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  • Problem #12 Distribution of Profits or Losses Based On Partners' Agreement

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    The partners of MRL Company share profits and losses based on their capital balances and an agreed-upon ratio. For a profit of P740,000, the partners receive salaries, 10% interest on capital, and shares of the remainder based on a 2:5:3 ratio. For a profit of P140,000, Resultay receives an additional P10,000 and Modesto receives P100,000, with the remainder shared based on the ratio. For a loss of P60,000, Resultay receives P110,000 and Laguna receives P10,000, with the loss allocated to Modesto.

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    Chapter 2 #12

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    The partners of MRL Company share profits and losses based on their capital balances and an agreed-upon ratio. For a profit of P740,000, the partners receive salaries, 10% interest on capital, and shares of the remainder based on a 2:5:3 ratio. For a profit of P140,000, Resultay receives an additional P10,000 and Modesto receives P100,000, with the remainder shared based on the ratio. For a loss of P60,000, Resultay receives P110,000 and Laguna receives P10,000, with the loss allocated to Modesto.

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    © All Rights Reserved
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    4K views3 pages

    Problem #12 Distribution of Profits or Losses Based On Partners' Agreement

    Uploaded by

    spp
    The partners of MRL Company share profits and losses based on their capital balances and an agreed-upon ratio. For a profit of P740,000, the partners receive salaries, 10% interest on capital, and shares of the remainder based on a 2:5:3 ratio. For a profit of P140,000, Resultay receives an additional P10,000 and Modesto receives P100,000, with the remainder shared based on the ratio. For a loss of P60,000, Resultay receives P110,000 and Laguna receives P10,000, with the loss allocated to Modesto.

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    © All Rights Reserved
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    of 3

    Problem #12

    Distribution of Profits or Losses Based on Partners’ Agreement

    Modesto, Resultay, and Laguna are partners in MRL Company, with average capital balances for the year of P300000,
    P400000, and P200000, respectively. They share remaining profits and losses in a 2:5:3 ratio, respectively, after each
    receives a P150000 salary and 10% interest on his average capital balances.

    Required:

    Prepare the journal entries to close the income summary, assuming a:

    1. Profit of P740000
    2. Profit of P140000
    3. Loss of P60000

    Income Summary 740000


    Modesto, Drawing 220000
    Resultay, Drawing 290000
    Laguna, Drawing 230000

    Income Summary 140000


    Resultay, Drawing 10000
    Modesto, Drawing 100000
    Laguna, Drawing 50000

    Resultay, Drawing 110000


    Laguna, Drawing 10000
    Income Summary 60000
    Modesto, Drawing 60000
    Modesto Resultay Laguna Total
    average capital
    balances 300000.00 400000.00 200000.00 900000.00
    salary 150000.00 150000.00 150000.00 450000.00
    interest 10% 30000.00 40000.00 20000.00 90000.00
    remainder 40000.00 100000.00 60000.00 200000.00
    total profit 220000.00 290000.00 230000.00 740000.00

    Modesto Resultay Laguna Total


    average capital
    balances 300000.00 400000.00 200000.00 900000.00
    salary 150000.00 150000.00 150000.00 450000.00
    interest 10% 30000.00 40000.00 20000.00 90000.00
    remainder -80000.00 200000.00 120000.00 -400000.00
    total profit 100000.00 -10000.00 50000.00 140000.00

    Modesto Resultay Laguna Total


    average capital
    balances 300000.00 400000.00 200000.00 900000.00
    salary 150000.00 150000.00 150000.00 450000.00
    interest 10% 30000.00 40000.00 20000.00 90000.00
    remainder 120000.00 300000.00 180000.00 -600000.00
    total profit 60000.00 110000.00 -10000.00 -60000.00

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