3. The partnership contract of Ivan and Irvin provided for salaries of P90,000 to Ivan and...
3. The partnership contract of Ivan and Irvin provided for salaries of P90,000 to Ivan and P70,000 to Irvin, with any remaining income or loss divided equally. During, 2020, pre salaries income of Ivan and Irvin Co. was P200,000, and both Ivan and Irvin withdrew cash from the partnership equal to 80% of their salary allowance, During 2020, Ivan’s equity in the partnership:
a. Increase more than Irvin’s equity
b. Decrease more than Irvin’s equity
c. Increase the same amount as Irvin’s equity
d. Decrease the same amount as Irvin’s equity
4. A retiring partner withdraws his interest at book value receives assets
a. Above his capital interest
b. Below his capital interest
c. Equal to his capital interest
d. None of the choices
Homework Answers
| 3 | |||
| Ivan | Irvin | Total | |
| Salary allowance | 90000 | 70000 | 160000 |
| Remaining income | 20000 | 20000 | 40000 |
| Total income allocated | 110000 | 90000 | 200000 |
| Ivan | Irvin | ||
| Total income allocated | 110000 | 90000 | |
| Less: Withdrawals | |||
| 90000 X 80% | 72000 | ||
| 70000 X 80% | 56000 | ||
| Increase in Equity | 38000 | 34000 |
| Ivan’s equity in the partnership Increase more than Irvin’s equity |
| Option A is correct |
| 4 |
| A retiring partner withdraws his interest at book value receives assets Equal to his capital interest |
| Option C is correct |
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