DATA CENTER COLLEGE OF THE PHILIPPINES

QUIZ #2
Partnership and Corporation Accounting
“Partnership Operations”

I. TRUE OR FALSE. Write TRUE if the statement is correct, otherwise, write FALSE.

1. The profits and losses shall be distributed conformity with the agreement.
2. When a loss is closed into partner’s capital accounts, income summary is credited.
3. Profit and losses are divided equally among the partners unless the partnership
agreement specifies otherwise.
4. The industrial partner is not liable for losses because he cannot withdraw the work or
labor already done by him.
5. When a profit or loss sharing agreement provides for salary and interest allowances to
the partners, these salary and interest allowances should be deducted from revenues in
arriving partnership profit.
6. The salary, interest and stated ratio method of allocation cannot be applied when loss
has occurred.
7. Bonus is allowed to partners only if there is profit, since bonus is based on profit.
8. In certain cases, when distribution of profit or losses involves salary and interest
allowances, some partners may receive an increase in equity and other may suffer a
decrease.
9. If the partnership agreement specifies a method for sharing profits, but not losses, then
losses are shared in the same proportion as profits.
10. The salary allocation to partners also appears as salaries expense on the partnership’s
income statement.

II. PROBLEM SOLVING. Solve the following independent problems. Show your solution in
good form.

1. Cjay and Marcos Partnership made a net income for the year of 42,000 before bonus.
Cjay and Marcos, the partners, agreed that Cjay is to receive a yearly bonus of 5% of the
net profiy after deducting the said bonus, and the balance will be divided in the ratio of
3:2 to Cjay and Marcos respectively. How much profit share will Cjay receive?
____________

2. Dante and Jerome invested their assets to form DJ Partnership on January 1, 2014. The
partnership reported net loss of 100,00 for the year ended December 31, 2014. The
partnership agreement provides the allocation of net income in the following order:

a. Interest on capital: 10,000 to Dante and 12,000 to Jerome

b. Dante is to be given monthly salaries of 8,000
c. Mark is to receive a bonus of 5% of net income after salaries and bonus
d. Any remaining balance is to be divided equally.
How much is Dante’s share in the net loss for the year? ____________
3. Partners Elpidio, Fortun anfd George have capital account balances at the beginning of
the year of 125,000, 136,000 and 95,000, respectively. They share net income and losses
as follows:
a. 7% interest on their beginning capital balances
b. Salary allowance of 10,000 to Elpidio; 12,000 to Fortun and 15,000 to George
c. 5% Bonus to George based on profit after bonus
d. The balance to be divided equally.

The partnership reported net income of 75,600 for the year, before interest, salaries
and bonus to partnership. How much will be the profit share of George in the net
income for the year? _________________

4. Lydia, Mae and Kathy formed a partnership on July 1, 2014. Upon formation, Lydia
contributed a total capital of 100,000, Mae contributed total capital of 200,000 while
Kathy contributed 200,000. After 6 months of operations, they earned a revenue of 125,
250 but incurred total expenses of 167, 820. The partners failed to agree on the division
of profit or loss. Based on this information. How much will be the share of Lydia in the
division of profit or loss? __________________

5. Carl and Chito are partners of CC Partnership. CC Partnership reported a net income of
88,000 for the year 2014. In the distribution of profit or loss, the partners agreed to
provide a total interest on capital of 24,000; total salaries of 20,000 and a 10% bonus to
Carl based on profit after salaries, interest and after bonus; and to divide the balance
equally. Compute for the amount of bonus to be given to Carl? _________________

6. Rebecca and Hannah are partners of RH Partnership. The partnership agreement

provide for the division of income as follows:

a. Interest on capital: 10,000 to Rebecca and 15,000 to Hannah

b. Hannah will be given salaries of 50,000 annually
c. Hannah will receive bonus of 10% of income before salaries, bonus and interest.
d. Balance will be divided equally.

The net income after deducting the salaries, interest and bonus is 303,000. How much is
the bonus given to Hannah? _______________