PARTNERSHIP OPERATIONS ENABLING ASSESSMENT

1. Luz, Vi and Minda are partners when the partnership earned a profit of P30,000. Their
agreement provides the following regarding the allocation of profit and losses:
a. 8% interest in partner’s ending capital in excess of P75,000
b. Salaries of P20,000 for Luz and 30,000 for Vi
c. Any balance is to be distributed 2:1:1 for Luz, Vi and Minda, respectively.

Assume ending capital balances of P60,000, P80,000 and P100,000 for partners Luz, Vi and
Minda, respectively. What is the amount of profit allocated for Minda, if each provision of the
profit and loss agreement is satisfied to whatever extent possible using the priority order shown
above?
P2,000

2. Partners AA and BB have profit and loss agreement with the following provisions: salaries of
P30,000 and P45,000 for AA and BB, respectively; a bonus to AA of 10% of net income after
salaries and bonus, and interest of 10% on average capital balances of P20,000 and P35,000
for AA and BB, respectively. One-third of any remaining profits will be allocated to AA and the
balance to BB.

● If the partnership has net income of P102,500, how much should be allocated to
Partner AA?
P41,000

● If the partnership has net income of P102,500, how much should be allocated to
Partner BB?
P61,500

● If the partnership had net income of P22,000, how much should be allocated to
partner AA, assuming that the provision of the profit and loss agreement are ranked by
order of priority starting with salaries?
P8,800

3. Hope & Faith Co. reports net income after 30% tax of P235,000 by the end of 2018. The
partnership agreement provides for division of profit or loss on the ratio of the partners’ capital
balances. At the end of 2017, each partner had a capital balance of P220,000. During 2018,
Hope made additional investment of P50,000 on April 1 and withdrew P70,000 of her capital on
September 30. Faith, on the other hand, made additional investment of P80,000 on October 1.

● The share of Hope in the net profit using the ratio of weighted average capital is _
P117,500

4. The partnership agreement of Rossi and Olson provides for salary allowances of P45,000 to
Rossi and P35,000 to Olson, with the remaining income or loss to be divided equally. During the
year, Rossi and Olson each withdraw cash equal to 80% of their salary allowances. If
partnership net income is P100,000, Rossi’s equity in the partnership would
Increase more than Olson’s

5. Nancy and Betty enter into a partnership agreement where they decide to share profits
according to the following rules.
● Nancy and Berry will receive salaries of P1700 and P14500 respectively as the from
allocation.
● The next allocation is based on 20% of each partner’s capital balances.
● Any remaining profit or loss is to be allocated completely to betty
The partnership net income for the first year is P50,000. Nancy’s capital balance is P83,000 and
Betty's capital is P11,000 at the end of the year. Calculate the share of profit/loss to be allocated
to Betty.
P31,700