Reference no: EM132944973
Question - On January 1, 2021, Charlie and Naomii formed a partnership by initially contributing cash of P 168,000 and P105,600, respectively. The changes in their capital balances during 2021 are summarized as follows:
CHARLIE NAOMI
Balances, January 1 P168,000 P 105,600 Investment, April 1 15,360.
Withdrawal July, 1 (24,000) Investment, September 1 44.640 Withdrawal, October 1 (1,920).
Investment, December 31 3,840 Balances, December 31 P 181,440 P 130,080.
The partnership reported a net income of P194,976 in 2021 and the profit and loss agreement are as follows:
a. Interest at 5% is allowed on average capital balances;
b. Salaries of P1,200 per month to each partner;
c. Bonus to Charlie of 10% of net income after interest, salaries, and bonus; and
d. Balance to be divided in the ratio of 6:4 to Charlie and Naomi, respectively.
Both partners withdrew one-fourth of their salary allowances in 2021.
Required -
1. Prepare schedule for the division of net profit for 2021 with supporting computations when appropriate.
2. Prepare statement of the partners' capital balances at the end 2021.
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