Reference no: EM132744461

CeeDee partnership begins its first year of operation with the following capital balances: Cee, Capital, P224,000; Dee, capital, P112,000. According to the partnership agreement all profits will be distributed as follows:

1. Cee will be allowed an salary of P268,800 and P134,400 to Dee. The partners will be allowed with interest equal to 10% of the beginning capital balance of the eyar. Cee qill be allowed a bonus of 10% of the net income after bonus. The remainder will be divided on the basis of the beginning capital for the first year and equally for the second year.
2. Each partner is allowed to withdraw up to P11,200 per year. Assume that the income summary has a debit balance of P16,800 on the first year and a credit balance of P61,600 on the second year. Assume further that each partner withdraws the maximum amount from the business each period.

Problem 1: What is the balance of Dee's capital account at the end of the second year?

a. P95,200

b. P296,520

c. P201,600

d. P39,480