Scribd
Upload
331 views3 pages

Quiz On Partnership Operations - Final Term Period (1) (Repaired)

The document presents a quiz on different methods for dividing partnership net income among three partners - Mah, Kee, and Sig. It provides the capital balances for each partner and the total net income for the year. It then asks to calculate the division of net income under five methods: 1) weighted average capital ratio, 2) allowing 6% interest on beginning capital and dividing the remainder 3:4:3, 3) allowing salaries and dividing the residual equally, 4) allowing Sig a 20% bonus on pre-bonus income and dividing the rest equally, 5) allowing Sig a 20% bonus on post-bonus income and dividing the remainder 4:3:3. Computations are shown for each method.

Uploaded by

Ceejay Mancilla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
331 views3 pages

Quiz On Partnership Operations - Final Term Period (1) (Repaired)

The document presents a quiz on different methods for dividing partnership net income among three partners - Mah, Kee, and Sig. It provides the capital balances for each partner and the total net income for the year. It then asks to calculate the division of net income under five methods: 1) weighted average capital ratio, 2) allowing 6% interest on beginning capital and dividing the remainder 3:4:3, 3) allowing salaries and dividing the residual equally, 4) allowing Sig a 20% bonus on pre-bonus income and dividing the rest equally, 5) allowing Sig a 20% bonus on post-bonus income and dividing the remainder 4:3:3. Computations are shown for each method.

Uploaded by

Ceejay Mancilla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 3

Quiz on Partnership Operations – Final Term Period

ADAPTED: Nelson S. Abeleda, Simplified Accounting for Partnership and Corporation, 2015 Edition,
Volume 2

Problem: The capital accounts of Mah, Kee, and Sig are shown below:

Mah Capital Kee Capital Sig Capital

Feb. 1 3,000 Jan. 1 15,000 April 1 9,000 Jan. 1 30,000 Nov.1 39,500 Jan. 1 35,000

Apr. 1 9,000 July 1 15,500 Jun.1 37,000

The net income for the year was P27,000.

Required: Show how the net income will be divided under each of the following methods and give the
entry to record the distribution of profits. (25 points)

a. Using the weighted average capital ratio.


b. 6% interest is allowed on the beginning capital and the balance is to be divided 3:4:3 for Mah,
Kee, and Sig respectively.
c. Salaries allowed: Mah, P3,600; Kee, P5,400; and Sig, P6,000. Residual income, equally.
d. Sig, the managing partner is allowed a bonus of 20% of the net income before bonus and the
balance is to be divided equally.
e. Sig, the managing partner is allowed a bonus of 20% of the net income after bonus and the
balance is to be divided in the ratio of 4:3:3 for Mah, Kee, and Sig respectively.

A. Using the weighted average capital ratio

Computation of the weighted average Mah capital

Date Capital balance Months unchanged Total

Jan. 1 P15,000 x 1= P15,000

Feb. 1 12,000 x 2= 24,000

Apr. 1 21,000 x 9= 189,000

12 = P228,000

Weighted average capital =228,000 / 12 = P19,000

Computation of the weighted average Kee capital


Date Capital balance Months unchanged Total

Jan 1 30,000 x 3= P90,000

April 1 21,000 x 3= 63,000

July 1 36,500 x 6= 219,000

12 = P372,000

Weighted average capital 372,000 / 12 = P31,000

Computation of the weighted average Sig capital

Date Capital balance Months unchanged Total

Jan1 35,000 x 5= 175,000

Jun 1 32,500 x 5= 162,500

Nov1 (4,500) x 2= (9,000)

12 = P328,500

Weighted average capital 546,000 / 12 = P27,375

19,000/77,375x27,000= 6630.05
31,000/77,375x27,000= 10817.45
27,375/77,375x27,000= 9552.50
=27,000

B. 6% interest is allowed on the beginning capital and the balance is to be divided 3:4:3 for Mah, Kee,
and Sig respectively.
Income and Expense Summary 27,000
Mah Capital 5,400
Kee Capital 13,800
Sig Capita; 12,600
Mah Kee Sig Total
Bonus (6% x 15,000, 30,000, 35,0000) 900 1,800 2,100 4,800
Balance 3:4:3 6,660 8,880 6,660 22,200
P7,560 P10,680 P8,760 P27,000

Computation of the bonus:


Net profit before bonus 106% P24,000
Less: Bonus 6% 4,000 (6% x 20,000)
Net profit after bonus 100% P20,000 (24,000/106%)

C. Salaries allowed: Mah, P3,600; Kee, P5,400; and Sig, P6,000. Residual income, equally.
Income and expense summary 27,000
Mah capital 7,600
Kee capital 9,400
Sig capital 10,000
Mah kee sig Total
Salaries 3,600 5,400 6,000 15,000
Residual income 4,000 4,000 4,000 12,000
P7,600 P9,400 P10,000 P 27,000

D. Sig, the managing partner is allowed a bonus of 20% of the net income before bonus and the
balance is to be divided equally.
Income and expense summary 27,000
Mah capital 7,2000
Kee capital 7,200
Sig capital 12,600
Mah Kee Sig Total
Bonus (20%x27,000) 5,400 5,400
Balance equally 7,200 7,200 7,200 21,600
P7,200 P7,200 P12,600 P 27,000

E. Sig, the managing partner is allowed a bonus of 20% of the net income after bonus and the balance
is to be divided in the ratio of 4:3:3 for Mah, Kee, and Sig respectively.
Income and expense summary 27,000
Mah capital
Kee capital
Sig capital
Mah Kee Sig Total
Bonus(20%x22,500) 4,500 4,500
Balance: 4:3:3 9,000 6,750 6,750 22,500
P9,000 P6,750 P11,250 P27,000
Computation of the bonus
Net Profit before bonus 120% 27,000
Less: bonus 20% 4,500
Net profit 100% P22,500

You might also like