VI. Net Income distribution and computation of partner’s capital balance
Use the following information for the next 2 questions.
PS PARTNERSHIP. On January 1, 2023, Psalm and Trisha formed PS Partnership. The article of co-partnership provides that profit or loss shall be distributed accordingly:
• 15% interest on average capital balance.
• P30,000 and P80,000 quarterly salary for Psalm and Trisha, respectively.
• The remainder shall be distributed in the ratio of 4:6 for Psalm and Trisha, respectively.
The following transactions regarding the capital balance of the partners for year 2023 are provided:
Questions:
1. What is the capital balance of Psalm on December 31, 2023?
2. What is the capital balance of Tricia on December 31, 2023?
Transactions
Psalm, Capital
Trisha, Capital
January 1, 2023 investment
P1,200,000
P550,000
March 31,2023 investment
200,000
July 30,2023 withdrawal
(300,000)
September 30, 2023 withdrawal
(300,000)
November 1,2023 investment
800,000