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AC and BD formed a partnership on January 1, 2013. On this date, AC contributed capital of 600,000. On
the other hand, BD contributed no capital because he will manage the firm on full time basis. The
partnership agreement provides for the following:
A. Capital accounts are to be credited annually with interest at 5% of the beginning capital
C. BD is to receive a bonus of 20% of profit computed before interest, salaries and bonus are deducted
There are no withdrawals by either partner during the year. The partnership income statement contains
the following:
Revenues 1,720,000
Questions:
B= 20% (880+240+30+B)
B= 20% (1150 + B)
B= 230 + .2B
.8B = 230
B = 287.5
Remaining profit of 880 after the allowances will be divided into 7:3 ratio
2. Ending Equity of AC
= 1,246,000.
FAR
Leah Company acquired a welding machine with an invoice price of P3,360,000 subject to a cash
discount of 5% which was not taken. Trade Discount was 20%. Leah incurred freight and insurance
during shipment of P50,000 and testing and installation cost of P200,000. Leah also incurred cost of
P20,000 in removing the old welding machine prior to the installation of the new one. Welding supplies
were acquired at a cost of P100,000. The VAT on the acquisition is P360,000. What is the cost of the
welding machine?
3,100,000
3,360,000 - 360,000 x 95%= 2.85M
Merch
Calculate the difference between the payment date for those taking the early payment discount, and
the date when payment is normally due, and divide it into 360 days. For example, under 2/10 net 30
terms, you would divide 20 days into 360, to arrive at 18. You use this number to annualize the interest
rate calculated in the next step.
Subtract the discount percentage from 100% and divide the result into the discount percentage. For
example, under 2/10 net 30 terms, you would divide 2% by 98% to arrive at 0.0204. This is the interest
rate being offered through the credit terms.
Multiply the result of both calculations together to obtain the annualized interest rate. To conclude the
example, you would multiply 18 by 0.0204 to arrive at an effective annualized interest rate of 36.72%.