a. Intellectual and Lovable share profits and losses in the ratio 7:5, respectively.

Intellectual
Based on 7:5 Ratio
Intellectual - 350,000 x 7/12 204,166.67
Lovable - 350,000 x 5/12
Total 204,166.67

b. Interest of 10% is allowed on average capital balance and the remainder equally.

Computation of Average Capital- Intellectual Balance

Date Unchanged
Jan-01 580,000.00
Mar-30 640,000.00
May-10 May-01 780,000.00
Jul-25 Jul-31 700,000.00
Total
Divide by:

Computation of Average Capital- Lovable

Balance
Date Unchanged
Jan-01 420,000.00
May-18 May-31 540,000.00
Aug-24 Aug-31 500,000.00
Oct-29 Oct-31 600,000.00
Total
Divide by

Intellectual
Interest at 10% of average capital
Intellectual - 685,000 x 10% 68,500.00
Lovable - 493,333.33 x 10%
Balance - equally 116,083.34
Share in Net Income 184,583.34

c. Intellectual and Lovable shall be given monthly salaries of P9,000 and P7,500, respectively and the balance divided in

PREFERRED ANSWER:
Intellectual
Salary( Intellectual = 9000 x 12) (Lovable = 7500 x 12) 108,000.00
Balance - based on ending capital (7/13, 6/13) 81,846.15
Share in Net Income 189,846.15
ALTERNATIVE:
Intellectual
Salary( Intellectual = 9000 x 12) (Lovable = 7500 x 12) 108,000.00
Add: Remaining (54:46) 82,080.00
Share in Net Income 190,080.00

d. Intellectual is allowed a bonus of 10% and the balance

is divided based on average capital.
(Bonus not treated as expense).

PREFFERED ANSWER: Intellectual

Bonus to Intellectual (350,000 x10%) 35,000.00
Balance based on Average Capital
Intellectual - 685,000/1,178,333.33 X 315,000 183,118.81
Lovable- 493,333.33/1,178,333.33 X 315,000
Total 218,118.81

ALTERNATIVE ANSWER: Intellectual

Bonus to Intellectual (350,000 x10%) 35,000.00
Balance based on Average Capital
Intellectual - 58% X 315,000 182,700.00
Lovable- 42% X 315,000
Total 217,700.00

e. Partners share profits and losses under the following agreement:

a. bonus of 10% of net income after bonus is given to Intellectual
b. interest of 6% is given to beginning capital
c. any balance divided in the ratio of 3:2 to Intellectual and Lovable, respectively.

Intellectual
Bonus to Intellectual 31,818.18
Interest at 6% on beginning capital 34,800.00
Intellectual, Interest (580,000x0.06)
Lovable, Interest (420,000x0.06)
Remaining (3:2) 154,909.09
Totals 221,527.27

Bonus Computation:
B= 10% (350000-B)
B= 35000- 0.10B
1.10B= 35000
1.10B/1.10= 35000/1.10
B= 31818.18

f. Partners share profits and losses under the following agreement:

a.
b. interest
monthlyof 6% isofallowed
salary P12,000onand
theP9,000
excessisofgiven
average investment of one partner over the other
to Intellectual
and Lovable, respectively
c. bonus of 10% of net income after salaries and interests is given to Intellectual
d. any balance divided based on ending capital.
PREFERRED ANSWER: Intellectual
Interest (685,000-493333.33 = 191666.67 X 6%= 11,500) 11,500.00
Salary allocations 144,000.00
Intellectual (12,000x 12)
Lovable (9,000 x 12 )
Bonus 8,650.00
Remaining (7/13;6/13) 41,919.23
Totals 206,069.23

ALTERNATIVE ANSWER: Intellectual

Interest 11,500.00
Salary allocations 144,000.00
Intellectual (12,000x 12)
Lovable (9,000 x 12 )
Bonus 8,650.00
Remaining (54:46) 42,039.00
Totals 206,189.00

Bonus Computation:
B= 10% (350000- 252000-11500)
B= (35000-25200-1150)
B= 8650

g. Partnership agreement on their share in profits and losses contains the following:
a. interest of 10% is allowed on ending capital
b. bonus ofsalary
c. monthly 10% ofofnet income
P12,500 after
and bonusisand
P10,000 interests
given is given to Intellectual.
to Intellectual
and Lovable, respectively
d. any balance divided equally
Intellectual
Interest 70,000.00
Bonus 20,000.00
Salary Allocations 150,000.00
Intellectual (12,500 x 12)
Lovable (10,000 x 12)
Remaining (50:50) - 35,000.00
Totals 205,000.00
BONUS= 10% ( 350,000-130,000-B)
B = .10(220,000- B)
B = 22,000-.1B
1.1B = 22,000
B =20,000
 Lovable Total

204,166.67
145,833.33 145,833.33
145,833.33 350,000.00

Peso Average
Months Capital
3.00 1,740,000.00
1.00 640,000.00
3.00 2,340,000.00
5.00 3,500,000.00
12.00 8,220,000.00
12.00 685,000.00

Peso Average
Months Capital
5.00 2,100,000.00
3.00 1,620,000.00
2.00 1,000,000.00
2.00 1,200,000.00
12.00 5,920,000.00
12.00 493,333.33

Lovable Total

49,333.33 117,833.33
116,083.34 232,166.67
165,416.67 350,000.00

ely and the balance divided in the ratio of ending capital.

Lovable Total
90,000.00 198,000.00
70,153.85 152,000.00
160,153.85 350,000.00
Lovable Total
90,000.00 198,000.00
69,920.00 152,000.00
159,920.00 350,000.00

Lovable Total
35,000.00

131,881.19 315,000.00
131,881.19 350,000.00

Lovable Total
35,000.00

132,300.00 315,000.00
132,300.00 350,000.00

Lovable Total
31,818.18
25,200.00 60,000.00

103,272.73 258,181.82
128,472.73 350,000.00
Lovable Total
11,500.00 note: Do not give interest to Lovable because it is meant only to compensate the
108,000.00 252,000.00

8,650.00
35,930.77 77,850.00
143,930.77 350,000.00

Lovable Total
11,500.00
108,000.00 252,000.00

8,650.00
35,811.00 77,850.00
143,811.00 350,000.00

Lovable Total
60,000.00 130,000.00
- 20,000.00
120,000.00 270,000.00

- 35,000.00 - 70,000.00
145,000.00 350,000.00
nly to compensate the partner with higher capital