Reference no: EM132826791

Garcia and Henson formed a partnership on January 2, 20X5 and agreed to share profits 90% and 10%, respectively. Garcia contributed capital of P25,000. Henson contributed no capital but has specialized expertise and manages the firm full time. There were no withdrawals during the year.

The partnership agreement provides for the following:

1. Capital accounts are to be credited annually with interest at 5% of beginning capital.
2. Henson is to be paid a salary of P1,000 a month.
3. Henson is to receive a bonus of 20% of income calculated before deducting his salary and interest on both capital accounts.
4. Bonus, interest, and Henson's salary are to be considered partnership expenses.

The partnership 20X5 income statement as follows:

Revenues 96,450

Expenses (including salary, interest, and bonus) 49,700

Net income 46,750

Problem 1: What is Henson's 20X5 bonus?

A. P11,688

B. P12,000

C. P15,000

D. P15,738