Partnership Operations

1. Villena, a partner in the Dulay, Villena & Co., has a 30% participation in partnership profits and
losses. Villena’s capital account has a net decrease of P120,000 during the calendar year 2018.
During 2018, Villena withdrew P260,000 (charged against his capital account) and contributed
property valued at P50,000 to the partnership. What was the profit of the Dulay, Villena & Co.
for year 2018?
a. P1,100,000.
b. P466,667.
c. P700,000.
d. P300,000.

Solution:

(260,000) + 50,000 + X = (120,000)

(210,000) + X = (120,000)

X = (120,000) + 210,000

X = -90,000

90,000 / 30% = P300,000

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2. Del Mundo, Ballada and Mendoza are partners sharing profit on a 7:2:1 ratio. Burgos was
admitted into the partnership with 15% share in the profit on Jan. 1, 2018. The old partners
continue to share profit in their original ratios.

For the year 2018, the partnership showed a profit of P15,000. However, it was discovered that
the following items were omitted in the firm’s book.

Unrecorded at year end: 2017 2018

Accrued Expense P1,050

Accrued Income 875
Prepaid Expense P1,400
Unearned Income 1,225

The share of Ballada in the 2018 profit is?

a. P2,197.50
b. P2,637.00
c. P2,490.50
d. P3,149.75

Solution:

P15,000 – 1,050 + 875 – 1,400 + 1,225 = 14,650 imaminus yung accrued exp. Saka prepaid exp.
Partnership Operations

14,650 x 15% = 2,197.50 kukunin muna yung percent ng new partner. Yan na yung kay Burgos na
share.

14,650 – 2,197.50 = 12,452.50 yung matitira paghahatian nung old partners sa hatiaan nila na 7:2:1

12,452.50 x 20% = 2,490.50

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3. At the beginning of 2018, the statement of financial position for EasyPage Company showed the
following balances in the partner’s capital accounts: Rivera, P24,000 and Rosario P26,000. Rivera
and Rosario share profits and losses in a 3:7 ratio. During 2018, EasyPage experienced a P40,000
loss. Rivera withdrew P10,000 from the partnership during the year and Rosario withdrew
P18,000. What will be the balance in Rivera’s capital on Dec. 31, 2018?
a. P 3,600
b. P 2,000
c. P12,000
d. P26,000

Solution:
Profit & Loss
30% 70%
Sharing
Partners Rivera Rosario
Capital 24,000 26,000
Loss (12,000) (28,000)
Drawings (10,000) (18,000)
Balance P2,000 (P20,000)

Loss computation:
40,000 x 30% = 12,000
40,000 x 70% = 28,000

Iminus lang yung loss saka drawings na ginawa ng bawat partner para makuha yung ending capital nila.

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4. The partnership agreement of Zuniga, Armenta & Galang provided for the year- end allocation
of profit in the following order:
- First, Zuniga is to receive 10% profit up to P200,000 and 20% over P200,000
- Second, Armenta and Galang each are to receive 5% of the remaining profit over P300,000.
- The balance of profit is to be allocated equally among the three partners.

The partnership’s 2018 profit was P500,000 before any allocations to partners. What amount
should be allocated to Zuniga?

a. P202,000
b. P216,000
c. P206,000
d. P220,000
Partnership Operations

Solution:

Zuniga = 200,000 x 10% = 20,000 eto yung profit up to 200k

300,000 x 20% = 60,000 eto yung over 200k. Kaya ang ginagawa ko 500k-200k
Total = 80,000

Remainder: (500,000 – 80,000) = 420,000 eto na lang natira after iminus yung kay zuniga

Armenta: (120,000 x 5%) = 6,000 kaya 120k lang kase sabi remaining profit over 300k. Kaya 420k-300k.
Galang: (120,000 x 5%) = 6,000
Total = 12,000
Balance: (500,000 – 80,000 – 12,000) = 408,000

408,000 / 3 = 136,000 each eto kase equally daw ididivide yung natira na profit

Zuniga Armenta Galang

80,000 6,000 6,000
136,000 136,000 136,000
Total 216,000 142,000 142,000

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5. On Jan 1. 2018, Anatalio, Yecyec, Guzon and Calimpusan formed Butuan Trading Co., a
partnership, with contributions as follows: Anatalio, P50,000; Yecyec, P25,000; Guzon, P25,000
and Calimpusan, P20,000. The partnership contract provided that each partner shall receive a
5% interest on contributed capital, and that Anatalio and Yecyec shall receive salaries of P5,000
and P3,000, respectively.

The contact also provided that Guzon shall receive a minimum of P2,500 per annum, and
Calimpusan a minimum of P6,000 per annum, which is inclusive of amounts representing
interest and share of remaining profits. The balance of the profits shall be distributed to
Anatalio, Yecyec, Guzon and Calimpusan in a ratio 3:3:2:2.

What amount must be earned by the partnership, before any charge for interest and salaries, so
that Anatalio may receive an aggregate of P12,500 including interest, salary and share of
profits?

a. P32,333
b. P30,000
c. P30,667
d. P16,667

Solution:

A Y G C Total
Salary 5,000 3,000 8,000
Partnership Operations

Interest 5% 2,500 1,250 1,250 1,000 6,000

Remainder 5,000 5,000 3,333 3,333 16,667
12,500
Additional 32,334
1,667
Profit
May additional 1,667 kasi sabi sa problem may minimum na 6,000 per annum na makukuha si
Calimpusan.

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6. Garachico, Perez, and Burgos formed a partnership on Jan. 1, 2018, and contributed P150,000,
P200,000, and P250,000, respectively. Their article of co-partnership provided that the
operating profit be shared among the partners as follows: as salary, P24,000 for Garachico,
P18,000 for Perez, and P12,000 for Burgos; interest of 12% on the average capital during 2018 of
the three partners; and the balance in the ratio of 2:4:4, respectively.

The operating profit for the year ended Dec. 31, 2018 amounted to P176,000. Garachico
contributed additional capital of P30,000 on July 1 and made a withdrawal of P10,000 on Oct. 1;
Perez contributed additional capital of P20,000 on Aug. 1 and made a withdrawal of P10,000 on
Oct. 1; and, Burgos made a withdrawal of P30,000 on Nov. 1.

The partners’ capital balances on Dec. 31, 2018 are

a. Garachico, P179,680; Perez, P229,360; and, Burgos, P239,360

b. Garachico, P223,180; Perez, P272,060; and, Burgos, P280,760
c. Garachico, P189,680; Perez, P239,360; and, Burgos, P269,360
d. Garachico, P179,760; Perez, P229,520; and, Burgos, P239,520

Solution:

Garachico Perez Burgos Total

End Capital 170,000 210,000 220,000
Salary 24,000 18,000 12,000 54,000
Interest 12% 19,500 24,700 29,400 73,600
Remainder 9,680 19,360 19,360 48,400
Total 223,180 272,060 280,760 176,000
Kukunin muna yung average capital balance ng bawat partner. Ang ginamit ko dito yung shortcut na
tinuro sa review. Kung magkano yung ininvest or winidraw ng partner tas bibilangin yung number ng
month over 12 ganern lang.
G P
Jan 1. 150,000 x 12 /12 = 150,000 Jan 1. 200,000 x 12 /12 = 200,000
July 1. 30,000 x 6 /12 = 15,000 Aug 1. 20,000 x 5 /12 = 8,333
Oct 1. (10,000) x 3/12 = (2,500) Oct 1. (10,000) x 3/12 = (2,500)
Total: 162,500 x 12% = 19,500 Total: 205,833 x 12% = 24,700
B
Jan 1. 250,000 x 12 /12 = 250,000
Partnership Operations

Nov 1. (30,000) x 2 /12 = (5,000)

Total: 245,000 x 12% = 29,400
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7. Castillo, Labasan and Hollanes are partners with average capital balances during 2018 of
P472,500, P238,650, and P162,350, respectively. The partners receive 10% interest on their
average capital balances; after deducting salaries of P122,325 to Castillo and P82,625 to
Hollanes, the residual profits or loss is divided equally.

In 2018, the partnership had a loss of P125,624 before the interest and salaries to partners. By
what amount should Castillo’s and Hollanes’ capital account change increase (decrease)?

Catillo Hollanes

a. P30,267 P(40,448)
b. P29,476 P17,536
c. P(40,844) P31,235
d. P 28,358 P32,458

Solution:

Castillo Labasan Hollanes Total

Ave. Cap 472.500 238,650 162,350
Salary 122,325 82,625 204,950
Interest 10% 47,250 23,865 16,235 87,350
Residual (139,308) (139,308) (139,308) (417,924)
30,267 (115,443) (40,448) (125,624)
Sabi dito may loss daw na 125,624 kaya ayun may negative sa pinakadulo. Kunin muna yung total ng
salary at interest. Bale 292,300 ang lalabas tas add sa 125,624 magiging 417,924 gawin lang negative yon
kase yun na yung loss tas divide sa 3 kase sabi divided equally ang profit or loss.

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Partnership Operations