profit distribution
PROBLEM
1. 1. Erap,Joseph and John are partners in a business with capital balances as shown:
ERAP- CREDITS 1/1 50,000; 5/1 60,000; DEBITS 3/1 40,000; 6/1 5,000
JOSEPH - CREDITS 1/1 75,000; 4/1 30,000; DEBITS 5/1 25,000
JOHN - CREDITS 1/1 60,000; 5/1 20,000; DEBITS 2/1 25,000
Show how the net income will be distributed in the following cases if:
a) The net income is P35,000.00
b) The net income is P70,000.00
1. 30%:30%:40%
2. 1:3:5
3. Using the average capital ratio
4. Using the ending capital ratio
5. Using the beginning capital ratio
6. 5% interest is allowed on the beginning capital and balance is divided 3:5:3.
7. Salaries of 3,000;5,000;and 2,500, respectively,and the remainder according to beginning
capital balances.
8. Joseph is allowed 10% bonus of net income before bonus, and balance equally.
9. Erap is allowed 12% bonus of net income after deducting bonus, remainder equally.
10. John and Erap is allowed bonus of 7% and 3%,respectively, from net income after bonus and
income tax of 25%. remainder distributed according to their beginning capital.
PTS: 30
2. Mah, Kee, and Poot put up a Beerhouse on June 1, 2008. Their capital balances are as follows:
Mah P250,000
Kee
300,000
Poot
285,000
Their profit and loss sharing agreement were as follows:
- Interest of 12% is to be allowed on partners capital in excess of P 275,000.
- Salaries of P20,000,35,000 shall be allowed to Mah and Kee, respectively.
- Poot is to be given a bonus of 17% of the net profit.
Net profit for the year was Ps130,000.00
1. Show how the net income will be distributed using their agreement AND
a) The bonus was before the bonus.
b) The bonus was after the bonus.
c) The bonus was before the bonus and 30% tax.
d) The bonus was after the bonus and 30% tax.
PTS: 20