CHAPTER 3

Partnership Operations

E 3-1

1. Borres = 250/500 x P300,000 = P150,000

Buendia = 150/500 x P300,000 = P90,000
Bustos = 100/500 x P300,000 = P60,000

2. Borres = 3 / 6 x P300,000 = P150,000

Buendia = 1 / 6 x P300,000 = P50,000
Bustos = 2 / 6 x P300,000 = P100,000

E 3-2

Income Summary 500,000

Banal, Capital 237,250
Benson, Capital 262,750
Banal Benson Total
10% Interest on average capital P 89,000 P114,500 P203,500
Remainder – divided equally 148,250 148,250 296,500
Total P237,250 P262,750 P500,000

Computation of average capital

Banal 1/01 - 3/31 P800,000 x 3 P 2,400,000
4/01 - 8/31 960,000 x 5 4,800,000
9/01 – 10/31 840,000 x 2 1,680,000
11/01 – 12/31 900,000 x 2 1,800,000
P10,680,000 / 12 P890,000

Benson 1/01 - 2/28 P1,200,000 x 2 P 2,400,000

3/01 - 6/30 1,020,000 x 4 4,080,000
7/01 - 9/30 1,160,000 x 3 3,480,000
10/01 – 12/31 1,260,000 x 3 3,780,000
P13,740,000 / 12 P1,145,000

E 3-3

Benito Bunye Total

a. Interest of 10% on excess average capital P 40,000 P 40,000
Salaries 500,000 P300,000 800,000
Remainder – divided in the ratio of 70:30 42,000 18,000 60,000
Total P582,000 P318,000 P 900,000

b. Interest of 10% on excess average capital P 40,000 P 40,000

Salaries 500,000 P300,000 800,000
Remainder –divided in the ratio of 70:30 ( 98,000) ( 42,000) ( 140,000)
Total P442,000 P258,000 P 700,000
PC – Chapter 3 page 2

E 3-4
1. Blanco = 120/300 x P120,000 = P48,000; Banda = 180/300 x P120,000 = P72,000

2. Blanco = 120/300 x P120,000 = P48,000; Banda = 180/300 x P120,000 = P72,000

3. Blanco Banda Total

Interest of 8% on original investment P 9,600 P14,400 P 24,000
Balance – divided equally 48,000 48,000 96,000
Total P57,600 P62,400 P120,000

4. Blanco Banda Total

Salaries to partners P 54,000 P 45,000 P 99,000
Balance – divided equally 10,500 10,500 21,000
Total P 64,500 P 55,500 P120,000

5. Blanco = 50/125 x P120,000 = P48,000; Banda = 75/125 x P120,000 = P72,000

E 3-5
1. Bueno Beran Total
Interest of 8% on beginning capital P 96,000 P108,000 P204,000
Salaries to partners 450,000 225,000 675,000
Balance – divided 3:2 ( 77,400) ( 51,600) ( 129,000)
Total P468,600 P281,400 P750,000

2. Beran = P750,000 x 2/5 = P300,000; however, minimum guaranteed amount to Beran is P320,000
Bueno = P750,000 – P320,000 = P430,000

E 3-6
Net income after salaries, interest and bonus P374,000
Interest (P200,000 x 10 %) P20,000
Salaries 96,000 116,000
Net income before interest and salaries P490,000
Bonus rate x 25%
Amount of bonus to be credited to Basco P 122,500

E 3-7

Income before income tax = P650,000 / 65% = P1,000,000

1. B = .05 x P1,000,000 = P50,000

2. B = .05 (P1,000,000 – B)
= P50,000 / 1.05
= P47,619

3. B = .05 (P1,000,000 – T)
T = .35 (P1,000,000) = P350,000

B = .05 (P1,000,000 – P350,000)

= .05 (P650,000)
= P32,500
PC – Chapter 3 page 3

4. B = .05 (P1,000,000 – B – T)
T = .35 (P1,000,000) = P350,000

B = .05 (P1,000,000 – B – P350,000)

= .05 (P650,000 – B)
= P32,500 / 1.05
= P30,952

E 3-8
1. Balbin Bagtas Banta Total
Capital balances P240,000 P200,000 P200,000 P 640,000
Required capital 256,000 224,000 160,000 640,000
Cash received (paid) (P 16,000) (P 24,000) P 40,000 ----

Banta, Capital 40,000

Balbin, Capital 16,000
Bagtas, Capital 24,000

2. Balbin Bagtas Banta Total

Capital balances P240,000 P200,000 P200,000 P 640,000
Required capital 320,000 280,000 200,000 800,000
Additional investment P 80,000 P 80,000 -------- P 160,000

P240,000 / 40% = P600,000; P200,000 / 35% = P571,428; P200,000 / 25% = P800,000

Cash 160,000
Balbin, Capital 80,000
Bagtas, Capital 80 000

3. Balbin Bagtas Banta Total

Capital balances P240,000 P200,000 P200,000 P640,000
Required capital 240,000 210,000 150,000 600,000
Additional investment(withdrawals) -------- 10,000 (P50,000) P 40,000

Banta, Capital 50,000

Bagtas, Capital 10,000
Cash 40,000

E 3-9
Drawings charged against capital P520,000
Less Additional investment 100,000
Decrease in capital P420,000
Less Net decrease in capital 240,000
Share in net income P 180,000
Profit share  25%
Net income of the partnership P720,000
PC – Chapter 3 page 4

P 3-1
1. Income Summary 600,000
Bondoc, Capital 360,000
Barba, Capital 240,000
Bondoc = P600,000 x 60% = P360,000
Barba = P600,000 x 40% = P240,000

2. Income Summary 600,000

Bondoc, Capital 350,000
Barba, Capital 250,000
Bondoc = P600,000 x 210/360 = P350,000
Barba = P600,000 x 150/360 = P250,000

3. Income Summary 600,000

Bondoc, Capital 400,000
Berba, Capital 200,000
Bondoc = P600,000 x 255,000/382,500* = P400,000
Barba = P600,000 x 127,500/382,500** = P200,000

* Jan. 1 – Apr. 30 P210,000 x 4 = P 840,000

May 1 – Sept. 30 300,000 x 5 = 1,500,000
Oct. 1 - Dec. 31 240,000 x 3 = 720,000
P3,060,000 / 12 P255,000

**Jan. 1 – Mar. 31 P150,000 x 3 = P 450,000

Apr. 1 – Dec. 31 120,000 x 9 = 1,080,000
P1,530,000 / 12 127,500
P382,500

4. Income Summary 600,000

Bondoc, Capital 305,100
Barba, Capital 294,400
Bondoc Barba Total
8% interest on ave. cap. P 20,400 P 10,200 P 30,600
Balance – equally 284,700 284,700 569,400
P305,100 P294,900 P600,000

5. Income Summary 600,000

Bondoc, Capital 376,000
Barba, Capital 224,000
Bondoc Barba Total
Salaries P120,000 P 96,000 P216,000
Bal. – ending cap. ratio 256,000 128,000 384,000
P376,000 P224,000 P600,000
PC – Chapter 3 page 5

6. Income Summary 600,000

Bondoc, Capital 300,000
Barba, Capital 300,000
Bondoc Barba Total
Bonus P150,000 P150,000
Bal. – ave. capital ratio P300,000 150,000 450,000
P300,000 P300,000 P600,000
Bonus P600,000 x 1/3 divided by 1 1/3 = P150,000

P 3-2
1. Income Summary 700,000
Bernal, Capital 505,800
Burgos, Capital 194,200
Bernal Burgos Total
8% int. on beg. capital P 28,800 P 35,200 P 64,000
Balance – 3: 1 477,000 159,000 636,000
P505,800 P194,200 P700,000

2. Income Summary 700,000

Bernal, Capital 284,000
Burgos, Capital 416,000
Bernal Burgos Total
Salaries P 140,000 P260,000 P400,000
12% int. on ending capital 48,000 60,000 108,000
Balance – equally 96,000 96,000 192,000
P284,000 P416,000 P700,000

3. Income Summary 700,000

Bernal, Capital 394,150
Burgos, Capital 305,850
Bernal Burgos Total
Salaries P 90,000 P 170,000 P260,000
12% int. on ave. cap.* 49,000 50,800 99,800
Balance – 3:1 255,150 85,050 340,200
P394,150 P305,850 P700,000

* Jan. 1 – May 31 P360,000 x 5 = P1,800,000

June 1 – Oct. 31 460,000 x 5 = 2,300,000
Nov. 1 – Dec. 31 400,000 x 2 = 800,000
P7,900,000 / 12 P408,333

Jan. 1 – June 30 P440,000 x 6 = P 2,640,000

July 1 – Oct. 31 360,000 x 4 = 1,4400,000
Nov. 1 – Dec. 31 500,000 x 2 = 1,000,000
P5,080,000 / 12 P423,333

4. Income Summary 700,000

PC – Chapter 3 page 6

Bernal, Capital 267,567

Burgos, Capital 432,433
Bernal Burgos Total
Salaries P 100,000 P200,000 P300,000
10% int. on ave. capital 40,833 42,333 83,166
Balance – 40%, 60% 126,734 190,100 316,834
P267,567 P432,433 P700,000

5. Income Summary 700,000

Bernal, Capital 329,360
Burgos, Capital 370,640
Bernal Burgos Total
Salaries P100,000 P100,000 P200,000
8% int. on beg. capital 28,800 35,200 64,000
Bonus -.10 (NI – S – I ) 43,600 43,600
Balance – 2:3 156,960 235,440 392,400
P329,360 P370,640 P700,000

P 3-3
Bilbao Bertol Borja Total
1. 6% interest on capital P 33,600 P 24,000 P 14,400 P 72,000
Salaries 96,000 80,000 176,000
Balance – 5:3:2 (149,000) ( 89,400) ( 59,600) (298,000)
Total P(115,400) P 30,600 P 34,800 P(50,000)

2. 6% interest on capital P 33,600 P 24,000 P ,14400 P 72,000

Salaries 96,000 80,000 176,000
Balance – 5:3:2 ( 64,000) ( 38,400) ( 25,600) (128,000)
Total P( 30,400) P 81,600 P 68,800 P120,000

3. 6% interest on capital P 33,600 P 24,000 P 14,400 P 72,000

Salaries 96,000 80,000 176,000
Bonus 27,000 27,000
Balance – 5:3:2 112,500 67,500 45,000 225,000
Total P 146,100 P214,500 P 139,400 P500,000

P 3-4

1. Basa Benito Beltran Bagnes Total

Salaries P400,000 P200,000 P 600,000
Bonus 60,000 40,000 100,000*
Interest 100,000 90,000 P 40,000 P 94,000 324,000
Balance 269,000 269,000 269,000 269,000 1,076,000
Total P829,000 P599,000 P309,000 P363,000 P2,100,000

*B = 5% (P2,100,000 – B) = P100,000 x 3/5 = P60,000

x 2/5 = 40,000
PC – Chapter 3 page 7

2. Basa Benito Beltran Bagnes Total

Salaries P 400,000 P 200,000 P 600,000
Interest 100,000 90,000 P 40,000 P 94,000 324,000
Balance (431,000) (431,000) (431,000) (431,000) (1,724,000)
Total P 69,000 P(141,000) P (391,000) (P337,000) (P800,000)

3. Basa Benito Beltran Bagnes Total

Interest P 100,000 P 90,000 P 40,000 P 94,000 P 324,000
Bonus 22,857 15,238 38,095
Salaries 291,937 145,968 437,905*
Total P 414,794 P 251,206 P 40,000 P 94,000 P 800,000

B = 5% (P800,000 – B) = P38,095 x 3/5 = P22,857; P38,095 x 2/5 = P15,238

*P437,905 x 4/6 = P291,937; P437,905 x 2/6 = P145,968

P 3-5
1. Bente Bala Total
5% interest on capital P25,000 P 15,000 P 40,000
Salaries 120,000 80,000 200,000
20% bonus on net income 221,000 221,000
Balance – capital ratio 402,500 241,500 644,000
Total P768,500 P 336,500 P1,105,000

2. Sales 4,800,000
Cost of Goods Sold 2,100,000
Operating Expenses 1,000,000
Income Taxes 595,000
Income Summary 1,105,000

Income Summary 1,105,000

Bente, Capital 768,500
Bala, Capital 336,500

Bente, Capital 60,000

Bala, Capital 100,000
Bente, Drawing 60,000
Bala, Drawing 100,000

Bente and Bala Partnership

PC – Chapter 3 page 8

Statement of Changes in Partners’ Equity

For the Year Ended December 31, 2009

Bente Bala Total

Capital balances, January 1, 2009 P 500,000 P300,000 P 800,000
Add Distribution of net income for 2009:
Interests P 25,000 P 15,000 P 40,000
Salaries 120,000 80,000 200,000
Bonus 221,000 221,000
Balance - capital ratio 402,500 241,500 644,000
Total share in net income P 768,500 P 336,500 P1,105,000

Total P1,268,500 P 636,500 P1,905,000

Less Drawings 60,000 100,000 160,000
Capital balances, December 31, 2009 P1,208,500 P 536,500 P1,745,000

P 3-6
1. Net sales (P1,525,000 – P25,000) P1,500,000
Cost of goods sold:
Purchases P980,000
Less Merchandise inventory, end 365,000 615,000
Gross profit P 885,000
Operating expenses (300,000 – 12,500 – 5,000 + 7,500 + 30,000) 320,000
Income before income tax P 565,000
Income tax 197,750
Net income P 367,250

2. Brenda Brosas Total

Salaries (P150,000 x 8/12) P100,000 P100,000
Additional 10% of NI after salaries 26,725 26,725
Balance – original capital 150,328 P 90,197 240,525
Total P277,053 P90,197 P367,250

3. Brenda Brosas Total

Beginning capital P625,000 P375,000 P1,000,000
Add Share in net income 277,053 90,197 367,250
Total P902,053 P465,197 P1,367,250
Less Drawings 100,000 150,000 250,000
Ending capital P802,053 P315,197 P1,117,250

P 3-7
Be on Top Company
PC – Chapter 3 page 9

Income Statement
For the Year Ended December 31, 2009

Sales P5,100,000
Cost of goods sold:
Purchases P4,920,000
Less: Purchase returns and allowances P 99,000
Purchase discounts 138,000 237,000
Cost of goods available for sale P4,683,000
Less Merchandise inventory, December 31 1,446,000 3,237,000
Gross profit P1,863,000
Other operating income – interest 27,000
Selling expenses (schedule 1) ( 530,000)
Administrative and general expenses (schedule 2) ( 801,800)
Operating income P 558,200
Interest expense ( 30,000)
Net income before Income Tax 528,200
Income Taxes 184,870
Net Income after Income Tax P 343,330

Division o net income:

Bathan Buenas Total
Interest P 60,000 P 48,900 P108,900
Salaries 100,000 100,000
Balance – divided equally 67,215 67,215 134,430
Total P227,215 P116,115 P343,330

Schedule 1 – Selling expenses Schedule 2 – General and administrative expenses

Sales salaries P480,000 Taxes P 36,500
Store supplies 19,200 Doubtful accounts 9,300
Depreciation 21,300 Others 756,000
Advertising 9,500 Total P801,800
P530,000

Be on Top Company
Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2009

Bathan Buenas Total

Original capital P600,000 P489,000 P1,089,000
Add Share in net income 227,215 116,115 343,330
Total P827,215 P605,115 P1,432,330
Less Drawing 144,000 54,000 198,000
Capital, December 31, 2008 P683,215 P551,115 P1,234,330

Be on Top Company
Statement of Financial Position
December 31, 2009
PC – Chapter 3 page 10

Assets
Current assets:
Cash P582,750
Notes receivable 120,000
Accounts receivable P186,000
Less Allowance for doubtful accounts 9,300 176,700
Interest receivable 6,000
Merchandise inventory 1,446,000
Prepaid taxes 10,000
Store supplies 16,800 P2,358,250
Noncurrent assets
Store furniture P222,000
Less Accumulated depreciation 21,300 200,700
Total assets P2,558,950
Liabilities and Capital
Current liabilities;
Notes payable P 360,000
Accounts payable 756,000
Advertising payable 9,500
Taxes payable 10,500
Interest payable 3,750
Income Tax Payable 184,870
Total liabilities P1,324,620

Bathan, capital P 683,215

Buenas, capital 551,115
Total partners’ capital 1,234,330
Total liabilities and capital P2,558,950

3. Adjusting entries
Adjustment for inventories is included in the closing entries

a. Store Supplies Expense 19,200

Store Supplies 19,200

b. Depreciation Expense 21,300

Accumulated Depreciation 21,300

c. Advertising Expense 9,500

Advertising Payable 9,500

d. Prepaid Taxes 10,000

Taxes 10,000

e. Taxes 10,500
Taxes Payable 10,500
f. Interest Expense 3,750
Interest Payable 3,750
PC – Chapter 3 page 11

g. Interest Receivable 6,000

Interest Revenue 6,000

h. Doubtful Accounts Expense 9,300

Allowance for Doubtful Accounts 9,300

i. Income Tax 184,870

Income Tax Payable 184,870

Closing entries
a. Merchandise Inventory 1,446,000
Interest Revenue 27,000
Purchase Returns and Allowances 99,000
Purchase Discounts 138,000
Sales 5,100,000
Income Summary 6,810,000

b. Income Summary 6,466,670

General Expenses – Others 756,000
Interest Expense 30,000
Purchases 4,920,000
Sales Salaries 480,000
Taxes 36,500
Store Supplies Expense 19,200
Depreciation Expense 21,300
Advertising Expense 9,500
Doubtful Accounts Expense 9,300
Income Taxes 184,870

c. Income Summary 343,330

Bathan, Capital 227,215
Buenas, Capital 116,115

d. Bathan, Capital 144,000

Buenas, Capital 54,000
Bathan, Drawing 144,000
Buenas, Drawing 54,000

P 3-8
Bacani, Badeo and Barte
Statement of Changes in Partners’ Equity
PC – Chapter 3 page 12

For the Three Years Ending December 31, 2009

Bacani Badeo Barte Total

Original capital P1,000,000 P500,000 P 400,000 P1,900,000
Less: Share in net loss – 2007 (sch. 1) ( 8,000) ( 14,000) ( 20,000) ( 42,000)
Drawing (72,000) (86,800) ( 96,000) (254,800)
Capital, January 1, 2008 P 920,000 P 399,200 P 284,000 P1,603,200
Add Share in net income – 2008 (sch. 2) 107,200 99,952 93,040 300,192
Total P1,027,200 P 499,152 P 377,040 P1,903,392
Less Drawing 139,600 163,200 177,200 480,000
Capital, January 1, 2009 P 887,600 P 335,952 P 199,840 P1,423,392
Add Share in net income – 2009 (sch. 3) 170,855 153,656 145,489 470,000
Total P1,058,455 P 489,608 P 345,329 P1,893,392
Less Drawing 163,200 195,200 169,600 528,000
Capital, December 31, 2009 P 895,255 P 294,408 P 175,729 P1,365,392

Schedule 1 – Distribution of 2007 net loss

Bacani Badeo Barte Total
Salaries P 96,000 P 120,000 P 120,000 P336,000
Interest on beginning capital 60,000 30,000 24,000 114,000
Balance – equally ( 164,000) ( 164,000) ( 164,000) ( 492,000)
Total P( 8,000) P( 14,000) P(20,000) P( 42,000)

Schedule 2 – Distribution of 2008 net income

Bacani Badeo Barte Total
Salaries P 96,000 P 120,000 P 120,000 P336,000
Interest on beginning capital 55,200 23,952 17,040 96,192
Balance – equally ( 44,000) ( 44,000) ( 44,000) ( 132,000)
Total P 107,200 P 99,952 P 93,040 P300,192

Schedule 3 – Distribution of 2009 net income

Bacani Badeo Barte Total
Salaries P 96,000 P 120,000 P 120,000 P336,000
Interest on beginning capital 53,256 20,157 11,990 85,403
Bonus 8,100 8,100
Balance – equally 13,499 13,499 13,499 40,497
Total P 170,855 P 153,656 P 145,489 P470,000
Bonus = P470,000 – (P336,000 + P85,403) x 20/120 = P8,100

P 3-9
1. Balmes = 5/10 x 80% = 40%
Bamban = 3/10 x 80% = 24%
Buela = 2/10 x 80% = 16%
Bagnes 20%

2. Corrected net income = P500,000 – ( P24,000 - P62,000 - P40,000 + P30,000 + P18,000

x 65%) = P480,500
PC – Chapter 3 page 13

Balmes = P480,500 x 40% = P192,200 Buela = P480,500 x 16% = P76,880

Bamban = P480,500 x 24% = P115,320 Bagnes = P480,500 x 20% = P96,100

Multiple Choice
1. B Jan. 1 – Mar. 31 P 80,000 x 3 = P 240,000
Apr. 1 – May 31 96,000 x 2 = 192,000
June 1 – Aug. 31 112,000 x 3 = 336,000
Sept. 1 – Dec. 31 72,000 x 4 = 288,000
P1,056,000 / 12 = P88,000

2. B Bañas Belda
Capital beg. P 120,000 P 118,000
Share in net loss (32,000) (16,000)
P88,000 P102,000

3. A Bernardo Belo
Salaries P 110,000 P 90,000
Balance – 60:40 (12,000) (8,000)
P98,000 P82,000

4. D Bustos
Net Profit P220,000
Bonus P220,000 x 10%/110% (20,000) 20,000
Interest P220,000 – P200,000 = P20,000 x 10% (2,000)
Salaries ( 44,000) 24,000
Balance P 154,000
Share of Bustos x 2/10 30,800
Total profit share of Bustos P74,800
5. A Banta:
Jan. 1 – June 30 P200,000 x 6 = P 1,200,000
Jul. 1 - Dec. 31 320,000 x 6 = 1,920,000
P 3,120,000 / 12 = P260,000 x 10% = P26,000

Berba: P300,000 x 10% = 30,000

Borja:
Jan. 1 – Sept. 30 P450,000 x 9 = P4,050,000
Oct. 1 – Dec. 31 310,000 x 3 = 930,000
P4,980,000/12 = P415,000 x 10% = 41,500
P97,500

6. B Salaries = P120,000 + P96,000 + P72,000 P 288,000

Interest 97,500
Balance = P10,000 x 3 30,000
Total P 415,500

7. D Original capital P 950,000

Additional investment 120,000
Withdrawals ( 140,000)
PC – Chapter 3 page 14

Net income 415,500

Total partnership capital P1,345,500
8. B Besa Basco Buan Baduel Total
Interest P 7,500 P3,750 P3,750 P3,000 P18,000
Salaries 15,000 9,000 24,000
Add’l profit to Baduel 5,000 5,000
Balance 15,000* 15,000 10,000 10,000 50,000
P37,500 P27,750 P13,750 P18,000 P97,000
*P37,500 – P7,500 – P15,000 = P15,000/30% = P50,000
9. B
10. D

11. C try distributing any profit or loss

12. C Bulan Bustos Bucao Total

Salaries P24,000 P18,000 P12,000 P 54,000
Interest 19,500 24,700 29,400 73,600
Balance – 2:4:4 10,480 20,960 20,960 52,400
Total P53,980 P63,660 P62,360 P180,000
Bulan
Jan. 1 – July 1 P150,000 x 6 = P 900,000
July 1 – Oct. 1 180,000 x 3 = 540,000
Oct. 1 – Dec. 31 170,000 x 3 = 510,000
P1,950,000 / 12 = P162,500
Bustos
Jan. 1 – Aug. 1 P200,000 x 7 = P1,400,000
Aug. 1 – Oct. 1 220,000 x 2 = 440,000
Oct. 1 – Dec. 31 210,000 x 3 = 630,000
P2,470,000 / 12 = P205,833
Bucao
Jan. 1 – Nov. 1 P250,000 x 10 = P2,500,000
Nov. 1 – Dec. 31 220,000 x 2 = 440,000
P2,940,000 / 12 = P245,000

13. A Bulan Bustos Bucao

Original capital P150,000 P200,000 P250,000
Additional investment 30,000 20,000
Withdrawals ( 10,000) ( 10,000) ( 30,000)
Share in net income 53,980 63,660 62,360
Capital, Dec. 31, 2005 P223,980 P273,660 P282,360

14. D Briones Balen Burgos Total

Interest P 94,500 P 47,730 P 32,470 P174,700
Salaries 244,650 165,250 409,900
Balance –Equally (278,616) (278,616) (278,616) (835,848)
PC – Chapter 3 page 15

Total P 60,534 (P80,896) (P251,248)

TM 10
1. F 5. T 9. F 13. T 17. T
2. F 6. F 10. T 14. T 18. F
3. T 7. T 11. T 15. F 19. T
4. T 8. T 12. T 16. T 20. T

TM 11
1. F 4. B 7. C 10. E 13. J
2. G 5. A 8. H 11. L 14 N
3. M 6. P 9. D 12. O 15. Q

TM 12
1. D
2. B
3. B
4. C
5. C
6. C Beltran Barba Total
Capital beginning P400,000 P500,000 P900,000
Share in net income-equally 200,000 200,000 400,000
Share in net loss – 2:1 ( 160,000) ( 80,000) ( 240,000)
Capital, end P440,000 P620,000 P1,060,000

7. D P2,500,000 + (P1,800,000 + P400,000) = P4,700,000 – P2,000,000 = P2,700,000

8. B Beran and Banda = 300/1,100 x P1,100,000 = P300,000;

Banjo = 500/1,100 x P1,100,000 = P500,000

9. B Banzon Borja Total

Salaries P160,000 P200,000 P360,000
Interest on beginning capital 36,000 60,000 96,000
Remainder – equally 72,000 72,000 144,000
Total P268,000 P332,000 P600,000

10. B P520,000 – P100,000 – P240,000 = P180,000 / 20% = P900,000

11. D Jan. 1 – June 30 P 840,000 x 6 = P5,040,000

July 1 – July 31 1,080,000 x 1 = 1,080,000
Aug. 1 – Dec. 31 990,000 x 5 = 4,950,000
P11,070,000/12 = P922,500 x12%=P110,700

12. C Basilio Bituin Total

Salaries P220,000 P 180,000 P400,000
Remainder – 60:40 ( 24,000) ( 16,000) ( 40,000)
Total P 196,000 P 164,000 P360,000

13. A P1,000,000 + (P1,800,000 x 20%) – P200,000 = P1,160,000

14. C P600,000 + P200,000 = P800,000/2 = P400,000
15. B P450,000 x 60% = P270,000
PC – Chapter 3 page 16

TM 13
Problem A

Beltran, Bernal and Basco Partnership

Schedule of the Distribution of Partnership Profit

Beltran Bernal Basco Total

Salaries P57,600 P48,000 P38,400 P144,000
Interest 34,560 46,080 66,240 146,880
Balance – equally 55,040 55,040 55,040 165,120
Total distribution of net income P147,200 P149,120 P159,680 P456,000

Beltran, Bernal and Basco Partnership

Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2009

Beltran Bernal Basco Total

Original capital P384,000 P576,000 P864,000 P 1,824,000
Add: Additional investment 96,000 96,000
Share in net income 147,200 149,120 159,680 456,000
Total P627,200 P725,120 P1,023,680 P2,376,000
Less Drawing ( 48,000) ( 48,000) (192,000) ( 288,000)
Capital, December 31, 2008 P579,200 P677,120 P831,680 P2,088,000

Problem B

1.
Double B Partnership
Income Statement
For the Year Ended December 31, 2009

Sales P1,800,000
Cost of goods sold:
Inventory, January 1 P 800,000
Purchases 1,200,000
Cost of goods available for sale P2,000,000
Less Inventory, December 31 1,100,000 900,000
Gross profit P900,000
Operating expenses:
Depreciation – building P30,000
Depreciation – furniture and fixtures 30,000
Other operating expenses 300,000 360,000
Net income before Income Tax P540,000
Income Tax 189,000
Net Income after Income Tax P351,000
2. Net income is allocated as follows:
Bilbao Bragas Total
Salaries P240,000 P240,000 P480,000
Interest on beginning capital 75,000 62,000 137,000
PC – Chapter 3 page 17

Remainder -2:3 (106,400) (159,600) (266,000)

Total P208,600 P142,400 P351,000

Income Summary 351,000

Bilbao, Capital, 208,600
Bragas, Capital 142,400

3. Bilbao, Capital 200,000

Bragas, Capital 240,000
Bilbao, Drawing 200,000
Bragas, Drawing 240,000

Double B Partnership
Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2009

Bilbao Bragas Total

Capital, January 1 P1,300,000 P1,240,000 P2,540,000
Add: Additional investment 200,000 200,000
Share in net income 208,600 142,400 351,000
Total P1,708,600 P1,382,400 P3,091,000
Less Drawing 200,000 240,000 440,000
Capital, December 31 P1,508,600 P1,142,400 P2,651,000