Reference no: EM132919082

Problem 1 - AJ and Rica share profits and losses on a fractional-share basis: one-fourths for AJ and three-fourths for Rica. During  the year ending Dec. 31, the firm has profits of P820,000. The beginning capital balances for the year were P650,000  for AJ and P740,000 for Rica. The total drawings during the year is P120,000 for AJ and P160,000 for Rica.

Required -

1. Journalize the entry to close income summary account

2. Journalize the entry to close the partners' drawing accounts on Dec. 31.

Problem 2 - Crisanto and Laxandra are in partnership, sharing profits equally. On July 1, 2020, Rica joined in the partnership, and from that date, profits are shared as follows: Crisanto 35%, Laxandra 35% and Rica 30%. 

In the year ended Dec. 31, 2020, profits were:

6 months to June 31, 2020 P390,000

6 months to Dec. 31, 2020 P370,000

Required -

1. Prepared a profit distribution schedule for the year 2020.

2. Journalize the entry to close the income summary account to partners' drawing accounts.

Problem 3 - Zaias, Roel and Allison formed a commercial partnership on Jan 1, 2020. Zaias invested P180,000; Roel, P160,000 and  Allison, P290,000. Zaias will be the managing partner. Roel will work in the store half of his time while Allison will be a silent partner.

a. Loss is P320,000 and the partners have no written partnership agreement.

b. Loss is P760,000. The articles of partnership states that partners Zaias, Roel and Allison agreed that profits would  be shared in the ratio of 40:25:35, respectively. The agreement did not mention the manner of sharing of losses. c. Profit is P950,000. The first P400,000 is shared on the basis of salary allowances, with Zaias receiving P250,000 and  Roel receiving P 160,000. The remainder is allocated on the basis of their capital contributions. d. Profit is P1,720,000. The first P680,000 is shared on the basis of their capital contributions; and the next P420,000 is based on service, with Zaias receiving P250,000 and Roel receiving P 160,000. Any remainder is shared equally.

Required - Determine each partners' share in profit/loss in each situations above.