Quiz #2

Partnership Operations
Name: Score:
Course/Yr.&Sec. Date:
Instructions: Encircle the letter of the answer chosen. Erasures and alterations of answers are not
allowed for multiple choices and fill in the blanks. Do not use frixion pen.

I. Multiple Choice
1. This is the most equitable way of distributing profit.
a. average capital c. ending capital
b. beginning capital d. original capital
2. Epol and Apol are partners. But only Epol is the managing partner. Both contributed equal
assets. The best profit sharing ratio will be
a. equally.
b. salary to Epol and Apol, remaining profit to be shared equally.
c. salary to Epol, remaining profit to be shared equally.
d. 1:1 ratio.
3. Accounts receivable invested by a partner should be recorded at its
a. realizable amount c. gross amount
b. book value d. market value
4. Jay and Kaye are partners who share profits and losses in the ratio of 60% and 40%,
respectively. Jay's salary is P60,000 and P30,000 for Kaye. The partners are also paid interest
on their average capital balances. In 2015, Jay received P30,000 of interest and Kaye, P12,000.
The profit and loss allocation is determined after deductions for the salary and interest
payments. If Kaye's share in the residual income (income after deducting salaries and interest)
was P60,000 in 2015, what was the total partnership income?

A. P192,000 C. P282,000
B. P345,000 D. P387,000
5. The partnership has the following accounting amounts:
(1) Sales = P70,000
(2) Cost of Goods Sold = P40,000
(3) Operating Expenses = P10,000
(4) Salary allocations to partners = P13,000
(5) Interest paid to banks = P2,000
(6) Partners' withdrawals = P8,000
The partnership net income (loss) is:
A. P20,000 C. P5,000
B. P18,000 D. P (3,000)
6. Lancelot 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 salary and bonus as a means of allocating profit among the
partners. Salaries traceable to the other partners are estimated to be P100,000. What amount of
income would be necessary so that Lancelot would consider the choices to be equal?

A. P165,000 C. P265,000
B. P290,000 D. P305,000
7. Gary and Vi are considering forming a partnership whereby profits will be allocated through the
use of salaries and bonuses. Bonuses will be 10% of net income after total salaries and bonuses.

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 Gary will receive a salary of P30,000 and a bonus. Vi has the option of receiving a salary of
P40,000 and a 10% bonus or simply receiving a salary of P52,000. Both partners will receive the
same amount of bonus.

Determine the level of net income that would be necessary so that Vi would be indifferent to the
profit sharing option selected.
A. P240,000 C. P94,000
B. P300,000 D. P334,000
8. The partnership agreement of Et, Chi and Zen provides for the year-end allocation of net income
in the following order:
(1) Et is to receive 10% of net income up to P200,000 and 20% over P200,000.
(2) Chi and Zen each are to receive 5% of the remaining income over P300,000.
(3) The balance of income is to be allocated equally among the partners.

The partnership's 2015 net income was P500,000 before any allocations to partners. What
amount should be allocated to Et?
A. P202,000 C. P206,000
B. P216,000 D. P220,000
9. The partnership agreement of Pusong and Mamon provides that interest at 10% per year is to be
credited to each partner on the basis of weighted-average capital balances. A summary of the
capital account of Mamon for the year ended December 31, 2015, is as folows:
Balance, Jan 1. P420,000
Additional investment, Jul 1. 120,000
Withdrawal, Aug 1. (45,000)
Balance, Dec 31. 495,000
What amount of interest should be credited to Mamon's capital account for 2015?

A. P45,750 C. P46,125
B. P49,500 D. P51,750
10.Akoy, Dee and Cocopia are partners with average capital balances during 2015 of P360,000,
P180,000 and P120,000, respectively. Partners receive 10% interest on their average capital
balances. After deducting salaries of P90,000 to Akoy and P60,000 to Cocopia the residual profit
or loss is divided equally. In 2015 the partnership sustained a P99,000 loss before interest and
salaries to partners. By what amount should Akoy's capital account change?

A. P21,000 increase C. P105,000 decrease

B. P33,000 decrease D. P126,000 increase

11.Benj was credited with a salary of P72,000 and interest of P12,000 on his capital contribution.
He was charged with P6,000 as his share in the negative balance on a 1:2 ratio. The capital
contributions are P100,000 for Benj and P200,000 for Barlyn. Only Benj is the managing
partner.

How much was the total profit for distribution?

a. P90,000 b. P18,000 c. P72,000 d. P66,000

12.Using the preceeding number, how much the profit or loss share of Barlyn?
a. P12,000 b. P36,000 c. (P12,000) d. (P36,000)

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II. Problem
A. On January 1, 2015, CAMMADS Partnership begins its operations with the following
investments:
Michael P80,000
Marguerite 40,000

According to the partnership agreement, all profits will be distributed as follows:

 Michael will be allowed a monthly salary of P8,000 with P4,000 assigned to Marguerite.
 The partners will be allowed with interest equal to 10% of the capital balance as of the first
day of the year.
 Michael will be allowed a bonus of 10% of the net income after bonus.
 The remainder will be divided on the basis of the beginning capital for the first year and
equally for the second year.
 Each partner is allowed to withdraw up to P4,000 a year.

Partnership’s operation results in a net loss of P6,000 in 2015 and a profit of P22,000 in 2016.
Each partner withdraws the maximum amount each year.

Determine the following:

13-14. Bonus of Michael(if any) for the year 2015 *NONE and 2016 P2,000.

*No bonus in case of net loss or residual loss.

15-18. Journal entries to close income summary for:

2015:Michael, Drawing P4,000
Marguerite, Drawing 2,000
Income Summary P6,000

2016:Income Summary P22,000

Marguerite, Drawing 15,900
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 Michael, Drawing P37,900

B. The partnership agreement of Ang, Bajoh and Coh provides for the year-end allocation of net
income in the following order:

 First, Ang is to receive 10 percent of net income up to P100,000 and 20 percent over
P100,000.
 Second, Bajoh and Coh each are to receive 5 percent of the remaining income over
P150,000.
 The balance of income is to be allocated equally among the partners.

The partnership’s 2016 net income was P250,000 before any allocations to partners.

19-20. Prepare the journal entries to close the net income for the year

Income Summary P250,000

Ang, Drawing P108,000
Bajoh, Drawing 71,000
Coh, Drawing 71,000

 Trust in the Lord with all your heart and lean not on your own understanding>>Proverbs 3:5 *BMS* PAGE
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