Reference no: EM132963667
Question - Edward, Glenn and Ramel, formed a partnership on July 1, 2018 with the following investments:
Edward 200,000
Glenn 300,000
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?
4. Considering your answer in number 3, prepare the Statement of Changes in Capital.
5. Based on number 1, what is the formula of bonus with the salaries and interest?
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