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How profit is distributed to partners

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Reference no: EM133003487

Arvin Jumawan and cedrick are partners of Zediski Company, The Income and Expense summary account befoe final closing shows a credit balance of P250,000 at the end of the final year.

The following were taken from the respective capital account ledgers of Jumawan and Cedrick

Arvin Jumawan                                                   Cedrick
Jan 1 balance P120,000 Jan 1 Balance              P150,000
Apt 1 Withdrawal 18,000 Mar. 1 Investment        20,000
Sep 1 Investment 14,000 Aug 1 Withdrawal         25,000

Problem 1: Determine how profit is distributed to partners (show supporting schedule of profit distribution) under the following separate assumption:

a. 10% interest based on beginning capital is provided and the remaining amount is distributed based on ending capital balances.

b. 20% interest is allowed to partners and the remaining amount is distributed based on an arbitrary ratio 4:2

c.12% interest is provided for based on the average capital balances bonus to jurnawan of 20% of profit before salaries but after bonus, salaries to each of the partner in the amount of P20,000 and P15,000 respectively and the reminder equally divided.

Reference no: EM133003487

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