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Chapter 2 # 8 Ns

A partnership was formed on January 1, 2018 between Mones, Pitular, and Tuazon with initial investments of P2 million, P1 million, and P1 million respectively. According to the partnership agreement, profits and losses are to be distributed first by paying salaries of P120,000 to Mones, P60,000 to Pitular, and P60,000 to Tuazon. Next, 5% interest is paid on initial capital balances. Any remaining profits are then split between the partners in a 4:1:1 ratio. The partnership reported a profit of P350,000 for 2018.

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10K views1 page

Chapter 2 # 8 Ns

A partnership was formed on January 1, 2018 between Mones, Pitular, and Tuazon with initial investments of P2 million, P1 million, and P1 million respectively. According to the partnership agreement, profits and losses are to be distributed first by paying salaries of P120,000 to Mones, P60,000 to Pitular, and P60,000 to Tuazon. Next, 5% interest is paid on initial capital balances. Any remaining profits are then split between the partners in a 4:1:1 ratio. The partnership reported a profit of P350,000 for 2018.

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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem #18

Order of Priority

On Jan 1, 2018, the Mones, Pitular and Tuazon Partnership was formed with initial investment by the partners as
follows:

According to the partnership agreement, profit or loss is to be divided among the partners as follows:

1. Salaries of P120000 for Mones, P60000 for Pitular and P60000 for Tuazon.
2. Interest at 5% on the original capital balances.
3. The remainder to be divided among Mones, Pitular, and Tuazon in a ratio of 4:1:1, respectively.

The partnership reported profit of P350000 for the year ended Dec 31, 2018.

Required:

Determine the partners’ share in the profit under each of the following independent situations:

1. Partner’s salaries and interest on capital balances should be fully allocated and any defieciency between these
allocations and profit is to be divided among Mones, Pitular, and Tuazon in the ratio 4:1:1, respectively.
2. Partner’s salaries and interest on capital balances should be made only to the extent that the profit can provide.

  Mones Pitular Tuazon Total


2000000.0 1000000.0 1000000.0
initial investment 0 0 0 4000000.00
salaries 120000.00 60000.00 60000.00 240000.00
interest 5% 100000.00 50000.00 50000.00 200000.00
remainder 4:1:1 -60000.00 -15000.00 -15000.00 -90000.00
profit 160000.00 95000.00 95000.00 350000.00

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