Reference no: EM132670229
Question: Problem 1: On August 1, 2010, Marie and Paz formed a partnership. Marie contributed inventory of P500,000 with a fair value of P300,000 while Paz contributed cash of P250,000 and a land valued that cost her P900,000 with a carrying amount of P1,000,000 and a fair value of P1,250,000. The partnership did not assume the mortgage attached to the property worth P250,000. The partners agree to allocate profits and losses as follows:
1. Each partner shall receive 5% interest on the amount of his beginning capital.
2. Marie will receive a salary of P8,000 per month.
3. The remainder will be divided equally on the first year and 60:40 on subsequent years.
4. Marie and Paz are allowed to withdraw P5,000 per month. Any withdrawal is treated as a direct reduction of capital.
In 2010, the partnership has a credit balance of income summary of P100,000. On July 1, 2011, Ivonne was admitted in the partnership by investing P800,000 for a 25% interest. Asset revaluation is to be recognized. After admission of Ivonne, the partners agreed to divide profits as follows:
1. Each partner shall receive 5% interest on the amount of his beginning capital.
2. All partners will receive a salary of P2,000 per month.
3. The balance to be divided 45% to Marie, 30% to Paz and 25% to Ivonne.
4. Each partner is allowed to withdraw P2,000 per month. Any withdrawal is treated as a direct reduction of capital.
In 2011, the partnership earned a profit of P300,000 evenly throughout the year. How much is the capital balance of Marie at the end of December 31, 2011?
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