Question

On December 31 ,2018 A, B and C formed a partnership wherein A contributed P4,800,000 for 20% interest in the partnership, B Contributed P14,400,000 for a capital credit of P12,000,000. After closing of accounting books, B and C withdrew the following amounts respectively: P1,200,000 and P1,440,000. Profit and Loss arrangement are agreed as follows:

• Annual salary of P60,000, 48,000 and 36,000 respectively

• The remainder will be divided in the ratio of 2:3:5

On December 31 ,2019 the capital balance of A is 4,836,000.

1.What is the net income / (net loss) of the partnership for the year ended December 31, 2019?

2. What is the capital balance of C on December 31, 2019?

Answer 1

Net Loss of the firm			144,000	$
Capital Balance of C on December 31, 2019	3,324,000	$

Profit and Loss Appropriation Account
Particulars	Amount	Particulars	Amount
Annual salary:
A	60,000
B	48,000	Net Loss
C	36,000	A : 144,000 x 2/10	28,800
		B : 144,000 x 3/10	43,200
		C : 144,000 x 5/10	72,000
	144,000		144,000

Capital Balance of C as on December 31, 2018
Contribution by A	4,800,000
Contribution by A in %	20%
Total capital of the firm (4,800,000/20%)	24,000,000
Contribution by B	14,400,000
Contribution by C (Total - A - B)	4,800,000

Capital Account of C
Particulars	Amount	Particulars	Amount
		By Balance c/d	4,800,000
To Cash Account	1,440,000	By Salary	36,000
(Drawings)
To share of loss	72,000
To balance c/d	3,324,000
(Balancing figure)
	4,836,000		4,836,000