing partner.
Additional information:
a. On October 1, 2018, Edward made additional investment of P60,000.
b. Ramel invested P30,000 on December 1, 2018.
Required -
1. If each partner received P30,000 (ignore income tax) on the residual profit after salaries, interest and bonus, the net income reported by the partnership during the 1st 6-months of operation is?
2. Considering your answer in number 1, prepare the Statement of Changes in Capital.
3. Assuming the result of operation is a loss of P50,000, how much is the share of each partner to the partnership loss?
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