1.

The partnership agreement of XX,YY & ZZ provides for the year-end allocation of net income in the
following order:
 First XX is to receive 10% of net income up to P 200,000 and 20% over P 200,000
 Second YY and ZZ each are to receive 5% of the remaining income over P 300,000
 The balance of income is to be allocated equally among three partners.
The partnership’s 2011 net income was P 500,000 before any allocations to partners. What amount
should be allocated to XX?

a. P202,000 c. P 206,000
b. 216,000 d. 220,000

2. The partnership’s agreement of RR and SS 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
SS for the year ended December 31,2015 is as follows:

Balance, January 1……………………. P 420,000

Additional Investment, July 1…………. 120,000
Withdrawal, August 1………………….. (45,000)
Balance, December 31………………… 495,000

What amount of interest should be credited to SS’s capital account for 2015?
a. P45,750 c. P 46,125
b. 49,500 d. 51,750

3. AA, BB and CC are partners with average capital balances during 2015 of P 360,000, P 180,000 and
P 120,000 respectively. Partners receive 10% interest on their average capital balances. After
deducting salaries of P 90,000 to AA and P 60,000 to CC the residual profit or loss before interest and
salaries to partners. By what amount should AA’s capital account change?
a. P 21,000 increase c. P105,000 decrease
b. 33,000 decrease d. 126,000 increase

4. On January 1, 2015 DD and EE decided to form a partnership. At the end of the year, the partnership
made a net income of P 120,000. The capital accounts of the partnership show the following
transactions.

DD Capital EE Capital
Dr Cr Dr Cr
January 1……. - P 40,000 - P 25,000
April 1………… P 5,000 - - -
June1………… - - - 10,000
August 1…….. - 10,000 - -
September 1… - - P 3,000 -
October 1……. - 5.000 1,000 -
December 1…. - 4,000 - 5,000

Assuming that an interest of 20% per annum is given an average capital and balance of the profits is
allocated equally, the allocation of profits should be:
 a. DD. P60,000 EE P59,000 c. DD. P67,000 EE. P52,800
b. DD. P61,200 EE. P58,800 d. DD. P68,800 EE. P51,200

5. AA and BB formed a partnership in 2015 and made the following investments and capital withdrawing
during the year:
AA BB
Investments Draws Investments Draws
March 1……….. P 30,000 P 20,000
June 1………… P 10,000 P 10,000
August 1……… 20,000 2,000
December 1….. 5,000

The partnership’s profit and loss agreement provides for a salary of which P 30,000 was paid to each
partner for 2015 AA is to receive a bonus of 10% on net income after the salaries and bonus. The
partners are also to receive interest of 8% on average annual capital balances affected by both
investments and drawings. Any remaining profits are to be allocated equally among the partners.

Assuming net income of P 60,000 before salaries and bonus, determine how the income would be
allocated among the partners.

a. AA. P31,138 BB P28,862 c. AA P30,633 BB P29,367

b. AA P33,537 BB P26,463 d. AA P30,684 BB P29,316

6. HH,MM and AA formed a partnership on January 1,2015 and contributed P150,000, P200,000 and
P250,000 respectively. Their articles of co-partnership provide that the operating income be shared
among the partners as follows: as salary P24,000 for HH, P18,000 for MM, and P12,000 for AA;
interest of 12% on the average capital during 2015 of the three partners; and the remainder in the ratio
of 2:4:4 respectively.

The operating income for the year ending December 31,2015 amounted to P176,000. HH contributed
additional capital of P30,000 on July 1 and made a drawing of P10,000 on October 1; MM contributed
additional capital of P20,000 on August and made a drawing of P10,000 on October 1; and AA made
a drawing of P30,000 on November 1.

The partner’s capital balances on December 31,2015 are:

a. HH. P179,680; MM. P229,360; AA. P239,360
b. HH. P179,760; MM. P229,520; AA. P239,520
c. HH. P189,680; MM. P239,360; AA. P269,360
d. HH. P223,180; MM. P272,060; AA. P280,760

7. On January 1, 2015 A, B, C and D formed a Bakya Trading CO. a partnership with capital contributions
as follows: A. P 50,000 ; B. P25,000 ; C. P 25,000 and D. P 20,000. The partnership contract provided
that each partner shall receive a 5% interest on contributed capital and that A and B shall receive
salaries of P 5,000 and P 3,000 respectively. The contract also provided that C shall receive a minimum
of P2,500 per annum, and D a minimum of P6,000 per annum, which is inclusive of amounts
representing interest and share of remaining profits. The balance of the profits shall be distributed to
A, B, C and D in a 3:3:2:2 ratio.
 What amount must be earned by the partnership, before any charge for interest and salaries, so that
A may receive an aggregate of P 12,500 including interest, salary and share in profits?

a. P16,667 c. P30,667
b. 30,000 d. 32,333

8. AA, BB and CC are partners with average capital balances during 2015 of P472,500, P238,650 and
P162,350 respectively. The partners receive 10% interest on their average capital balances; after
deducting salaries of P122,325 to AA and P82,625 to CC the residual profits or loss is divided equally.

In 2015, the partnership had a net loss of P125,624 before the interest and salaries to partners.

By what amount should AA’s and CC’s capital account-change-increase (decrease)?

AA CC AA CC
a. P30,267 P(40,448) c. P(40,844) P31,235
b. 29,476 17,536 d. 28,358 32,458

9. The same information in Number 8, except the partnership had a loss of P125,624 after the interest
and salaries to partners by what amount should BB’s capital account-change-increase (decrease)?

a. P(115,443) c. P(41,875)
b. 23,865 d. (18,010)

10. Hunt, Rob, Turman and Kelly own a publishing company that they operate as a partnership. The
partnership agreement includes the following:
 Hunt receives a salary of P20,000 and a bonus of 3% of income after all bonuses
 Rob receives a salary of P10,000 and a bonus of 2% of income after all bonuses
 All partners are to receive 10% interest on their average capital balances

The average capital balances are as follows:

Hunt………………………. P 50,000
Rob……………………….. 45,000
Turman…………………… 20,000
Kelly………………………. 47,000

Any remaining profits and loss are to be divided equally among the partners.

Determine how a profit of P105,000 would be allocated among the partners.

a. Hunt P41,450 ; Rob P29,950 ; Turman P15,450 ; Kelly P18,150
b. Hunt P28,000 ; Rob P16,500 ; Turman P2,000 ; Kelly P4,700
c. Hunt P39,700 ; Rob P29,200 ; Turman P15,450 ; Kelly P19,400
d. Cannot be determined