Problem: The following list of account and their balance appear on the books of MJ Thai Spa as of December 31,

201
Direction: Make a 10 column worksheet with a profit distribution table
Cash
Account Receivable
Allowance for Bad Debts
Notes receivables
Unexpired Insurance
Furniture & Fixtures
Accumulated Depn. Furniture
Equipment
Accumulated Depn. Equipment
Account Payable
Notes Payable
Unexpired Commissions
Jay, Capital
Jay, Personal
Mel, Capital
Membership Fee
Service Fee Income
Advertising Expense
Taxes and Licenses
Rent
Sales Salaries
Office Salaries
Store Supplies Expense
Office Salaries Expense
Utilities Expense
Interest Expense
Interest Income
Loss on Foreign Exchange

Partnership agreement calls for the following:

Monthly salary allowance of P5,000 for mel and P7,500 for jay.
12% Interest on capitals balance, and residual profit to be shared equally.
of MJ Thai Spa as of December 31, 2018:

₱ 58,850
32,400
2,500
19,000
2,575
238,000
5,950
432,000
21,600
15,000
50,000
600
60,000
3,600
40,000
945,900
1,530,500
300,160
108,970
644,000
346,000
150,000
3,400
2,090
310,850
10,610
5,455
15,000

shared equally.
 Accounts Trial Balance Adjusting Entrie
Debit Credit Debit
Cash ₱ 58,850
Account Receivable 32,400
Allowance for Bad Debts 2,500
Notes receivables 19,000
Unexpired Insurance 2,575
Furniture & Fixtures 238,000
Accumulated Depn. Furniture 5,950
Equipment 432,000
Accumulated Depn. Equipment 21,600
Account Payable 15,000
Notes Payable 50,000
Unexpired Commissions 600 300
Jay, Capital 60,000
Jay, Personal 3,600
Mel, Capital 40,000
Membership Fee 945,900
Service Fee Income 1,530,500
Advertising Expense 300,160
Taxes and Licenses 108,970
Rent 644,000
Sales Salaries 346,000
Office Salaries 150,000
Store Supplies Expense 3,400
Office Salaries Expense 2,090
Utilities Expense 310,850
Interest Expense 10,610
Interest Income 5,455
Loss on Foreign Exchange 15,000
Total 2,677,505 2,677,505

Bad Debt Expense 740

Depreciation Expense - Furniture and Fixture 11,900
Depreciation Expense - Equipment 21,600
Insurance Expense 1,931.25
Commission Expense
Interest Receivavle 150
Prepaid Interest 8,250
44,871.25
Net Income Before Tax

Net Income Before Tax

Tax Provision of 30%
Net Income After Tax

Jay, Capital
Mel, Capital
 Adjusting Entries Income Statement Jay, Personal
Debit Credit Debit Credit Debit Credit

740

1,931.25

11,900

21,600

300
60,000
3,600

945,900
1,530,500
300,160
108,970
644,000
346,000
150,000
3,400
2,090
310,850
8,250 2,360
150 5,605
15,000

740 740
11,900 11,900
21,600 21,600
1,931.25 1,931.25
300 300
150
8,250
44,871.25 44,871.25 ₱ 1,919,001 ₱ 2,482,305
563,303.75
₱ 2,482,305 ₱ 2,482,305
 563,303.75
168,991.13
394,312.63 213,356.31
563,303.75 563,303.75 3,600 273,356
269,756

273,356.31 273,356.31
ersonal Mel, Personal Statement of Financial Position
Credit Debit Credit Debit Credit
₱ 58,850
32,400
3,240
19,000
644
238,000
17,850
432,000
43,200
15,000
50,000
300
60,000

40,000

150
8,250
 168,991
213,356.31 180,956.31
273,356 0 220,956
269,756
220,956 220,956
273,356.31 220,956 220,956 ₱ 798,294.00 ₱ 798,294.00
Date Particulars F
a.) Bad Debt Expense
Allowance for Bad Debts(3,240-2,500)
To adjust bad debts recorded

b.) Depreciation Expenses- Furniture & Fixtures

Accumulated Depreciation - Furniture & Fixtures (238,000*0.05)
To adjust Depreciation for Furniture & Fixtures

Depreciation Expenses- Equipment

Accumulated Depreciation - Equipments (432,000*0.05)
To adjust Depreciation for Equipment

c.) Unearned Commissions

Comission Income
To record half of unearned Commision

d.) Insurance Expenses

Prepaid Insurance (2,575/12*8)
To record Insurance Expiredof Delivery Equipment

e.) Interest Receivable

Interest Income (18%*10,000*1/12)
To record Interest Revenue

f.) Prepai Interest

Interest Expense (50,000*18* 1/12 = 750*11)
To record Prepaid Interest

g.) Income Summary

Income Tax Payable
To record 30% tax
Debit Credit
740
740

11,900
11,900

21,600
21,600

300
300

1931.25
1931.25

150
150

8,250
8,250

0
0
 MJ THAI SPA
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED DECEMBER 31, 2018

Assets
Current Assets
Cash 58,850
Accounts Receivable 32,400
Allowance for Bad Debts -3,240
Notes receivable 19,000
Unexpired Insurance 643
Interest Receivable 150
Prepaid Interest 8,250

Non Current Assets

Furniture & Fixtures 238,000
Accumulated Depreciation - Furniture & Fixtures -17,850 220,150
Equipment 432,000
Accumulated Depreciation - Equipment -43,200 388,800
TOTAL ASSETS

LIABILITIES AND PARTNER'S EQUITY

Accounts Payable 15,000
Notes Payable 50,000
Unearned Commission 300

PARTNER'S EQUITY
Jay, Capital 269,756.00
Mel, Capital 220,956.00
Net Income 168,991.00
TOTAL LIABILITY & PARTNER'S EQUITY
116,053

608,950
725,003

65,300

659,703
725,003
 MJ THAI SPA
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2018

Membership Fee
Service Fee Income
Interest Income
Commission Income
Gross Profit
Expenses:
Advertising Expense 300,160
Taxes and Licenses 108,970
Rent 644,000
Sale Salaries 346,000
Offcie Salaries 150,000
Store Supplies Expense 3,400
Office Supplies Expense 2,090
Utilities Expense 310,850
Bad Debt Expense 740
Depreciation Expense - Furniture & Fixtures 11,900
Depreciation Expense -Equipment 21,600
Insurance Expense 1,931.25
Interest Expense
Loss on Foreign Exchange

Total Operating Expenses

Net Income Before Tax
Less: 30% Tax
Net Income
 945,900
1,530,500
5,605
300
2,482,305

1,901,641.25
-2,360
-15,000

1,919,001.25
563,303.75
168,991.13
₱ 394,312.63
 MJ THAI SPA
POST-CLOSING TRIAL BALANCE
FOR THE YEAR ENDED DECEMBER 31, 2018
PARTICULARS Debit
Cash ₱ 58,850
Accounts Receivable 32,400
Allowance for Bad Debts
Interest Receivable 150
Prepaid Interest 8,250
Notes Receivable 19,000
Unexpired Insurance 643.75
Furniture & Fixtures 238,000
Accumulated Depreciation - Furniture
Equipment 432,000
Accumulated Depreciation - Equipment
Accounts Payable
Notes Payable
Income Taxes Payable
Unearned Commissions
Jay, Capital
Mel, Capital
Total 789,293.75
 Credit

₱ 3,240

17,850

43,200
15,000
50,000
168,991.13
300
269,756.31
220,956.31
789,293.75
 Closing Entries
Particulars F
a. Income Summary
Advertising Expense
Taxes and Licenses
Rent
Sales Salaries
Office Salaries
Store Supplies Expense
Office Supplies Expense
Utilities Expense
Interest Expense
Loss on foreign Exchange
Bad Debt Expense
Depreciation Expense - Furniture and Fixture
Depreciation Expense - Equipment
Insurance Expense
To close expense account

b. Membership Fee
Service Fee
Interest Income
Commision income
Income Summary
To close Revenue Account

c. Income Summary
Income Taxes Payable
To record Income Tax Liability

d. Income Summary
Jay, Drawing
Mel, Drawing
To record the Profit share of each partner
 Debit Credit
1,919,001.25
300,160
108,970
644,000
346,000
150,000
3,400
2,090
310,850
2,360
15,000
740
11,900
21,600
1,931.25

945,900
1,530,500
5,605
300
2,482,305

168,991.13
168,991.13

490,712.62
269,756.310
220,956.310
 Reversing Entries
e) Interest Income 150
Interest Receivable 150
To reverse Accrued Income

f) Interest Expense 8,250

Prepaid Interest 8,250
To reverse Prepaid Expense

g) Income Taxes Payable 168,991

Income Taxes Expense 168,991
To reverse Tax Payable
 Allocation of Profit
Jay 60000/100,000 *394,312.63 236,587.58
Mel 40000/100,000 *394,312.63 157,725.05
Total 394,312.6

Allocation of Profit
Jay Mel
Net Profit 394,313
12% Interest (12% x 60,000& 40,000) 7200 4800 12000
Salary(7,500 & 5,000 x 12) 90,000 60,000 150,000
Net Income Remaining 232,313
Remainder Equally 116156.315 116156.315 232312.63
Total Income Allocated 213,356.315 180,956.315 394,313
 Income Summary
Jay, Drawing
Mel, Drawing
394,313 To record the Profit share of each partner
12000
150,000
232,313
232312.63
394,313
394,312.63
213,356.315
180,956.315