Alden and Maine are partners with capital balances of P 1,000,000 each, sharing income and losses in a 3:2 ratio. The partners have been considering Doris' proposal to invest P 1,000,000 cash for a 1/3 share in the partnership. The following questions were brought up by the partners who sought your advice on whether to admit Doris in the partnership: A. If Doris' proposal is accepted what will be the effect on the profit and loss ratio? B. If a net income of P 600,000 will be earned by the firm after a year, what would be their profit shares? C. If the P 600,000 net income could be earned by the firm without the additional investment, who would benefit least with the proposal? D. If the firm could earn only P 450,00o, without additional investment, would the proposal be still attractive to Alden?

Alden and Maine are partners with capital balances of P 1,000,000 each, sharing income and losses in a 3:2 ratio. The partners have been considering Doris' proposal to invest P 1,000,000 cash for a 1/3 share in the partnership. The following questions were brought up by the partners who sought your advice on whether to admit Doris in the partnership: A. If Doris' proposal is accepted what will be the effect on the profit and loss ratio? B. If a net income of P 600,000 will be earned by the firm after a year, what would be their profit shares? C. If the P 600,000 net income could be earned by the firm without the additional investment, who would benefit least with the proposal? D. If the firm could earn only P 450,00o, without additional investment, would the proposal be still attractive to Alden?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter11: Partnerships: Distributions, Transfer Of Interests, And Terminations

Section: Chapter Questions

Problem 44P

See similar textbooks

Similar questions

Ritz , Von, and Lara are partners with capital balances of P20,000, P30,000, and P50,000 respectively. They share income in the ratio of 1:2:3. Income Summary with a debit balance of P30,000 is to be closed to the capital accounts. A gain is recognized for Ritz in the amount of P3,000. The amount of cash she would be getting from the partnership upon withdrawal would be?
Salim and Rashid form a partnership, investing OR 80,000 and OR 120,000, respectively. Required: Determine their shares of net income: Net income is OR 60,000. The first OR 30,000 is shared on the basis of partner capital balances. The next OR 20,000 is based on partner services, with Salim getting 40% and Rashid 60%. The remainder is shared equally. How can partnership profits and losses be allocated. Please I need answer for these questions. Thanks
I asked this question earlier but they answered as if the net income was $280,000 and not $270,000. Could you possibly help and show me how to do it with a net income of $270,000? Dividing Partnership Income Beau Dawson and Willow McDonald formed a partnership, investing $116,000 and $174,000, respectively. Determine their participation in the year's net income of $270,000 under each of the following independent assumptions: a. No agreement concerning division of net income.b. Divided in the ratio of original capital investment.c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.d. Salary allowances of $40,000 and $50,000, respectively, and the balance divided equally.e. Allowance of interest at the rate of 5% on original investments, salary allowances of $40,000 and $50,000, respectively, and the remainder divided equally. Dawson McDonald a. $fill in the blank 1 $fill in the blank 2 b. $fill in the blank 3 $fill in the…
Kali and Jane are contemplating on the profit-sharing strategy of the partnership. However, the selected modes of profit distribution vary according to their level of income. Jane was offered a salary of P50,000 or a salary of P20,000 plus a bonus of 15% of net income after salary and bonus. Per estimate, other partners were to receive also a salary amounting to P150,000. What income level would result to indifference on Jane?
Estephanie, Flordeliza, and Geralyn formed a partnership. Geralyn made a cash investment amounting to P 80,000. Given this information, how much is the expected total capital of the partnership if they desire equal capital balances?
In a partnership firm there are two partners – X and Y. They share profit in the ratio of 55% and 45%. X contributed capital of OMR 180,000 and Y contributed OMR 160,000. Partnership Agreement says partners are eligible to get interest on capital at 10%. Income Statement of a Partnership firm shows the net profit of OMR 200,000. How much profit X and Y will receive from the partnership?
Not what you’re looking for? Continue submitting your question. Submit your question Question i. Kijiko and Sahani is in partnership sharing profits and losses 3:2. ii. Under the terms of the partnership agreement, the partners are entitled to interest on capital at 5% per annum and Sahani is entitled to a salary of Kshs. 4,500. Interest is charged on drawings at 5% per annum depending on when the drawings were withdrawn and the amounts of interest on drawings are given below. No interest is charged or allowed on current accounts. The interests on drawings are: Kijiko kshs. 600 and Sahani Kshs. 750. iii. The partners’ capitals at 1 July 2018 were: Kijiko Kshs. 30,000 and Sahani Kshs. 10,000. iv. The net trading profit of the firm, before dealing with partners’ interest or Sahani salary for the year ended 30 June 2019 was Kshs. 25,800. At 1 July 2018, there was a credit balance of Kshs. 1,280 on Sahani current account, while Kijiko current account balance was a debit of Kshs.…
2. Hammer and Nail formed a partnership. Hammer contributed equipment with original cost of P370,000 and fair value of P300,000 while Nail contributed cash of P180,000. Hammer and Nail agreed to have a 60:40 interest in the partnership and that their initial capital credits should reflect this fact. A partner's capital account should be increased accordingly by way of additional cash investment. Which of the partners should make an additional investment and by how much? a. Hammer, P20,000 b. Nail, P20,000 c. Hammer, P70,000 d. Nail, P70,000
Stephanie Calamba and Allan Brillantes decided to form a partnership. They agreed that Calamba will invest P200,000 andBrillantes, P300,000. Calamba will devote full time to the business, and Brillantes on part-time only. The following plans forthe division of profits are being considered: a. Equal divisionb. In the ratio of original investmentsc. In the ratio of time devoted to the businessd. Interest of 10% on original investments and the remainder in the ratio of 3:2e. Interest of 10% on original investments, salary allowances of P340,000 to Calamba and P170,000 to Brillantes, andthe remainder equally.f. Plan (e), except that Calamba is also to be allowed a bonus equal to the 20% of the amount by which profit exceedsthe salary allowances. Determine the partners’ share in profit or loss for each of the situations above assuming:(1) Profit of P1,500,000(2) Profit of P660,000
P. L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively. Consider each of the following independent situations regarding a new partner admission. Assume C invests $38,000 in cash for a 20% ownership interest. The money goes to the partnership. Bonus method is used. What is P's capital balance after C's contribution? $44,600. $46,880. $53,120. O$55,400.
Petersen, one of your clients, has indicated that Jacobsen is interested in buying Petersen’s interest in the partnership. Relevant information: (attached)Petersen has asked you a number of questions regarding selling his interest in the partnership. It is important to note that the partners vote on partnership matters in the same proportion as their profit and loss percentages.Prepare a response to each of the following questions:1. Given the above information, what is the suggested value of Petersen’s interest in the partnership?2. Petersen believes that there is significant additional value traceable to the partnership that is not reflected in the above information. In particular, Petersen believes that the partnership has significant goodwill and feels that his interest in the partnership is worth $130,000. What amount of total entity goodwill is suggested by this value?3. If Petersen were to sell half of his interest in the partnership to Jacobsen and half to Olsen, why might the…
PARTNERSHIP Kindly provide a clear solution. Thank you! Partners X, Y and Z have capital balances capital balances in a partnership of P140,000, P60,000 and P1,800,000. The operations for the year resulted in a loss of P240,000. What will be the capital balance of Y if the three partners share in the profits of the partnership in the ratio of 2:2:6? (POSITIVE FOR CREDIT BALANCE and NEGATIVE () or "-" FOR DEBIT BALANCE)* Partners X, Y and Z have capital balances capital balances in a partnership of P140,000, P60,000 and P1,800,000. The operations for the year resulted in a loss of P240,000. What will Y’s capital be if X gets a P280,000 salary, Y gets a P100,000 salary and Z gets a 10% interest on her beginning capital balance, with the remaining being divided at a 1:1:2 ratio? (POSITIVE FOR CREDIT BALANCE and NEGATIVE () or "-" FOR DEBIT BALANCE)*