NATIONAL COLLEGE BUSINESS AND ARTS

CHAPTER 12 - PARTNERSHIP OPERATIONS

Assignment 9/17/2020

Use the following information for the next two questions:

A and B formed partnership. The partnership agreement

stipulates the following:

> Annual Salary allowance of P 80,000 for A and P20,000 for B

> 10% bonus to A after salaries but before deduction for the Bonus
> the partners share in profits and losses on a 70:30 basis.

1. The Partnership earned profit of P 1,200,000 before salary allowance

Requirements:
a. Compute for the respective shares of the partners in the profit.
b. provide the Journal entry to close the income summary account
to the partner's respective equity accounts.

2. The partnership incurred a loss of P 60,000 before salary allowance

a. Compute for the respective shares of the partners in the loss.

b. provide the Journal entry to close the income summary account
to the partner's respective equity accounts.

3. A and B formed a partnership. The partnership agreement stipulates the following:

> annual Salaries of P 100,000 for A and P 20,000 for B.

> 10% bonus to A after salaries but before deductions for bonus
and interest,
> 10% interest on the weighted average capital balance of B.
> the partners share in profits and losses equally.

The partnership earned profit of P 1,200,000

The Movements in B Capital Account are as follows:

Beg: Jan 1 Balance 400,000

April 30 Investment 300,000
May 31 Investment 200,000
Aug 1 Withdrawals -100,000
Dec 1 Investment 300,000
end balance ###

Requirements: Compute for the respective shares of the partners in the

profit.

Date balance Months Acc. Balance Fraction Ave Cap. Balance

Jan 1 400,000 4 months 400,000 4/12 133,333
April 30 300,000 1 Month 700,000 1/12 58,333
May 31 200,000 2 months 900,000 2/12 150,000
Aug 1 -100,000 4 months 800,000 4/12 266,667
Dec 1 300,000 1 Month 1,100,000 1/12 91,667
Total 700,000
Requirements A
Profit to be distributed 70% 30% 1,200,000
A B
Salary 80,000 20,000 100,000
Bonus (1,200K -100 k x 10%) 110,000 110,000
Remaining Balance 693,000 297,000 990,000
TOTAL 883,000 317,000 1,200,000

Requirements B ,
Income Summary 1,200,000
A - Capital 883,000
B - Capital 317,000

To close the income summary account to the partners respective equity account

Requirements A
loss to be distributed (60,000)
A B
Salary 80,000 20,000 100,000
RB (70:30) -112,000 -48,000 (160,000)
TOTAL (32,000) (28,000) (60,000)

Requirements B
A -Capital 32,000
B -Capital 28,000
Income Summary 60,000

To close the income summary account to the partners respective equity account

Profits to be distributed 1,200,000

A B
Salaries 100,000 20,000 120,000
Bonus (1,200k -120 x 10%) 108,000 108,000
Interest (700,000 x 10%) 70,000 70,000
Remaining Balance 451,000 451,000 902,000
Total 659,000 541,000 1,200,000
NATIONAL COLLEGE BUSINESS AND ARTS
CHAPTER 12 - PARTNERSHIP OPERATIONS

1. A B and C formed a partnership. The partnership agreement stipulates the ff:

> Annual Salary allowance of P100,000 for A and P20,000 for B Profits to be distributed 40%
> 10% interest on the beginning capital balance of C A
> the partners share in profits and losses on a 40:40:20 ratio. Salary' 100,000
Interest (300k x 10%)
Remaining Balance 140,000
The partnership earned profit of P500,000. C Capital Account had a beginning balance TOTAL 240,000
of P 300,000. the difference between the amounts received by A and B is
A share in profits
a. 160,000 c. 80,000 B share in profits
b. 240,000 d. 60,000 Difference

2. A and B formed a prtnership. The partnership agreement stipulates the ff:

Profits to be distributed
> Annual Salary allowances of P80,000 for A and P40,000 for B add: Salaries
> The Partners share in profits and losses equally. Profit Before Salaries
A
The Partnership earned profit of P100,000 after salaries. How much is the share Salary' 80,000
of B? R:B - Equally 50,000
a. 70,000 c. 130,000 Total 130,000
b.30,000 d. 90,000

3. A and B formed a partnership the partnership agreement stipulates the following:

> Monthly salary allowances of P10,000 for A and P4,000 for B Profits to be distributed
The salaries are recognized as expenses add: Salaries (14,000 x 12)
> The partner share equally in profit and losses. Total
The Partnership earned profit of 360,000 how much is the share of A? A
Salaries 120,000
a. 300,000 c. 148,000 R B (Equally) 180,000
b.228,000 d. 128,000 Total 300,000

4. A and B share equally in partnership profits and losses. During the year, A's Capital
Account has a net increase of P50,000. Partner A made contributions of P 10,000 and
Capital withdrawals of P60,000 during the year. How much was the partnership profit
for the year? A- Capital
10,000
a. 180,000 c. 210,000 60,000
b.200,000 d. 480,000 100,000
50,000
5. A and B formed a partnership. The Partnership agreement stipulates the following:

> Annual Salary allowance of P100,000 for A the managing partner.

> 10% Bonus to A after salaries but before deduction for the bonus A Share in Profit
> the partners share in profits and losses Equally. B Share in Profit
Total Profits
The share of A in the partnership profit during the period was P595,000, including a bonus
of P90,000 how much was the share of B?

a. 386,000 c. 405,000 Profits to be distributed

b.398,000 d. 504,000
Salary
Bonus (1M - 100k x 10%)
R B - Equally
TOTAL
 40% 20% 500,000
B C
20,000 120,000
30,000 30,000
140,000 70,000 350,000
160,000 100,000 500,000

240,000
160,000
80,000

100,000
120,000
220,000
B
40,000 120,000
50,000 100,000
90,000 220,000

360,000
168,000
528,000
 B
48,000 168,000
180,000 360,000
228,000 528,000

? Investment 10,000
Withdrawals -60,000
Profits 100,000
Net Increase 50,000

A Share in Profit 100,000 50%

B Share in Profit 100,000 50%
Total Profits 200,000 100%

1,000,000
A B
100,000 100,000
90,000 90,000
405,000 405,000 810,000
595,000 405,000 1,000,000