A and B formed a partnership.

The followng are their contributions:

A B
Cash 100,000.00 -
A/R 50,000.00 -
Inventory 80,000.00 -
Land 50,000.00
Building 120,000.00
Notes Payable 60,000.00
A, Capital 170,000.00
B, Capital 170,000.00

Additional Information:
1.Included in A/R is an account amounting to P 20,000 which is deemed uncollecticble
2. The inventory has an estimated selling price of P 100,000 and estimated cost to sell of P 10,000.
3. An unpaid mortgage of P 10,000 on the land is assumed by the partnerhsip.
4. The building is under- depreciated by P 25,000
5. The building also has an unpaid mortgage amounting to P 15,000 but the mortgage is not assumed by the partnersh
6. The notes payable is stated at face amount. A proper valuation requires the recognition of a P 15,000 discount on n
7. A and B shall share profits and losses 60% and 40%, respectively.
assumed by the partnership
a P 15,000 discount on note payable.
 A B

Cash 100,000.00
A/R 30,000.00
Inventory 80,000.00
Land 50,000.00
Building 95,000.00
Notes Payable - 45,000.00
Mortgage Payable - 10,000.00
165,000.00 135,000.00

Cash 100,000.00
A/R 30,000.00
Inventory 80,000.00
Land 50,000.00
Building 95,000.00
Discount on Notes Payable 15,000.00
Notes Payable
Mortgage Payable
A, Capital
B, Capital
Total

100,000.00
30,000.00
80,000.00
50,000.00
95,000.00
- 45,000.00
- 10,000.00
300,000.00

60,000.00
10,000.00
165,000.00
135,000.00
Problem 2

A and B agreed to form a partnership. A contributed P 40,000 cash

while B contributed equipment with fair value of P 100,000.
However, due to the expertise that A will be bringing to the partnership,
the partners agreed that they should initially have an equal interest in the
partnership capital.

Requirement: Prepare journal entry.

Cash 40,000.00
Equipment 100,000.00
A, Capital 70,000.00
B, Capital 70,000.00
A and B formed a partnership. The partnership agreement stipulates the following:

1. Annual salary allowances of P 50,000 for A and P 30,000 for B.

Salary allowances are to be withdrawn by the partners throughout the period and are to be debited
to their respective drawing accounts.
2. The partners share profits equally and losses on a 60:40 ratio.

Profit = 100,0000

A B Total
Salary 50,000.00 30,000.00 80,000.00
Remainder 10,000.00 10,000.00 20,000.00
Total 60,000.00 40,000.00 100,000.00
are to be debited
A and B formed a partnership. The partnership agreement stipulates the ff:

1. Annual Salary allowances of P 48,000 for A and P 30,000 for B.

2. Bonus to A of 10% of the profit after partner's salaries and bonus.
3. The partners share profits and losses on a 60:40 ratio.

Profit = 100,000

A B Total

Salary 48,000.00 30,000.00 78,000.00

Bonus 2,000.00 2,000.00
Remainder 12,000.00 8,000.00 20,000.00
62,000.00 38,000.00 100,000.00
(*After Bonus) B = P - (P / 1 + Br)
where:

B = Bonus
P = Profit before bonus and tax
Br = Bonus rate or bonus percentage

B = 22,000 - (22,0000/ 1+ 10%)

B = 22,0000 - 20,0000
B = 2,000
A and B formed a partnership. The partnership agreement stipulates the ff:

1. Annual Salary allowances of P 45,000 for A and P 24,000 for B.

2. Bonus to A of 10% of the profit after partner's salaries and bonus.
3. The partners share profits and losses on a 70:30 ratio.

Losses = 150,000

A B Total
Salary 45,000.00 24,000.00 69,000.00
Remainder - 153,300.00 - 65,700.00 - 219,000.00
Total - 108,300.00 - 41,700.00 - 150,000.00
A and B formed a partnership. The partnership agreement stipulates the ff:

1. First, A shall receive a 10% of profit up to P 100,000 and 20% over P 100,000.
2. Second, B shall receive 5% of the remaining profit over P 150,000.
3. Any remainder shall shared equally.

Profit = 280,000

1. Bonus to A
First 100k : (10% x 100k) 10,000.00
Over 100k: ((280k-100k) x 20%)) 36,000.00

2. Bonus to B on remaininf profit

(280k - 10k - 36k -150k) x 5%

3. Remainder 114,900.00

Total 160,900.00
tipulates the ff:

d 20% over P 100,000.

P 150,000.

B Total

10,000.00
36,000.00

4,200.00 4,200.00

114,900.00 229,800.00

119,100.00 280,000.00
Mr. A, a partner in ABC Co., is deciding on whether to accept a salary of P 8,000
or a salary of P 5,000 plus a bonus of 10% of profit. The bonus shall be computed on profit
after salaries and bonus. Salaries of the other partners amount to P 20,000.

Requirement : What amount of profit would be necessary so that Mr. A would be indifferent between the choices?

Choice #1
8,000 salary

Let X = profit after salaries and bonus

10%X = bonus after bonus

8,000.00
10%X
X
X

Bonus

Profit after Salaries and Bonus

Add Back: Salaries of 5,000 to Mr. A and 20k Salaries to other partners
Add Back: Bonus
Profit before Salaries and Bonus
indifferent between the choices?

Choice #2
= 5,000 salary + 10%X

= 5,0000 + 10%X
= 8,000 - 5,000
= 3,000 / 10%
= 30,000.00

= 30,000 x 10%
= 3,000.00

30,000.00
25,000.00
3,000.00
58,000.00

Choice #2

Profit before Salaries and Bonus 58,000.00

Less: Salaries - 25,000.00
Profit before Bonus but after salaries 33,000.00

B = P - (P / 1 + Br)
B = 33,000 - (33,000 / 1 + 10%)
B = 3,000

Salary of 5k + 3k Bonus = 8k
A and B formed a partnership. The partnership agreement stipulates the following:

1. Monthly salary of P 5,000 for A.

2. 20% bonus to A, before deductions for salary, interest, and bonus.
3. 10% interest on the weighted average capital of B.
4. Salary, bonus and interest are considered partnership expenses.

Revenues
Expenses(including salary, interest, and bonus)
Profit

Weighted Ave. Capital = 100,000

How much is the bonus of A?

Profit
Add back: Annual Salary (5k x 12)
Add Back: Interest on Capital (100k x 10%)
Profit before annual salary and interest but after bonus
Divided by:
Profit before annual salary,interest and before bonus
Multiple by: Bonus Rate
Bonus
 150,000.00
- 120,000.00
30,000.00

30,000.00
60,000.00
10,000.00
100,000.00
80%
125,000.00
20%
25,000.00