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What is the capital balance of Allie at the end of the year

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Question - Allie and Belinda formed a partnership with a capital contribution of P80,000 and P40,000 respectively. According to the partnership agreement, all profits will be distributed as follows:

Allie will be allowed a monthly salary of P8,000 with P4,000 assigned to Belinda.

The partners will be allowed with interest equal to 10% of the capital balance as of the first day of the year.

Allie will be allowed a bonus of 10% of the net income after bonus.

The remainder will be divided on the basis of the beginning capital for the first year and equally for the second year.

Each partner is allowed to withdraw up to P4,000 a year.

Assume that the net loss for the first year of operations is P6,000, the net income for the second year is P22,000 and that each partner withdraws the maximum amount from the business each period, what is the capital balance of Allie at the end of the second year?

A. P73,900

B. P72,000

C. P105,900

D. P83,900

Reference no: EM132652826

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