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Partnership Operations - Problems A-D

The document outlines several methods for distributing annual net income between two partners, Sam and Neneng, based on their capital contributions. It provides journal entries for closing net income to partner capital accounts under different distribution scenarios from 2019 to 2020, including equal division, division based on capital ratio, interest on capital, salaries, and a combination approach. The scenarios calculate each partner's share of net income and record the closing journal entries under different distribution methods for the years 2019 and 2020. It tests various formulas for determining each partner's share of profits based on factors like capital contributions, interest earned on capital, salaries, and residuals after other distributions to evaluate different partnership

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Jasmine Acta
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211 views19 pages

Partnership Operations - Problems A-D

The document outlines several methods for distributing annual net income between two partners, Sam and Neneng, based on their capital contributions. It provides journal entries for closing net income to partner capital accounts under different distribution scenarios from 2019 to 2020, including equal division, division based on capital ratio, interest on capital, salaries, and a combination approach. The scenarios calculate each partner's share of net income and record the closing journal entries under different distribution methods for the years 2019 and 2020. It tests various formulas for determining each partner's share of profits based on factors like capital contributions, interest earned on capital, salaries, and residuals after other distributions to evaluate different partnership

Uploaded by

Jasmine Acta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Requirement 1

Account Titles and Explanation P.R. Debit

Cash 2,400,000.00
Sam, Capital
To record Sam's contribution

Building 2,200,000.00
Equipment 1,400,000.00
Neneng, Capital
To reocrd Neneng's contribution

Requirement 2
A. 2019 SAM
Divided Equally (840,000/2) 420,000.00

Account Titles and Explanation P.R. Debit

Income Summary 840,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

2020 SAM
Divided Equally (400,000/2) 200,000.00

Account Titles and Explanation P.R. Debit

Income Summary 400,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

B. 2019 SAM
Sam (2,400,000/6,000,000) * 840,000 336,000.00
Neneng (3,600,000 / 6,000,000) * 840,000
Total Share in Profit 336,000.00
Account Titles and Explanation P.R. Debit

Income Summary 840,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

2020 SAM
Sam (2,400,000/6,000,000) * 400,000 160,000.00
Neneng (3,600,000 / 6,000,000) * 400,000
Total Share in Profit 160,000.00

Account Titles and Explanation P.R. Debit

Income Summary 400,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

C. 2019 SAM
Sam (2,400,000/6,000,000) * 840,000 336,000.00
Neneng (3,600,000 / 6,000,000) * 840,000
Total Share in Profit 336,000.00

Account Titles and Explanation P.R. Debit

Income Summary 840,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

2020 SAM
Sam (2,400,000/6,000,000) * 400,000 160,000.00
Neneng (3,600,000 / 6,000,000) * 400,000
Total Share in Profit 160,000.00

Account Titles and Explanation P.R. Debit


Income Summary 400,000.00
Sam, Capital
Neneng, Capital
To close the net income to capital accounts

D. 2019 SAM
Interest:
Sam (2,400,000 * 10%) 240,000.00
Neneng (3,600,000 * 10%)
Remainder: (240,000) 120,000.00
Total Share in Profit 360,000.00

Account Titles and Explanation P.R. Debit

Income Summary 840,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

2020 SAM
Interest:
Sam (2,400,000 * 10%) 240,000.00
Neneng (3,600,000 * 10%)
Remainder: (200,000) (100,000.00)
Total Share in Profit 140,000.00

Account Titles and Explanation P.R. Debit

Income Summary 400,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

E. 2019 SAM
Salaries:
Sam 400,000.00
Neneng
Remainder: 160,000 80,000.00
Total Share in Profit 480,000.00
Account Titles and Explanation P.R. Debit

Income Summary 840,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

2020 SAM
Salaries:
Sam 400,000.00
Neneng
Remainder:(280,000) (140,000.00)
Total Share in Profit 260,000.00

Account Titles and Explanation P.R. Debit

Income Summary 400,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

F 2019 SAM
Salaries 400,000.00
Interest:
Sam (2,400,000 * 9%) 216,000.00
Neneng (3,600,000 * 9%)
Remainder: (380,000) (190,000.00)
Total Share in Profit 426,000.00

Account Titles and Explanation P.R. Debit

Income Summary 840,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts

2020 SAM
Salaries 400,000.00
Interest:
Sam (2,400,000 * 9%) 216,000.00
Neneng (3,600,000 * 9%)
Remainder: (820,000) (410,000.00)
Total Share in Profit 206,000.00

Account Titles and Explanation P.R. Debit

Income Summary 400,000.00


Sam, Capital
Neneng, Capital
To close the net income to capital accounts
Credit

2,400,000.00

3,600,000.00

NENENG TOTAL
420,000.00 840,000.00

Credit

420,000.00
420,000.00

NENENG TOTAL
200,000.00 400,000.00

Credit

200,000.00
200,000.00

NENENG TOTAL
336,000.00
504,000.00 504,000.00
504,000.00 840,000.00
Credit

336,000.00
504,000.00

NENENG TOTAL
160,000.00
240,000.00 240,000.00
240,000.00 400,000.00

Credit

160,000.00
240,000.00

NENENG TOTAL
336,000.00
504,000.00 504,000.00
504,000.00 840,000.00

Credit

336,000.00
504,000.00

NENENG TOTAL
160,000.00
240,000.00 240,000.00
240,000.00 400,000.00

Credit
160,000.00
240,000.00

NENENG TOTAL

240,000.00
360,000.00 360,000.00
120,000.00 240,000.00
480,000.00 840,000.00

Credit

360,000.00
480,000.00

NENENG TOTAL

240,000.00
360,000.00 360,000.00
(100,000.00) (200,000.00)
260,000.00 400,000.00

Credit

140,000.00
260,000.00

NENENG TOTAL

400,000.00
280,000.00 280,000.00
80,000.00 160,000.00
360,000.00 840,000.00
Credit

480,000.00
360,000.00

NENENG TOTAL

400,000.00
280,000.00 280,000.00
(140,000.00) (280,000.00)
140,000.00 400,000.00

Credit

260,000.00
140,000.00

NENENG TOTAL
280,000.00 680,000.00

216,000.00
324,000.00 324,000.00
(190,000.00) (380,000.00)
414,000.00 840,000.00

Credit

426,000.00
414,000.00

NENENG TOTAL
280,000.00 680,000.00

216,000.00
324,000.00 324,000.00
(410,000.00) (820,000.00)
194,000.00 400,000.00

Credit

206,000.00
194,000.00
Case 1
ALLAN
Salaries 150,000.00
Interest:
Allan (10% x 280,000) 28,000.00
Connie (10% x 400,000)
Jeriel (10% x 480,000)
Bonus 37,600.00
Remainder: (820,000) 20,520.00
Total Share in Profit 236,120.00

P.R
Account Titles and Explanation Debit
.
Income Summary 789,600.00
Allan, Capital
Connie, Capital
Jeriel, Capital
To close the net income to capital accounts

Bonus = 5% (NI-B)
Bonus = 5% (789,600 - B)
Bonus = 39,480 - .05B
1.05B = 39,480
B= 37,600

Case 2
ALLAN
Salaries 240,000.00
Interest:
Allan (10% x 313,333.33) 31,333.33
Connie (10% x313,333.33)
Jeriel (10% x 480,000)
Bonus 0
Remainder: (820,000) (44,955.56)
Total Share in Profit 226,377.78

P.R
Account Titles and Explanation Debit
.
Income Summary 680,800.00
Allan, Capital
Connie, Capital
Jeriel, Capital
To close the net income to capital accounts

Number of months
Amount
unchanged
ALLAN
Jan-01 300,000.00 4
May-01 360,000.00 4
Sep-01 280,000.00 4
Total Peso Amount
Divided by:
Average Capital

Number of months
Amount
unchanged
Connie
Jan-01 400,000.00 2
Mar-01 310,000.00 4
Jul-01 360,000.00 2
Sep-01 400,000.00 4
Total Peso Amount
Divided by:
Average Capital

Number of months
Amount
unchanged
JERIEL
Jan-01 500,000.00 3
Apr-01 570,000.00 2
Jun-01 600,000.00 2
Aug-01 480,000.00 4
Total Peso Amount
Divided by:
Average Capital

Case 3
ALLAN
Salaries 210,000.00
Interest:
Allan (10% x 300,000) 30,000.00
Connie (10% x 400,000)
Jeriel (10% x 500,000)
Bonus
Remainder: (820,000) 81,800.00
Total Share in Profit 321,800.00

P.R
Account Titles and Explanation Debit
.
Income Summary 929,400.00
Allan, Capital
Connie, Capital
Jeriel, Capital
To close the net income to capital accounts

Bonus= 20% (NI - S - B)


B= 20% ( 929,400 - 540,000 - B)
B = 20% (389,400
B = 77,880 - .2B
1.2B = 64,900
CONNIE JERIEL TOTAL
200,000.00 180,000.00 530,000.00
153,600.00

40,000.00
48,000.00
37,600.00
20,520.00 27,360.00 68,400.00
260,520.00 255,360.00 789,600.00

Credit

236,120.00
260,520.00
255,360.00

CONNIE JERIEL TOTAL


210,000.00 250,000.00 700,000.00
115,666.67

36,333.33
48,000.00
0
(44,955.56) (44,955.56) (134,866.67)
201,377.78 253,044.44 680,800.00

Credit

226,377.78
201,377.78
253,044.44

Total

1,200,000.00
1,440,000.00
1,120,000.00
3,760,000.00
12
313,333.33

Total

800,000.00
1,240,000.00
720,000.00
1,600,000.00
4,360,000.00
12
363,333.33

Total

1,500,000.00
1,140,000.00
1,200,000.00
1,920,000.00
5,760,000.00
12
480,000.00

CONNIE JERIEL TOTAL


180,000.00 150,000.00 540,000.00
184,900.00

40,000.00
50,000.00
64,900.00 0
71,575.00 51,125.00 204,500.00
291,575.00 316,025.00 929,400.00

Credit

321,800.00
291,575.00
316,025.00
C. a. 270,000 PROFIT
BETH SETH
Beth (270,000 x 300,000 / 1,000,000) 81,000.00
Seth (270,000 x 250,000 / 1,000,000) 67,500.00
Apple ( 270,000 x 450,000 / 1,000,000)
Total Share in Profit 81,000.00 67,500.00

Account Titles and Explanation P.R. Debit Credit

Income Summary 270,000.00


Beth, Capital 81,000.00
Seth, Capital 67,500.00
Apple, Capital 121,500.00
To close the net income to capital accounts

b. 240,000 loss
BETH SETH
Beth (240,000 x 300,000 / 1,000,000) (72,000.00)
Seth (240,000 x 250,000 / 1,000,000) (60,000.00)
Apple ( 240,000 x 450,000 / 1,000,000)
Total Share in Profit (72,000.00) (60,000.00)

Account Titles and Explanation P.R. Debit Credit

Beth, Capital 72,000.00


Seth, Capital 60,000.00
Apple, Capital 108,000.00
Income Summary 240,000.00
To close the net income to capital accounts
APPLE TOTAL
81,000.00
67,500.00
121,500.00 121,500.00
121,500.00 270,000.00

APPLE TOTAL
(72,000.00)
(60,000.00)
(108,000.00) (108,000.00)
(108,000.00) (240,000.00)
D.
E 3-7
Income before income tax = P650,000 / 70%
= P928,571

1 B = .05 x P928,571 = P46,428

2B = .05 (P928,571 – B)
= P46,428 / 1.05
B = P44,217

3B = .05 (P928,571 – T)
T = .30 (P928,571) = P278,571
B = .05 (P928,571 – P278,571)
= .05 (P650,000)
B = P32,500

4B = .05 (P928,571 – B – T)
T = .30 (P928,571) = P278,571

B = .05 (P928,571 – B – P278,571)

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

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