PARTNERSHIP OPERATION 004

1. (CQ) Partners JJ and KK share in p/l in the ratio of 60:40 respectively. JJ’s salary is 60,000
and 30,000 for KK. The partners are also paid interest on their average capital balances. In
2020, JJ received 30,000 of interest and KK, 12,000. The p/l allocation is determined after
deductions of salary and interest payments. If KK’s share in the residual was 60,000 in
2020, what is the total partnership income?

2. (CQ)Ryan, Ge, and Kim are partners with average capital balances during 2020 of
P120,000, P60,000, and P40,000, respectively. Partners receive 10% interest on their
average capital balances. After deducting salaries of P30,000 to Ryan and P20,000 to Kim,
the residual profit or loss is divided equally. In 2020, the partnership sustained a P33,000
loss before interest and salaries to partners. By what amount should Ryan’s capital account
change?

3. A, B and C are partners in an accounting firm. Their capital account balances at year-end
were A P90,000; B P110,000 and C P50,000. They share profit and losses on a 4:4:2 ratio,
after the following special terms:
1. Partner C is to receive a bonus of 10% of net income after the bonus.
2. Interests of 10% shall be paid on that portion of a partner’s capital in excess of
P100,000
3. Salaries of P10,000 and P12,000 shall be paid for partner A&C respectively.

Assuming a net income of P44,000 for the year, the total profit share of Partner C was:

4. The partnership agreement of AA, BB & CC provides for the year-end allocation of net
income in the following order:
 First AA is to receive 10% net income up to P200,000 and 20% of the remaining
income over P200,000
 Second BB and CC each are to receive 5% of the income over P300,000
 The balance of income is to be allocated equally among the three partners.
The partnership 2020 net income was P500,000 before any allocation to partners. What
amount should be allocated to AA?

5. Jes and Tine are partners. Their capital account balances at year-end were Jes P50,000 and
Tine P 30,000. They share profit and losses 60% and 40% respectively, after the following
special terms:
1. Interests of 10% shall be paid on that partner’s capital
2. Salaries of P10,000 and P12,000 shall be paid respectively.
3. Jes is to receive a 10% bonus of net income.
Assuming a net loss of P50,000 for the year, the total share of Jes in the loss was:
6. The net income of A and B Partnership for 2020 amounted to P504,000. A, is the managing
partner. Assume that the partners agreed on the allocation of net income as follows:
 Bonus of 20% to A:
 Salaries to A, P48,000 and B, P72,000;
 Interest on average capital balances A, P14,400 and B, P9.600.
 Residual balance in net income be allocated to A and B in the ratio of 2:1 ratio.

Required: Compute the income allocation of A & B based on the different assumptions of the
bonus
1.Bonus is based on net income before bonus, salaries and interest.
2.Bonus is based on net income after bonus but before salaries and interest.
3.Bonus is based on net income after bonus and salaries but before interest.
4.Bonus is based on net income after bonus, salaries and interest.
5.Bonus is based on net income after salaries but before bonus and interest.
6.Bonus is based on net income after interest but before bonus and salaries.
7.Bonus is based on net income before bonus but after income tax (tax rate is 35%).
8.Bonus is based on net income, that is, after bonus and income tax of 35%.