Problem 1

A summary of changes in the capital accounts of Pia, Karene, and Carissa Partnership, a law firm before closing
partnership net income to the capital accounts, is as follows:

Pia, Capital Karene, Capital Carissa, Capital

Balance, January 1 48,000.00 48,000.00 54,000.00
Investment, April 1 12,000.00
Withdrawal May 14 - 9,000.00
Withdrawal June 16 - 6,000.00
Withdrawal September 7 - 18,000.00
Balance, December 31 54,000.00 39,000.00 36,000.00

Partnership net income for the year amounted to P29,300.

Required: Allocate net income if

1. Carissa receives a salary of P7,100, each partner is allowed a 10% interest on beginning capital and the remaining
profits are allocated on the basis of average capital balances. (Investment and withdrawals are to be considered as made
at the beginning of the month if made before the middle of the month and are to be considered as made at the beginning
of the following month if made after the middle of the month.)

P K C
Salaries 7,100.00
Interest 4,800.00 4,800.00 5,400.00
Remainder 2,700.00 2,100.00 2,400.00
Total 7,500.00 6,900.00 14,900.00

Average Capital:

Pia: Months outstanding Months unchaged

1/1 48,000.00 x 12 / 12 48,000.00 48,000.00 x 3 / 12

4/1 12,000.00 x 9 / 12 9,000.00 60,000.00 x 3 / 12
7/1 - 6,000.00 x 6 / 12 - 3,000.00 54,000.00 x 6 / 12
54,000.00

Karene: Months outstanding Months unchaged

1/1 48,000.00 x 12/ 12 48,000.00 48,000.00 x 4 / 12
5/1 - 9,000.00 x 8 / 12 - 6,000.00 39,000.00 x 8 / 12
42,000.00

Carissa: Months outstanding Months unchaged

1/1 54,000.00 x 12 / 12 54,000.00 54,000.00 x 8 / 12
9/1 - 18,000.00 x 4 / 12 - 6,000.00 36,000.00 x 4 / 12
48,000.00

Total 144,000.00

a. Salaries of P10,000 for each partner 1) If P received P30,000 how much will C rece
b. 10% interest on Beg. Capital
c. 20% bonus to C after bonus
d. Remainder shall allocated 5:3:2 to P, K and C, respectively Salaries
Interest
Bonus
Remainder
Total
Bonus = 20% x 75,400
Problem 2 Bonus = 15,080

Sofia and Nathan are partners operating a chain of retail stores. The partnership agreement provides for the following:

Sofia Nathan
Salaries 10,000.00 5,000.00
Interest on average capital 10% 10%

Bonus 20% of net None

income before
interest but
after bonus
and salaries
Remainder 30% 70%

The income summary account for the year shows a credit balance of P51,000 before any deductions. Average capital
balances for Sofia and Nathan are P50,000 and P75,000, respectively

Required: Determine the share of Sofia and Nathan in the P51,000 net income.

Sofia Nathan Total

Salaries 10,000.00 5,000.00 15,000.00
Interest 5,000.00 7,500.00 12,500.00
Bonus 6,000.00 6,000.00
Remainder 5,250.00 12,250.00 17,500.00
Total 26,250.00 24,750.00 51,000.00

B = 20% ( NI - S - B)
B = 20% (51,000 - 15,000 - B)
 B = 20% (36,000 - B)
B = 7,200 - 0.20B
1.20B = 7,200
B = 6,000

Problem 3

Yin and Yang formed a partnership on January 2, 2019 and agreed to share profits and loss in the ratio of 90% and 10%,
respectively. Yin contributed capital of P25,000. Yang contributed no capital but has a specialize expertise and manages
the firm full time. There were no withdrawals during the year. The partnership agreement provides for the following:

a. Capital accounts are to be credited annually with interest at 5% of the beginning capital.
b. Yang is to be paid a salary of P1,000 a month.
c. Yang is to receive a bonus of 20% of net income calculated before deducting his salary and interest on both capital
accounts.

d. The bonus and interest of both partners, and Yang's salary are to be considered as partnership expenses.
The partnership's income statement for 2019 follows:

Revenues 96,450.00
Less: Expenses (including salary, interest and bonus) 49,700.00
Net Income 46,750.00

How much is the bonus of Yang?

Net Income after salaries, interest and bonus 46,750.00

Salaries 12,000.00
Interest 1,250.00
Net Income after bonus 60,000.00
20%
Bonus 12,000.00

Problem 4

The Why, Kaye and El Partnership were formed on January 2, 2019. The original cash investments were as follows:

Why 96,000
Kaye 144,000
El 216,000
According to the general partnership contract, the partners were to be remunerated as follows:

a. Salaries of P14,400 for Why, P12,000 for Kaye, and P13,600 for El.
b. Interest at 12% on the average capital balances during the year.
c. Remainer divided 40% to Why, 30% to Kaye, and 30% for El.

Income before partners' salaries for the year ended December 31, 2019, was P92,080. Why invested an additional P24,000
in the partnership on July 1; El withdrew P36,000 from the partnership on October 1; and, as authorized by the
partnership contract, Why, Kaye, and El each withdrew P750 monthly against their shares of net income for the year.

Required:

1. The share of Why in the net income.

2. The capital balance of El on December 31, 2019.
3. The share of Kaye in the net income. (If the salaries to partners' were recognized as operating expenses by the
partnership.)

Why Kaye El Total

Salaries 14,400.00 12,000.00 13,600.00 40,000.00
Interest 12,960.00 17,280.00 24,840.00 55,080.00
Remainder 14,800.00 11,100.00 11,100.00 37,000.00
Total 40,380.00 132,080.00

Problem 5

A, B, and C, dotcors, agree to form a partnership and to share profits in the ratio 5:3:2. They also agreed that C is to be
allowed a salary of P140,000 and that B is to be guaranteed P105,000 as his share of the profits. During the first year of
operations, income from fees are P900,000, while expenses total P480,000. How much of the profit should be credited to
A, B and to C?
50% 30% 20%
A B C Total
Salaries 140,000.00 140,000.00
Remainder 140,000.00 84,000.00 56,000.00 280,000.00
Total 140,000.00 84,000.00 196,000.00 420,000.00
- 15,000.00 21,000.00 - 6,000.00 -
Total 125,000.00 105,000.00 190,000.00 420,000.00

Problem 6
Globe Company, a partnership, was formed on January 1, 2019 with four partners, C, P, A, and S. Capital contributions
were as follows: C - P1,000,000; P - P500,000; A - P500,000; S - P400,000. The partnership agreement provides that each
partner shall receive 5% interest on the amount of his capital contribution. In addition, C is to receive salary of P100,000
and P a salary of P60,000. The agreement further provides that A shall receive a minimum of P50,000 per annum from the
partnership and S a minimum of P120,000 per annum, both including amounts allowed as interest on capital and their
respective shares of profits. The balance of the profits to be shared in the following proportions: C - 30%; P - 30%; A - 20%;
and S - 20%. Calculate the amount that must be earned by the partnership during 2019, before any charge for interest on
capital or partners' salaries, in order that C may receive an aggregate of P250,000, including interest, salary and share of
profits.

30% 30% 20% 20%

C P A S
Interest 50,000.00 25,000.00 25,000.00 20,000.00
Salaries 100,000.00 60,000.00
Remainder 100,000.00 100,000.00 66,666.67 66,666.67
Total 250,000.00 185,000.00 91,666.67 86,666.67
- - - 33,333.33
Total 250,000.00 185,000.00 91,666.67 120,000.00

30% 30% 20% 20%

C P A S
Interest 50,000.00 25,000.00 25,000.00 20,000.00
Salaries 100,000.00 60,000.00
Remainder 110,000.00 110,000.00 73,333.33 73,333.33
Total 260,000.00 195,000.00 98,333.33 93,333.33
- 10,000.00 - 10,000.00 - 6,666.67 26,666.67
Total 250,000.00 185,000.00 91,666.67 120,000.00

Problem 7

The following Balance Sheet for the partnership of Joshua, Scarlett and Matthew were taken from the books on October
1, 2019.
Total Assets Liabilities and Capital

Cash 100,000.00 Liabilities

Other Assets 400,000.00 Joshua, Capital
Scarlett, Capital
Matthew, Capital
Total Assets 500,000.00 Total Liabilities and Capital

The partners agreed to distribute profits as follows:

1. Annual salaries to Joshua and Scarlett of P5,000 each.

2. Annual interest of 5% on beginning capital.
3. Bonus of 15% to Matthew based on income after salaries, interest and bonus.
4. Remaining profit: 25% to Joshua, 35% to Scarlett and 40% to Matthew.

The partnership began its operations on October 1, 2019, and net income as of December 31, 2019 is P69,500. Which of
the following is true?

A. The bonus to Matthew is P5,804

B. Net income after salaries, interest and bonus is P38,696
C. Scarlett's total share in the net income is P21,688
D. Matthew's share on the profit after salaries, interest and bonus is P13,543

Problem 8
The following information relates to CJ and Christine's partners' capital accounts for fiscal year ending June 30:
CJ Christine
Balance 86,400.00 115,200.00
Add: Additional Investment, Jan 1 38,400.00 19,200.00
Net income for the year
Salaries 20,500.00 14,500.00
Interest 7,920.00 9,360.00
Bonus 3,720.00
Remainder 14,880.00 9,920.00
Total 171,820.00 168,180.00
Deduct: Drawings
Monthly amounts 15,070.00 15,060.00
Additional drawings, June 30 2,400.00 403.00
Balance June 30 154,350.00 152,717.00

Bonus is based on net income after salaries, interest and bonus. If the net income remains the same the following fiscal
year, and there is no change in the partnership agreement nor any additional investment.

How much will be Christine's total share in the net income in the following year?
 law firm before closing

Total Capital
150,000.00
12,000.00
- 9,000.00
- 6,000.00
- 18,000.00
129,000.00

ng capital and the remaining 2. An interest of 10% of the weighted-average capital, a 20% interest shall be paid on th
wals are to be considered as made average capital in excess of P45,000, salaries to Pia and Karene of P7,500 each, and the b
nsidered as made at the beginning beginning capital. (Investments and withdrawals are to be considered the same as in No
weighted-average capital.)

Total P K
7,100.00 Salaries 7,500.00 7,500.00
15,000.00 Interest (10%) 5,400.00 4,200.00
7,200.00 Interest (20%) 1,800.00
29,300.00 Remainder - 800.00 - 800.00
Total 13,900.00 10,900.00

hs unchaged

12,000.00
15,000.00
27,000.00
54,000.00

hs unchaged
16,000.00
26,000.00
42,000.00

hs unchaged
 36,000.00
12,000.00
48,000.00

eceived P30,000 how much will C receive? 2) If K received P12,000, how much is the net

P K C Total
10,000.00 10,000.00 10,000.00 30,000.00 Salaries
4,800.00 4,800.00 5,400.00 15,000.00 Interest
15,080.00 15,080.00 Bonus
15,200.00 9,120.00 6,080.00 30,400.00 Remainder
30,000.00 23,920.00 36,560.00 90,480.00 Total
= 20% x 75,400 Bonus = 20% x 35,667
Bonus = 7,133

ment provides for the following:

y deductions. Average capital

Income Summary 51,000.00

Sofia, Capital 26,250.00
Nathan, Capital 24,750.00
oss in the ratio of 90% and 10%,
pecialize expertise and manages
nt provides for the following:

y and interest on both capital

artnership expenses.

vestments were as follows: Why Kaye El

Salaries 14,400.00 12,000.00 13,600.00
Interest 12,960.00 17,280.00 24,840.00
Remainder - 1,200.00 - 900.00 - 900.00
Total 26,160.00 28,380.00 37,540.00
 Why:

1/2 96,000.00 x 12 /12 96,000.00

7/1 24,000.00 x 6 / 12 12,000.00
108,000.00
Why invested an additional P24,000
nd, as authorized by the Kaye:
es of net income for the year.
1/2 144,000.00 x 12/ 12 144,000.00

El:
1/2 216,000.00 x 12/12 216,000.00
10/1 - 36,000.00 x 3/12 - 9,000.00
operating expenses by the 207,000.00

El, Capital Beginning 216,000.00

Withdrawal - 36,000.00
Drawings - 9,000.00
Share in Net Income 37,540.00
El, Capital Ending 208,540.00

They also agreed that C is to be

e profits. During the first year of
of the profit should be credited to
 A, and S. Capital contributions
ip agreement provides that each
C is to receive salary of P100,000
um of P50,000 per annum from the
as interest on capital and their
portions: C - 30%; P - 30%; A - 20%;
before any charge for interest on
ding interest, salary and share of

Total
120,000.00
160,000.00
333,333.33
613,333.33
33,333.33
646,666.67

Total
120,000.00
160,000.00
366,666.67
646,666.67
-
646,666.67

taken from the books on October

es and Capital

200,000.00
120,000.00
95,000.00
85,000.00
500,000.00
25% 35% 40%
J S M
Salaries 1,250.00 1,250.00
Interest 1,500.00 1,187.50 1,062.50
Bonus 8,250.00
 Remainder 13,750.00 19,250.00 22,000.00
Total 16,500.00 21,687.50 31,312.50

ber 31, 2019 is P69,500. Which of

B = 15% ( NI - S - I - B)
B = 15% (69,500 - 2,500 - 3,750 - B)
B = 15% (63,250 - B)
B = 9,487.50 - 0.15B
1.15B = 9,487.50
B = 8,250

cal year ending June 30:

CJ Christine Total
35,000.00 Salaries 20,500.00 14,500.00 35,000.00
17,280.00 Interest (7.50%) 11,576.25 11,453.78 23,030.03
3,720.00 Bonus (15%) 2,970.00 2,970.00
24,800.00 80,800.00 Remainder (6:4) 11,879.99 7,919.99 19,799.98
15.00% Total 46,926.24 33,873.77 80,800.00
0.60 0.40

CJ:
ins the same the following fiscal
nt. Beg. 86,400.00 x 12/12 86,400.00
Jan. 1 38,400.00 x 6/12 19,200.00
105,600.00

Christine:

Beg. 115,200.00 x 12 /12 115,200.00

Jan. 1 19,200.00 x 6/ 12 9,600.00
124,800.00

B = 15% (80,800 -35,000 - 23,030 - B)

B = 15% (22,770 - B)
B = 3,415.15 - 0.15B
1.15B = 3,415.15
B = 2,970
% interest shall be paid on that portion of a partner's 3. It is agreed that Pia and Karene shall guarantee fees from their own
ne of P7,500 each, and the balance in the ratio of P25,000, respectively, that any deficiency is to be charged directly aga
onsidered the same as in No. 1 in computing failing to meet the guarantee, and that any excess is to be credited dir
partner with fees exceeding the guarantee.

C Total Fees earned during the year are classified as follows:

15,000.00 From clients of Pia
4,800.00 14,400.00 From clients of Karene
600.00 2,400.00 From clients of Carissa
- 900.00 - 2,500.00
4,500.00 29,300.00
Salaries of P5,000 and P7,500 are to be given to Pia and Carissa, respe
the beginning capital. Any remaining balance is allocated based on 7:2
Carissa respectively.

P
Guarantee 15,000.00
Salaries 5,000.00
Interest 4,800.00
Remainder - 5,740.00
Total 19,060.00
12,000, how much is the net income? 3) If P&K received a total of P40,000, how much will C receive?

P K C Total P &K
10,000.00 10,000.00 10,000.00 30,000.00 Salaries 20,000.00
4,800.00 4,800.00 5,400.00 15,000.00 Interest 9,600.00
7,133.00 7,133.00 Bonus
- 4,666.67 - 2,800.00 - 1,866.67 - 9,333.33 Remainder 10,400.00
10,133.33 12,000.00 20,666.33 42,799.67 Total 40,000.00
nus = 20% x 35,667 Bonus = 20% x 58,000
nus = 7,133 Bonus = 11,600
 Total
40,000.00
55,080.00
- 3,000.00
92,080.00
Total
2,500.00
3,750.00
8,250.00
55,000.00
69,500.00

7.50%

7.50%
all guarantee fees from their own clients of P35,000 and
4. Pia will receive a bonus of 25% of net income for managing
ency is to be charged directly against the account of the partner
bonus as an expense in computing the bonus amount), while
at any excess is to be credited directly to the account of the
divided on the basis of ending capital.
antee.

sified as follows: P
50,000.00 Bonus 5,860.00
20,000.00 Remainder 9,812.09
5,000.00 Total 15,672.09

be given to Pia and Carissa, respectively and interest of 10% of

balance is allocated based on 7:2:1 ratio to Pia, Karene, and
B = 25% (Net Income - B)
B = 0.25NI - 0.25B
1.25B = 0.25NI
K C Total 1.25B = 0.25(29,300)
- 5,000.00 - 10,000.00 1.25B = 7,325
7,500.00 12,500.00 B = 5,860
4,800.00 5,400.00 15,000.00
- 1,640.00 - 820.00 - 8,200.00
- 1,840.00 12,080.00 29,300.00
, how much will C receive?

P &K C Total
20,000.00 10,000.00 30,000.00
9,600.00 5,400.00 15,000.00
11,600.00 11,600.00
10,400.00 2,600.00 13,000.00
40,000.00 29,600.00 69,600.00
 25% of net income for managing the business (treating the
puting the bonus amount), while the remaining balance are
g capital.

K C Total
5,860.00
7,086.51 6,541.40 23,440.00
7,086.51 6,541.40 29,300.00