question archive Problem 3 Emo and Ted are partners engaged in a manufacturing business
Problem 3 Emo and Ted are partners engaged in a manufacturing business
Subject:AccountingPrice:9.82 Bought3
Problem 3 Emo and Ted are partners engaged in a manufacturing business. Transactions affecting the partners' capital accounts are as follows: Emo Ted Debit Credit Debit Credit January 1 P50,000 P70,000 April 1 30,000 P20,000 June 30 P25,000 50,000 September 1 45,000 60,000 October 1 70,000 40,000 The income summary has a debit balance of P45,000. The agreement between Emo and Ted includes the following terms: Interest on average capital at 8%; . Salaries of P25,000 and P35,000 are given to Emo and Ted respectively; . Bonus to Ted at 25% of net income after deducting interest and salaries but before deducting bonus; and . Balance is divided equally 24. How much is the net increase/decrease in Ted's capital account during 2021? (Encode your answer by indicating if it is increase or decrease e. g. 50,500 increase; 40,000 decrease) 25. How much is the share of Emo in the P45,000 debit balance in the income summary?
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
24. 103,600 Increase
25. (28,600)
Step-by-step explanation
| Emo | Ted | |
| Jan 1 (Amount x 12/12) | 50,000 | 70,000 |
| Apr 1 (Amount x 9/12) | 22,500 | (15,000) |
| June 30 (Amount x 6/12) | (12,500) | 25,000 |
| Sept 1 (Amount x 4/12) | (15,000) | 20,000 |
| Oct 1 (Amount x 3/12) | 17,500 | (10,000) |
| Average Capital | 62,500 | 90,000 |
| x 8% | x 8% | |
| Interest | 5,000 | 7,200 |
| Emo | Ted | Total | |
| Interest | 5,000 | 7,200 | 12,200 |
| Salary | 25,000 | 35,000 | 60,000 |
| Remainder | (58,600) | (58,600) | (117,200) |
| (28,600) | (16,400) | (45,000) |
*Since the partnership suffered a Loss of 45,000, bonus to Ted will not be given
| Jan 1 | 70,000 |
| Apr 1 | (20,000) |
| June 30 | 50,000 |
| Sept 1 | 60,000 |
| Oct 1 | (40,000) |
| Share in Net Loss | (16,400) |
| Net Increase in Capital of Ted | 103,600 |
