PARTNERSHIP OPERATIONS ENABLING ASSESSMENT

14. Jaime, Madrid and Soriano are partners sharing profits on a 5:3:2 ratio. On January 1, 2018, Matias was admitted
into the partnership with a 20% share in the profits. The old partners continue to participate in profits proportionate to
their original ratios. For the year 2018, the partnership books showed a net profit of P250,000. It was disclose
however, that the errors shown below were made:J
● Assuming that income tax rate is 35%, the share of Jaime in the corrected net profit is ________.
96100

● Assuming that income tax rate is 35%, the share of Madrid in the corrected net profit is ________.
57660

● Assuming that income tax rate is 35%, the share of Soriano in the corrected net profit is ________.
38440

● Assuming that income tax rate is 35%, the share of Matias in the corrected net profit is ________.
48050

● The new profit and loss ratio of Jaime is ________.

● The new profit and loss ratio of Madrid is ________.

● The new profit and loss ratio of Soriano is _______.

15. The net income of the Rice and Wynn partnership is P120,000. The partnership agreement specifies that Rice and
Wynn have a salary allowance of P32,000 and P48,000 respectively. The partnership agreement also specifies an
interest allowance of 10% on capital balances at the beginning of the year. Each partner had a beginning capital
balance of P80,000. Any remaining net income or net loss is shared equally.

● What is Rice’s share of the P120,000 net income?

● What is the balance of Wynn’s Capital account at the end of the year after net income has been distributed?
P148,000

16. The BLUE Company, a partnership, was formed on January 1, 2018 with four partners, Belen, Lorna, and Edna.
Capital contributions were as follows:

Belen 100,000

Lorna 50,000

Ursula 50,000

Edna 40,000

The partnership agreement provides that each partner shall receive 5% interest on the amount of his/her
capital contribution. In addition, Belen is to receive a salary of P10,000 and Lorna a salary of P6,000 per annum
which are to be charged as expenses of the business. The agreement further provides that Ursula shall receive a
minimum of P5,000 per annum from the partnership and Edna a minimum of P12,000 per annum, both including the
profits is to be distributed in the following proportion: Belen 30% Lorna 30% Ursula 20% Edna 20%.

● The amount that must be earned by the partnership during 2018, before any change for interest on capital or
partners salaries in order that Belen may receive an aggregate of P25,000 including interest, salary and
share of profits would be _________. (Disregard income tax. Round your final answer to the nearest peso.
Do not use peso sign, comma, and decimal.)
64667

● Using the amount that must be earned by the partnership during 2018, before any change for interest in capital
or partners salaries in order that Belen may receive an aggregate of P25,000, including interest, salary and
share of profits, the total earnings of Ursula would be _________. (Disregard income tax. Round your final
answer to the nearest peso. Do not use peso sign, comma, and decimal.)
9167

● Using the amount that must be earned by the partnership during 2018, before any change for interest in capital
or partners salaries in order that Belen may receive an aggregate of P25,000, including interest, salary and
share of profits, the total earnings of Lorna would be _________. (Disregard income tax. Round your final
answer to the nearest peso. Do not use peso sign, comma, and decimal.)
18500

17. On October 31, 2018, Zita and Jones formed a partnership by investing cash of P300,000 and P200,000,
respectively, The partners agreed to receive and annual salary allowance of P360,000 and to give Zita a bonus 20% of
the net income after partner’s salaries, the bonus being treated as an expense.

If the profits after salaries and bonuses are to be divided equally, and the profits on December 31, 2018 after
partner’s salaries but before bonus of Zita are P360,000, how much is the share of Zita in the profits?
P270,000

18. RK is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus of 10% of net
income after salaries and bonus as a means of allocating profit among partners. Salaries traceable to the other partners
are estimated to be P100,000. What amount of income would be necessary so that RK would consider choices to be
equal?
P290,000

19. A, B, and C are capitalist partners while D is an industrial partner. The partnership reported a net loss of P100,000.
How much is the share of D in the reported net loss?
P-0-

20. A partner’s share of net income is recognized in the accounts through

21. If the partnership agreement does not specify how income is to be allocated, profits and losses should be allocated
In accordance with their capital contribution

22. Lori and Mike enter into a partnership and decide to share profits and losses as follows:
● The first allocation is a salary allowance with Lori receiving P12,000 and Mike receiving P25,000.
● The second allocation is 20% of the partners’ capital balances at year end. On December 31, 2019, the capital
balances for Lori and Mike are P86,000 and P344,000, respectively.
● Any remaining profit or loss is allocated equally.

For the year ending December 31, 2019, the partnership reported a net loss of P122,000. The journal entry to record
the loss allocation will _______.
Debit Lori, Capital for P93,300

23. The Smith and Jones partnership agreement stipulates that profits and losses will be shared equally after salary
allowances of P120,000 for Smith and P60,000 for Jones. At the beginning of the year, Smith’s Capital account had a
balance of P240,000, while Jones’ Capital account had a balance of P210,000. Net income for the year was P150,000
The balance of Jones’ Capital account at the end of the year after closing is
P255,000

24. David, Chris, and John formed a partnership on July 31, 2019. They decided to share profits equally, but inserted a
clause in the partnership agreement where any losses would be allocated in the ratio of 5:2:3, respectively. For the
year ended December 31, 2019, the firm earned a net income of P50,000. However, for the year ended December 31,
2020, the firm incurred a loss of P60,000. Assuming that John had an initial capital contribution of P43,000 and made
no withdrawals, what is the balance of John’s capital account as of december 30, 2020? (Assume that none of the
partners made any further contributions to their capital accounts. Do not round any percentage calculations. Round all
monetary calculations to the nearest peso)
P41,667