The capital accounts for Perida and Rhoda at the end of fiscal year 2001 are

as follows:

Perida
January I       Balance     P 21,000
May I             Investment    9,000
October I      Withdrawal P 6,000

Rhoda
January 1       Balance      P 15,000
April 1            Withdrawal P 3,000

Net income for the year ended December 31, 2001 is P30,000.

Instructions: Give the journal entries to record the transfer of net income to the
capital accounts under each of the following assumptions: (Show the procedure
used in calculating the respective amounts as an explanation for each entry).
1. Net income is divided 60% to Perida and 40% to Rhoda.

December 31, 2001 Income Summary 30,000

Perida, Capital 18,000
Rhoda, Capital 12,000
To record division of profit

Perida 30,000x60% 18,000

Rhoda 30,000x40% 12,000
Total 30,000

2. Net income is divided in the ratio of capital at the beginning of the period.

December 31, 2001 Income Summary 30,000

Perida, Capital 17,500
Rhoda, Capital 12,500
To record division of profit

Perida 30,000x21,000/36,000 17,500

Rhoda 30,000x15,000/36,000 12,500
Total 30,000

3. Net income is divided in the ratio of average capital.

Income Summary 30,000

Perida, Capital 20,000
Rhoda, Capital 10,000
To record division of profit

Perida 30,000x25,500/38,250 20,000

Rhoda 30,000x12,750/38,250 10,000
Total 30,000
Computation of Average Capital

Perida
1-Jan 21,000x4/12 7,000
1-May 30,000x5/12 12,500
1-Oct 24,000x3/12 6,000
Total 25,500

Rhoda
1-Jan 15,000x3/12 3,750
1-Apr 12,000x9/12 9,000
Total 12,750

Total Average Capital 38,250

4. Interest at 8% is allowed on average capital and the balance of net income is

divided equally.

December 31, 2001 Income Summary 30,000

Perida, Capital 15,510
Rhoda, Capital 14,490
To record division of profit

Perida Rhoda Total

8% interest on ave. capital 2,040 1,020 3,060
balance to be divided equally
30,000-3,060=26,940 13,470 13,470 26,940
Total 15,510 14,490 30,000
5. Salaries of P 12,000 and P9,600 are allowed to Perida and Rhoda
respectively, and the balance of net income is divided in the ratio of capital
at the end of the period.

December 31, 2001 Income Summary 30,000

Perida, Capital 17,600
Rhoda, Capital 12,400
To record division of profit

Perida Rhoda
Salary 12,000 9,600
Balance to be divided based on
ratio of ending capital
Perida 8,400x 24,000/36,000= 5,600
Rhoda 8,400x 12,000/36,000= 2,800
Total 17,600 12,400

6. Rhoda is allowed a bonus of 33 1/3 %of net income after bonus, and the
balance of the net income is divided in the ratio of the average capital.

December 31, 2001 Income Summary 30,000

Perida, Capital 15,000
Rhoda, Capital 15,000
To record division of profit

Perida Rhoda
Bonus 30,000/1.3333x33 1/3% 7,500
Balance to be divided based on
ratio of average capital
Perida 22,500x 25,500/38,250= 15,000
Rhoda 22,500x 12,750/38,250= 7,500
Total 15,000 15,000
Total
21,600

5,600
2,800
30,000

Total
7,500

15,000
7,500
30,000