1. A and B formed a partnership on March 1, 20x1.

The partnership agreement stipulates the following:

• Monthly salary allowances of ₱10,000 for A and ₱6,000 for B. Salary allowances are to be withdrawn by the partners throughout
the period and are to be debited to their respective drawings accounts.
• The partners share profits equally and losses on a 60:40 ratio.

During the period the partnership earned profit of ₱100,000 before salary allowances. How much is the share of Partner B in the
partnership profit?
a. 64,000
b. 60,000
c. 36,000
d. 0

2. The partnership agreement of A and B states the following:

• Monthly salary of ₱10,000 for A.
• 20% bonus to A, before deductions for salary, interest, and bonus.
• 10% interest on the weighted average capital of B.
• Balance is shared equally.

B’s weighted average capital balance is ₱200,000. The partnership reported profit of ₱60,000 for the year, net of salaries, bonus and
interest. How much is the share of B in the profit?
a. 50,000
b. 151,300
c. 48,700
d. 200,000

3. Mr. A, a partner in ABC Co., is deciding on whether to accept a salary of ₱8,000 or a salary of ₱5,000 plus a bonus of 10% of profit.
The bonus shall be computed on profit before salaries and bonus. Salaries of the other partners amount to ₱20,000. What amount of
profit would be necessary so that Mr. A would be indifferent between the choices?
a. 30,000
b. 33,000
c. 48,000
d. 58,000

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

• Monthly salaries of ₱6,000 for A and ₱2,000 for B.
• 20% bonus to A, after deductions for salary, interest, and bonus.
• 10% interest on the weighted average capital of B.
• Any remaining amount is shared equally

The partnership’s records show the following

Revenues 150,000
Expenses (including salaries, interest, and bonus) (120,000)
Profit 30,000

The movements in B’s Capital account are as follows:

Beginning 60,000
Mar. 1 20,000 additional investment
Aug. 1 (30,000) capital withdrawal
Oct. 1 40,000 additional investment
Dec. 31 10,000 additional investment

How much is the share of B in the partnership profit?

a. 93,000
b. 52,250
c. 46,250
d. 45,000

5. X, Y and Z are partners with average capital balances during 2018 of P120,000, P60,000 and P40,000, respectively. Partners receive
10% interest on their average capital balances. After deducting salaries of P30,000 to X and P20,000 to Y, the residual profit or loss is
divided equally. In 2018 the partnership sustained a P33,000 loss before interest and salaries to partners.

By what amount should X’s capital account change?

a. P7,000 increase
b. P11,000 decrease
c. P35,000 decrease
d. P42,000 increase
6. Hunt, Rob, Turman and Kelly own a publishing company that they operate as a partnership. The partnership agreement includes the
following:
Hunt receives a salary of P10,000 and a bonus of 3% of income after all bonuses.
Rob receives a salary of P5,000 and a bonus of 2% of income after all bonuses.
All partners are to receive 10% interest on their average capital balances.
The average capital balances are Hunt, P25,000; Rob, P22,500; Turman, P10,000 and
Kelly, P23,500. Any remaining profit and losses are to be allocated equally among the partners.

a. Hunt, P20,725; Rob, P14,975; Turman, P7,725; Kelly, P9,075

b. Hunt, P14,000; Rob, P8,250; Turman, P1,000; Kelly, P2,350
c. Hunt, P19,850; Rob, P14,600; Turman, P8,350; Kelly, P9,700
d. Cannot be determined.

XX and YY formed a partnership on January 2, 20x2 and agreed to share profits and loss in the ratio of 90% and 10%, respectively. XX
contributed capital of P6,250. YY contributed no capital but has a specialized expertise and manages the firm full time.

There were no withdrawals during the year. The partnership agreement provides for the
following:
Capital accounts are to be credited annually with interest at 5% of the beginning capital
YY is to be paid a salary of P250 a month
YY is to receive a bonus of 20% of net income calculated before deducting his salary and interest on both capital accounts
Bonus, interest, and YY’s salary are to be considered as partnership expenses

The partnership’s income statement for 2019 follows:

Revenues 24,112.5
Less: Expenses (including salaries, interest, and bonus) 12,245.0
Net Income 11,687.5

7. What is YY’s 20x2 bonus?

a. P2,922.00
b. P3,000.00
c. P3,750.00
d. P3,934.50

8. How much is the total share of YY on the 20x2 partnership net income?
a. P7,084.50
b. P7,162.50
c. P7,918.75
d. P8,097.00

9. The Trading Company, a partnership, was formed on January 1, 20x2, with four partners, DD, EE, FF, and GG. Capital contributions
were as follows: DD, P25,000; EE, P12,500; FF, P12,500; GG, P10,000. The partnership agreement provides that partners shall receive
5% interest in the amounts of their capital contributions. In addition, DD is to receive a salary of P2,500 and EE a salary of P1,500. The
agreement further provides that FF shall receive a minimum of P1,250 per annum from the partnership and GG a minimum of P3,000 per
annum, both including amounts allowed as interest on capital and their respective shares of profits. The balance of the profits is to be
shared in the following proportions: DD, 30%; EE, 30%; FF, 20%; and GG, 20%. Calculate the amount that must be earned by the
partnership during 20x2, before any charges for interest on capital or partners’ salaries, in order that DD may receive an aggregate of
P6,250 including interest, salaries and share of profits.
a. P 8,333.33
b. P 15,000.00
c. P15,333.33
d. P16,166.67

10. Linda and Mario created a partnership to own and operate a health-food store. The partnership agreement provided that Linda
receives an annual salary of P10,000 and Mario a salary of P5,000 to recognize their relative time spent in operating the store. Remaining
profits and losses were divided 60:40 to Linda and Mario, respectively. Income of P13,000 for 20x1, the first year of operations, was
allocated P8,800 to Linda and P4,200 to Mario. On January 1, 20x2, the partnership agreement was changed to reflect the fact that Mario
could no longer devote any time to the store’s operations. The new agreement allows Linda a salary of P18,000, and the remaining profits
and losses are divided equally. In 20x2, an error was discovered such that 20x1 reported income was understated by P4,000. The
partnership income of P25,000 for 20x2 included this P4,000 related to 20x1.

In the reported new income of P25,000 for the year 20x2, Linda would have
a. P21,900
b. P17,100
c. P0
d. P12,500

11. Derha, a senior partner in a law firm, has a 30% participation in the firm’s profit and losses. During 2018, Derha withdrew P130,000
against her capital but contributed property with a fair value of P25,000. Derha’s capital increased by P15,000 during 2018.
The net income of the partnership for 2018 is
a. P150,000
b. P400,000
c. P350,000
d. P550,000

12. Elmo, Fred and Greg invest P40,000, P30,000 and P25,000 respectively, in a partnership on June 30, 20x1. They agree to divide net
income or loss as follows:
A. Interest at 10% on beginning capital account balances
B. Salaries of P10,000, P8,000 and P6,000, respectively to Elmo, Fred and Greg, respectively.
C. Remaining net income or loss is divided equally
D. A minimum of P18,000 of income is guaranteed to Greg regardless of the result of operations.

If the net income for the year ended June 30, 20x2 before interest and salaries allowances to partners was P44,000, the amount of the
net income credited to Elmo is:
a. P21,875
b. P20,000
c. P18,334
d. P14,500

13. The partnership agreement of A and B states the following:

Monthly salary of ₱10,000 for A.
20% bonus to A, before deductions for salary, interest, and bonus.
10% interest on the weighted average capital of B.
Balance is shared equally.
B’s weighted average capital balance is ₱200,000. The partnership reported profit of ₱60,000 for the year, net of salaries, bonus and
interest. How much is the share of B in the profit?
a. 50,000
b. 151,300
c. 48,700
d. 200,000

14. The partnership agreement of partners A, B and C stipulates the following:

A shall receive a salary of ₱40,000.
Interest of 10% shall be computed on the partners’ capital contributions of ₱40,000, ₱100,000 and ₱200,000.
Balance is divided among the partners on a 2:3:5 ratio. However, C is guaranteed a minimum share of ₱40,000, inclusive of interest,
if the partnership earns profit.

How much is the minimum level of profit necessary so that A shall receive a total of ₱50,000, inclusive of salary, interest and share in
remaining profit, and C shall also receive his guaranteed minimum share?
a. 109,000
b. 110,000
c. 112,000
d. 120,000

15. Left and Right are partners. Their capital accounts during 20x2 were as follows:

Partnership net income is P25,000 for the year. The partnership agreement provides for the division of net income as follows:
Each partner is credited 10 percent interest on his or her average capital (rounded to the nearest month)
Because of prior work experience of Left is entitled to an annual salary of P6,000 and Right is credited with P4,000
Any remainder income or loss is to be allocated based on the beginning capital

How much of the partnership net income for 20x2 should be assigned to Left and Right?
a. Left, P11,833.33; Right, P13,166.50
b. Left, P9,375; Right, P15,625
c. Left, P13,194; Right, P11,806
d. Left, P12,500; Right, P12,500

16. Temporary withdrawals made by the partner is posted in ledger as

a. Partner’s drawing, debit
b. Partner’s drawing, credit
c. Partner’s capital, debit
d. Partner’s capital, credit

17. According to the Philippine Civil Code, in the absence of an agreement, profit and loss are divided by partners in the ratio of:
a. Capital contributions
b. Equally
c. Time devoted by each of the partners
d. Goodwill

18. Which of the following is not a component of the formula used to distribute partnership profits to the partners?
a. Salary allocation to those partners working.
b. After all other allocation, the remainder divided according to the profit and loss sharing ratio.
c. Interest on the average capital investments.
d. Interest on loans to partners

19. The Red and black partnership agreement provides for Red to receive a 20% bonus on profits before the bonus. Remaining profits
and losses are divided between Red and black in the ratio of 2:3, respectively. Which partner has a greater advantage when the
partnership has a profit or when it has a loss?

Profit Loss
a. Red Black
b. Red Red
c. Black Red
d. Black Black

20.Statement 1: An industrial partner is exempt from sharing in partnership losses

Statement 2: Salaries to partners and interest on partners' capitals are accounted for as expenses of the partnership
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect