The partnership agreement of Ancient and Alpha provided for salary allowances of Php450,000 to Ancient and Php350,000

withdraw cash equal t0 80% of their salary allowances. If during the 2010, the partnership had profits in excess of Php1,000,0
would:

a)    Increase more than Alpha’s. c) Decrease more than Alpha’s

b)    Increase the same as Alpha’s d) Decrease the same as Alpha’s

Solution:
Ancient
Salary Allowances ₱ 450,000.00

Balance to be divided equally

(1,000,000-8,000=200,000) ₱ 100,000.00
Share of partners in profit ₱ 550,000.00
Withdrawals 80% of
Salary Allowances (360,000.00)
Balances ₱ 190,000.00

Answer:

D. Decrease the same as Alpha's

Problem #6

Jew and Gentile formed a partnership on January 1, 2010 with Jew contributing Php160,000 cash and Gentile contributing equ
with a book value of Php24,000 and fair value of Php32,000. During 2010, Jew made additional investment of Php16,000 on A
neither additional investment nor withdrawal during the year. What is the aver

Solution:
Jew
Cash ₱ 160,000.00
Equipment
Inventory
Aditional Investment:
April 1 ₱ 16,000.00
June 1 ₱ 16,000.00
Withdrawals:
September 1 (40,000.00)

Jew
Date Capital Account

January 1 ₱ 160,000.00
April 1 ₱ 16,000.00
June 1 ₱ 16,000.00
 Average Capital

Problem #7

The partners of Arlyn and Alvin partnership, share profits 3:2. However, Arlyn is to receive a yearly bonus of 20% for the net
income for the year of Php24,000 before the bonus. How much p

Solution:

Ratio: 3
Arlyn
Bonus ₱ 14,400.00
Yearly Bonus ₱ 4,000.00
Share of partners in profit ₱ 18,400.00

Profit before bonus ₱ 24,000.00 120%

Profit after bonus ₱ 20,000.00 100%
Bonus ₱ 4,000.00 20%

Problem #9
Grace and Kind share profits and losses in a ratio of 4:6. Grace and Kind receive salary allowances of P10,000 and P20,000
January 1. Partners’ drawings are not used in determining the average capital balances. Total net income for 2005 is P60,000.
a bonus of 5% of the original amount of net
Grace
January 1 Capital Balances 200,000.00
Yearly drawings (1,500 a month) 18,000.00
Permanent withdrawals of capital
June 1 (15,000.00)
May 1
Additional investment of capital
July 1 25,000.00
October 1
How much in total allocations have been made for interest, salary, and bonus allocations

Solution:
Grace
Salary Allowances ₱ 10,000.00
Interest (10%) ₱ 7,950.00
Bonus 4:6 (60,000- ₱ 1,040.00
30,000-27,400=2,600)
Balances ₱ 18,990.00

Grace
 Date
Capital Account Balances
January 1 ₱ 200,000.00
July 1 ₱ 25,000.00
Average Capital

Kind
Date
Capital Account Balances
January 1 ₱ 300,000.00
October 1 ₱ 30,000.00
Average Capital

Problem #10
L, M, and N are partners sharing profits 40%, 35% and 25%. Partners original capitals were in this ratio but on June 30, 2018, c
bring their capital balances into the profit and loss ratio. Assuming that the capital balances are to be brought into the profit a
remain the same, what cash transfers are required bet
a. L should pay N 130,000 and M b. M should pay N 78,000 and L
78,000 52,000
c. N will receive from L 52,000 and d. N will pay L 52,000 and M
M 78,000 78,000

Solution:

L - 40% ₱ 780,000.00
M - 35% ₱ 650,000.00
N - 25% ₱ 650,000.00
₱ 2,080,000.00
L M
₱ 2,080,000.00 ₱ 2,080,000.00
40% 35%
₱ 832,000.00 ₱ 728,000.00

L M
₱ 832,000.00 ₱ 728,000.00
₱ 780,000.00 ₱ 650,000.00
₱ 52,000.00 ₱ 78,000.00

Answer:
D. N will pay L 52,000 and M
78,000
s of Php450,000 to Ancient and Php350,000 to Alpha, and residual profit was allocated equally. During the year, the partners each
nership had profits in excess of Php1,000,000 without regard to salary allowances and withdrawals, Ancient’s capital in the partnership
would:

Alpha Total
₱ 350,000.00 ₱ 800,000.00

₱ 100,000.00 ₱ 200,000.00
₱ 450,000.00 ₱ 1,000,000.00

(280,000.00) (640,000.00)
₱ 170,000.00 ₱ 360,000.00

hp160,000 cash and Gentile contributing equipment with a book value of Php64,000 and a fair value of Php48,000 and inventory items
ade additional investment of Php16,000 on April 1 and Php16,000 0n June 1, and on September 1, he withdrew Php40,000. Gentile had
ithdrawal during the year. What is the average capital balance the end of 2010 for Jew?

Gentile

₱ 48,000.00
₱ 32,000.00

Portion of the year

unchanged Average Capital Balances
3/12 ₱ 40,000.00
2/12 ₱ 2,667.00
7/12 ₱ 9,333.00
 ₱ 52,000.00

to receive a yearly bonus of 20% for the net profits after deducting said bonus, in addition to his profit share. The partnership made net
f Php24,000 before the bonus. How much profit share will Arlyn receive?

2
Alvin Total
₱ 9,600.00 ₱ 24,000.00
₱ 4,000.00
₱ 9,600.00 ₱ 28,000.00

e salary allowances of P10,000 and P20,000, respectively, and both partners receive 10% on the balance in their capital accounts on
nces. Total net income for 2005 is P60,000. If net income after deducting the salary allocations is greater than P20,000. Kind receives
a bonus of 5% of the original amount of net income.
Kind
300,000.00
18,000.00

(20,000.00)

30,000.00
de for interest, salary, and bonus allocations, and how much in over-allocations have been made?

Kind Total
₱ 20,000.00 ₱ 30,000.00
₱ 19,450.00 ₱ 27,400.00

₱ 1,560.00 ₱ 2,600.00

₱ 41,010.00 ₱ 60,000.00
 Portion of the year
unchanged Average Capital Balances
6/12 ₱ 100,000.00
6/12 ₱ 12,500.00
₱ 112,500.00
(18,000.00)
(15,000.00)
₱ 79,500.00

Portion of the year

unchanged Average Capital Balances
9/12 ₱ 225,000.00
3/12 ₱ 7,500.00
₱ 232,500.00
(18,000.00)
(20,000.00)
₱ 194,500.00

als were in this ratio but on June 30, 2018, capital balances are as follows: L – 780,000; M – 650,000 and N – 650,000. Partners want to
l balances are to be brought into the profit and loss ratio by payments outside of the firm among the partners, the total firm’s capital to
e same, what cash transfers are required between the partners?

N
₱ 2,080,000.00
25%
₱ 520,000.00

N
₱ 650,000.00
₱ 520,000.00
₱ 130,000.00
, the partners each
pital in the partnership

0 and inventory items

hp40,000. Gentile had
e partnership made net

capital accounts on
20,000. Kind receives
0,000. Partners want to
otal firm’s capital to