Reference no: EM132664672

Question - On August 1, 2010, Marie and Paz formed a partnership. Marie contributed inventory of P500,000 with a fair value of P300,000 while Paz contributed cash of P250,000 and a land valued that cost her P900,000 with a carrying amount of P1,000,000 and a fair value of P1,250,000. The partnership did not assume the mortgage attached to the property worth P250,000. The partners agree to allocate profits and losses as follows:

1. Each partner shall receive 5% interest on the amount of his beginning capital.

2. Marie will receive a salary of P8,000 per month.

3. The remainder will be divided equally on the first year and 60:40 on subsequent years.

4. Marie and Paz are allowed to withdraw P5,000 per month. Any withdrawal is treated as a direct reduction of capital.

In 2010, the partnership has a credit balance of income summary of P100,000. On July 1, 2011, Ivonne was admitted in the partnership by investing P800,000 for a 25% interest. Asset revaluation is to be recognized. After admission of Ivonne, the partners agreed to divide profits as follows:

1. Each partner shall receive 5% interest on the amount of his beginning capital.

2. All partners will receive a salary of P2,000 per month.

3. The balance to be divided 45% to Marie, 30% to Paz and 25% to Ivonne.

4. Each partner is allowed to withdraw P2,000 per month. Any withdrawal is treated as a direct reduction of capital.

Required - In 2011, the partnership earned a profit of P300,000 evenly throughout the year. How much is the capital balance of Marie at the end of December 31, 2011?