CMPC Answer

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Subject: Managerial Accounting Course: AE 211
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miss_aanxoaa Answered 7 minutes ago
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Case A
Intellectual: P204,167
Lovable: P145,833

Case B
Lovable: P165,417

Case C
Lovable: P160,154

Case D
Lovable: P131,881

Case E
Lovable: P128,473

Case F
Lovable: P147,420

Case G
Lovable: P145,000
Explanation:
Case A
Since there is a given profit-sharing ratio of 7:5, we simply follow that ratio in determining the share of each partner.
Intellectual = 350,000 x 7/12 = P204,167
Lovable = 350,000 x 5/12 = P145,833

Case B
Step 1: Compute the average capital balance of each partner. Note the problem mentioned that investments and withdrawals
made before the middle of the month will be considered made at the beginning of the month, and those that are made after the
middle of the month will be considered made at the end of the month.
Intellectual
Jan-01 580,000 12/12 580,000
Mar-30 60,000 9/12 45,000
May-10 140,000 8/12 93,333
Jul-25 80,000 5/12 (33,333)
Average Capital 685,000
Lovable
Jan-01 420,000 12/12 420,000
May-18 120,000 7/12 70,000
Aug-24 40,000 4/12 (13,333)
Oct-29 100,000 2/12 16,667
Average Capital 493,333

Step 2: Allocate the profit by fulfilling the interest on average capital first and then dividing the remainder equally.
Intellectual Lovable Total
Interest (685,000 x 10%) 68,500 68,500
Interest (493,333 x 10%) 49,333 49,333
Remainder (350,000 - 68,500 - 49,333)/2 116,083 116,083 232,167
Total share of each partner 184,583 165,417 350,000

Case C
Step 1: Compute the ending capital of each partner.
Intellectual Lovable
Jan-01 580,000 Jan-01 420,000
Mar-30 60,000 May-18 120,000
May-10 140,000 Aug-24 (40,000)
Jul-25 (80,000) Oct-29 100,000
Ending Capital 700,000 Ending Capital 600,000
Step 2: Compute the ending capital ratio.
The ending capital ratio of Intellectual is 7/13 (700/1300) and the ending capital ratio of Lovable is 6/13 (600/1300).
Step 3: Allocate the profit.
Salaries (multiply by 12 to get the annual salary) 108,000 90,000 198,000
Remainder (350,000 - 16,500) x 7/13 81,846 81,846
Remainder (350,000 - 16,500) x 6/13 70,154 70,154

Case D
Step 1: Compute the bonus for Intellectual.

350,000 x 10% = 35,000
Step 2: Determine the average capital ratio.
Intellectual = 685,000/1,178,333
Lovable = 493,333/1,178,333
Bonus 35,000 35,000
Remainder (350,000 - 35,000) x 685k/1,178,333 183,119 183,119
Remainder (350,000 - 16,500) x 493,333/1,178,333 131,881 131,881

Case E
Step 1: Compute the bonus of 10% after bonus.

B = 10% x (350,000 - B)
B = 35,000 - 10%B
1.10B = 35,000
1.10B/1.10 = 35,000/1.10
B = 31,818
Step 2: Compute the interest on beginning capital.
Intellectual = 580,000 x 6% = 34,800
Lovable = 420,000 x 6% = 25,200

Bonus 31,818 31,818
Interest 34,800 25,200 60,000
Remainder (350,000 - 91,818) x 3/5 154,909 154,909
Remainder (350,000 - 91,818) x 2/5 103,273 103,273

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Case F
Step 1: Compute the average investment of each partner.
Intellectual
Mar-30 60,000 9/12 45,000
May-10 140,000 8/12 93,333
Average investment 138,333
Lovable
May-18 120,000 7/12 70,000
Oct-29 100,000 2/12 16,667
Average investment 86,667

Step 2: Compute the excess average investment and the interest for it.
Intellectual has excess average investment of (138,333 - 86,667) = 51,667. Interest for this is 51,667 x 6% = 3,100
Step 3: Compute the bonus after salaries and interests.
B = 10% x (350,000 - 252,000 - 3,100)
B = 10% x 94,900
B = 9,490
*Salaries = (12,000 x 12) +(9,000 x 12) = 252,000

Interest 3,100 3,100
Salaries 144,000 108,000 252,000
Bonus 9,490 9,490
Remainder (350,000 - 264,950) x 7/13 45,990 45,990
Remainder (350,000 - 264,950) x 6/13 39,420 39,420

Case G
Step 1: Compute the interest.

Intellectual = 700,000 x 10% = 70,000
Lovable = 600,000 x 10% = 60,000

Step 2: Compute for the bonus after bonus and interests.
B = 10% x (350,000 - B - 130,000)
B = (35,000 - 10%B - 13,000)
B = 22,000 - 10%B
1.10B = 22,000
1.10B/1.10 = 22,000/1.10
B = 20,000
Step 3: Compute the annual salary.
Intellectual = 12,500 x 12 = 150,000
Lovable = 10,000 x 12 = 120,000

Interest 70,000 60,000 130,000
Bonus 20,000 20,000
Salaries 150,000 120,000 270,000
Remainder (350,000 - 420,000)/2 (35,000) - 35,000
Remainder (350,000 - 420,000)/2 (35,000) - 35,000
*The remainder is negative, meaning the sum of interest, bonus, and salaries exceed the net income. Therefore, share of each
partner should be decreased.
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9/13/22, 8:21 PM Course Hero

🥳 Thank you for your feedback!

hello, please answer with solution please thank you!

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miss_aanxoaa Answered 7 minutes ago

Lovable = 350,000 x 5/12 = P145,833

Jan-01 580,000 12/12 580,000

Mar-30 60,000 9/12 45,000

May-10 140,000 8/12 93,333

Jul-25 80,000 5/12 (33,333)

Average Capital 685,000

Jan-01 420,000 12/12 420,000

May-18 120,000 7/12 70,000

Aug-24 40,000 4/12 (13,333)

Oct-29 100,000 2/12 16,667

Average Capital 493,333

Intellectual Lovable Total

Interest (685,000 x 10%) 68,500 68,500

Interest (493,333 x 10%) 49,333 49,333

Remainder (350,000 - 68,500 - 49,333)/2 116,083 116,083 232,167

Total share of each partner 184,583 165,417 350,000

Step 1: Compute the ending capital of each partner.

Jan-01 580,000 Jan-01 420,000

Mar-30 60,000 May-18 120,000

May-10 140,000 Aug-24 (40,000)

Jul-25 (80,000) Oct-29 100,000

Ending Capital 700,000 Ending Capital 600,000

Step 2: Compute the ending capital ratio.

Step 3: Allocate the profit.

Intellectual Lovable Total

Salaries (multiply by 12 to get the annual salary) 108,000 90,000 198,000

Remainder (350,000 - 16,500) x 7/13 81,846 81,846

Remainder (350,000 - 16,500) x 6/13 70,154 70,154

Total share of each partner 189,846 160,154 350,000

Step 1: Compute the bonus for Intellectual.

Intellectual Lovable Total

Bonus 35,000 35,000

Remainder (350,000 - 35,000) x 685k/1,178,333 183,119 183,119

Remainder (350,000 - 16,500) x 493,333/1,178,333 131,881 131,881

Total share of each partner 218,119 131,881 350,000

Step 1: Compute the bonus of 10% after bonus.

Lovable = 420,000 x 6% = 25,200

Intellectual Lovable Total

Bonus 31,818 31,818

Interest 34,800 25,200 60,000

Remainder (350,000 - 91,818) x 3/5 154,909 154,909

Remainder (350,000 - 91,818) x 2/5 103,273 103,273

Step 1: Compute the average investment of each partner.

Mar-30 60,000 9/12 45,000

May-10 140,000 8/12 93,333

Average investment 138,333

May-18 120,000 7/12 70,000

Oct-29 100,000 2/12 16,667

Average investment 86,667

*Salaries = (12,000 x 12) +(9,000 x 12) = 252,000

Intellectual Lovable Total

Interest 3,100 3,100

Salaries 144,000 108,000 252,000

Bonus 9,490 9,490

Remainder (350,000 - 264,950) x 7/13 45,990 45,990

Remainder (350,000 - 264,950) x 6/13 39,420 39,420

Total share of each partner 202,580 147,420 350,000