Chapter 1 - Accounting for Partnership Formation & Operation Chapter 1 - Accounting for Partnership Formation & Operation 6/7 P6,250 to Tomas. The balance of the profits is to be allocated at the rate of 60% to David, 10% to Curry, and 30% to Tomas. The partners, C and D, share profits 3:2. However, C is to receive a yearly bonus of 20% of the profits, in addition to his profit share. The partnership made a net 000 602 It is intended to distribute cash to the partners so that, after credits and income for the year of P960,000 before the bonus. allocations have been made as indicated in the preceding paragraph, the balance 26. Assuming C's bonus is computed on profit after deducting said bonus, how in the partners' accounts will be proportionate to their residual profit-sharing much profit share will D receive? ratios. None of the partners is to invest additional cash, but they wish to c. P320,000 1.a. P640,000 d. P307,200 distribute the lowest possible amount of cash. . P160,000 24. How much are capital balances of David, Curry and Tomas, respectively. Red, White and Blue are partners with average capital balances during 2021 of a. P52,422; P8,737 and P26,211 P60,000, P30,000 and P20,000, respectively, The partners will receive 10% interest b. P129,383; P28,006 and P26,211 on their average capital balances, salary allowance of P15,000 for Red and C. P110,160; P18,360 and P55,080 P10,000 for Blue any residual profit is to be divided equally. In 2021, partnership d. P168,036; P28,006 and P84,018 sustained a loss of P16,500 before interest and salaries to partners. The following Balance Sheet for the partnership of C, I and G were taken from 27. By what amount would Red capital account change? the books on October 1, 2021. C. P5,500 decrease a. P21,000 increase, d. P3,500 increase 090.0909 b. P17,500 decrease Assets Liabilities & Capital Cash On December 31, 2020, Amy and Kaye have capital balances of P400,000 and 0.367 P100,000 Liabilities P200,000 Other Assets , 400,000 C Capital P320,000, respectively. On April 1, 2021, Amy invested an additional P400,000 I Capital" mitibbA 120,000 95.000 while she withdrew P100,000 at the beginning of the 4th quarter. Kaye also made G Capital 85,000 an additional investment of P300,000 and withdrew P20,000 on May 1. Amy is Total Assets P500,000 Total Liabilities & capital 500,000 the managing partner and will receive a bonus equal to 10% of reported net income. Both partners shall receive 10% interest on their beginning capital, after The partners agreed to distribute profits as follows: which, any remainder shall be divided in the ratio of capital at the end of the 1. Annual salaries to C and I of P5,000 each period. The net income of the partnership for 2021 after tax is P600,000 Annual interest of 5% on beginning capital 3. Bonus of 15% to C based on income after salaries, interest and 28. How much is the share of Amy in the 2021 net income of the partnership? bonus trifl gris a a. P333,333 C. P323,077 b. P248,000 d. P352,000 Remaining profit: 25% to C, 35% to I and 40% to G The partnership began its operations on Oct. 1, 2021 and net income as of Dec. 31, RR and PP share profits after the provision of annual salary allowances of 2021 is P69,500. P14,400 and P13,200, respectively in the ratio of 6:4. However, if partnership's net income is insufficient to provide for said allowances in full amount, the net 25. Which of the following is true? income shall be divided equally between the partners. In 2021, the following a. The bonus to C is P5,804. errors were, discovered: Depreciation for 2021 is understated by P2,100 and the b. Net Income after salaries, interest and bonus is P38,696. inventory on December 31, 2021 is overstated by P11,400. The partnership net income for 2021 was reported to be P19,500. c. I's total share in the net income is P21,688. d. G's share on the profit after salaries, interest and bonus is P13,543. will not aniturgo to afluent anf! X Scanned with CamScar Chapter 1 - Accounting for Partnership Formation & Operation Chapter 1 - Accounting for Partnership Formation & Operation 29. The capital accounts of the partners should be increased (decreased) by: P192,900 HEC a. .RR, P (6,540); PP, P (6,540) Revenues 99,400 b. RR, P 3,000; PP, P 3,000 Expenses (including salary, interest and bonus) P93,500 C. RR, P (6,960); PP, P6,540 Net Profit d. RR, P (6,750); PP, P (6,750) 31. The amount of bonus to Che is: C. -P30,000 The partnership of X, Y and Z provides for the division of net income as follows; P23,376 a. d. P31,476 b. P24,000 a. Y, who manages the partnership is to receive a salary of P16,500 monthly Ariel, JC and Eugene are partners share profits on a 5:3:2 ratio. On January 1, b. Each partner is to be allowed interest at 15% on ending 2021, Betty is admitted into the partnership with a 10% share in profits. The old capital partners continue to participate in profits in their original ratio. For the year c. Balance - 25:30:45 to X, Y and Z respectively 2021, the net income of the partnership was reported at P250,000. However, it was discovered that the following items were omitted in the partnership's books: During 2021, X invested an additional P96,00 in the partnership. Y made .00) Is; Unrecorded at year-end 2020 2021 an additional investment of P60,000 and withdrew P90,000. Z withdrew P72,000. No other investments or withdrawals were made during 2017. P 16,000 swollenA 1 10 If Prepaid expense On January 1, 2021, the capital balances were X - P280,00; Y - P300,000 and Z- P170,000. Total capital at year-end was P975,000. Accrued expense P 12,000 Unearned income 1914,000 Accrued income 10,000 30. How much is the capital balance of each partner, X, Y and Z at December 31, 2021? a. P412,750; P484,920; P77,330 32. What is the share of Eugene in the 2021 net income? b. P36,750; P214,920; (P20,670) a. P44,280 C. P49,200 P398,750; P412,500; P87,250 b. P45,720 1. P44,640 d. P316,750; P514,920; P149,330 The partnership of X, Y and Z provides for the division of net income as follows: Malou and Che formed a partnership on January 2, 2021 and agreed to share income 90% and 10% respectively. Malou contributed capital of P50,000 while i. Y, who manages the partnership is to receive a salary of che contributed no capital but has a specialized expertise and manages the firm P16,500 monthly full-time. The partnership agreement provides for the following: Isnoilibbe na sb wonbiliwe see. " ji.' Each partner is to be allowed interest at 15% on ending capital a. Capital accounts are to be credited annually with interest at 5% of iii. Balance - 25:30:45 to X, Y and Z respectively beginning capital" b. Che is to be paid a salary of P2,000 a month During 2021, X invested an additional P96,00 in the partnership. Y made an c. Che is to receive a bonus of 20% of income calculated before additional investment of P60,000 and withdrew P90,000. Z withdrew P72,000. No deducting bonus, salary and interest on both capital accounts." other investments or withdrawals were made during 2021. On January 1, 2021, d. Bonus, interest and salary of Che are to be considered partnership the capital balances were X - P280,00; Y - P300,000 and Z - P170,000. Total expenses. capital at year-end was P975,000. The results of operation for the year 2021 was a profit of P93,500 computed as