Reference no: EM132962694

Questions -

Q1. Say, Alittle and Prayer are partners in a furniture company. Their partnership agreement provides for the following profit and loss distributions;

Say, Alittle and Prayer are to receive salaries of P40,000, P36,000, and P13,650, respectively. Say is to receive a bonus equal to 10% of income before the bonus.

Each partner is to receive 10% interest on the weighted average capital balance. The average capital balances of Say, Alittle and Prayer are P10,000, P7,500, and P46,000 respectively

Any remaining profits of losses are to be divided equally among the partners.

How much profit must the partnership earn to allow Say a share of P52,000 from said profit?

Q2. Etonaman admits Subukanmo for a partnership interest in his business. The balance sheet accounts of Etonaman on November 30, 2019 prior to the admission of Subukanmo are as follows:

Debit

Cash ?

Accounts receivable 96,000

Mdse. Inventory 144,000

Credit

Accounts payable 49,600

Etonaman, Capital ?

It is agreed that for purposes of establishing Etonaman's interest, the following adjustments should be made:

An allowance for doubtful accounts of 2% of accounts receivable is to be established.

The merchandise inventory is to be valued at P120,000

Prepaid expenses of P5,200 and accrued expenses of P3,200 are to be recognized.

Subukanmo invested cash of P113,640 to give him a one-third interest in the total capital of the firm.

What is the capital balance of Etonaman before the admission of Subukanmo?