Partners A and B share in profits and losses on a 70:30 ratio after salaries of P80,000

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Question:

Partners A and B share in profits and losses on a 70:30 ratio after salaries of P80,000 for A and P40,000 for B. The business earned profit of P180,000 before deduction for the salaries.

Requirements:

a. Compute for the partners' respective share in the profit.

b. Provide the journal entries (the salaries are withdrawn periodically).

2. A and B's partnership agreement provide for annual salary allowances of P160,000 for A and P80,000 for B. Profits are shared equally, while losses on a 70:30 ratio. The partnership earned profit of P200,000.

Requirement:

Compute for the respective shares of the partners in the profit

3. The partnership agreement of A and B stipulates the following:

· Annual salaries of P100,000 for A and P60,000 for B.

· 20% bonus to A, based on profit after salaries and bonus.

· Balance is shared equally.

The partnership earned profit of P520,000 before salaries and bonus.

Requirement:

Compute for the respective shares of the partners in the profit.

4. A and B's partnership agreement provides for an annual salary allowance of P100,000 for A and 10% interest on the weighted average capital balance of B. The remainder is shared equally. During the period, the partnership earned profit of P200,000. B's capital account had a beginning balance of P120,000. B made additional investments of P60,000 on March 1, P40,000 on Sept. 30, and made drawings of P30,000 on Aug. 1 and P9,000 on Nov. 1.

Requirement:

Compute for the respective shares of the partners in the profit.

5. A&B Co. started operations on April 1, 20x1. Mr. A, a partner in A&B Co., is entitled to 6% interest on the weighted average balance of his capital account. Mr. A's ledger shows the following:

A, Capital

Date Ref. Debit Credit Balance

April 1, 20x1 001 100,000.00 100,000.00

June 30, 20x1 098 21,000.00 79,000.00

September 30, 20x1 146 8,000.00 87,000.00

December 1, 20x1 211 4,000.00 83.000.00

Requirement:

Compute for the interest on Mr. A's weighted average capital balance.

6. The partnership agreement of A and B states the following:

· Monthly salary of P10,000 for A.

· 20% bonus to A, before deductions for salary, interest, bonus.

· 10% interest on the weighted average capital of B.

· Balance is shared equally.

B's weighted average capital balance is P200,000. The partnership reported profit of P60,000 for the year, net of salaries, bonus and interest.

Requirement:

Compute for B's share in the profit.

7. A and B's partnership agreement states the following:

· A and B are to maintain average capital balances of P200,000 and P300,000, respectively. A 12% interest is to be computed on any excess or deficiency.

· Balance is shared equally.

The partnership earned profit of P120,000 for the nine months ended Dec. 31, 20x1. The average capital balances of the partners during the period were P240,000 for A and P220,000 for B.

Requirement:

Provide the entry to close the income summary account to the partners' capital accounts.

8. A and B's partnership began operations on April 1, 20x1. On this date. A invested P200,000 cash, while B invested a non cash asset with a carrying amount of P600,000 and a fair value of P400.000. The partnership agreement stipulates the following:

· Monthly salary of P8,000 to A, recognized as expense. The monthly salaries are to be paid at each month-end.

· Bonus to A equal to 10% of profit before salaries and interest but after bonus.

· 10% annual interest on the weighted average balance of B's capital.

· Balance is shared equally

B contributed additional P44,000 on July 1, 20xl and made drawings of P24,000 on Dec. 1, 20x1. The partnership reported profit of P588,000 before deductions for bonus and interest.

Requirement:

Compute for the ending balances of the partners' capital accounts.