PARTNERSHIP OPERATIONS

Division of profits and losses

A, B, and C's partnership agreement stipulate the following: Case #1: Sufficient profit
a. Annual salaries of P12,000 to A and P8,000 to C The partnership earns profit of P100,000. Com
b. 10% bonus to A, based on profit after salaries but before partners' respective shares
before deducting the bonus
c. 10% interest on the following capital contributions
A - P100,000 Amount being allocated
B - P60,000 Allocation:
C - P120,000 a. Salaries
d. P/L ration of 40:30:30 b. Bonus (100K - 20K) x 10%
c. Interest
Case #1: Sufficient profit A - (100K x 10%)
The partnership earns profit of P100,000. Compute for the B - (60K x 10%)
partners' respective shares C - (120K x 10%)
d. Remainder
Case #2 44,000
The partnership earns profit of P10,000. Compute for the partner's
respective shares

Case #3 Case #2
The partnership incurs loss of P20,000. Compute for the partner's The partnership earns profit of P10,000. Comp
respective shares respective shares

Amount being allocated

Allocation:
a. Salaries
b. Bonus N/A
c. Interest
A - (100K x 10%)
B - (60K x 10%)
C - (120K x 10%)
d. Remainder
-38,000

Case #3
The partnership incurs loss of P20,000. Compu
respective shares

Amount being allocated

Allocation:
a. Salaries
b. Bonus N/A
c. Interest
A - (100K x 10%)
B - (60K x 10%)
C - (120K x 10%)
d. Remainder
-₱68,000
 Interest on weighted average capital
A and B's partnership agreement stipulates the following:
p earns profit of P100,000. Compute for the a. Monthly salary of 4,000 to A
ctive shares b. 20% bonus to A, based on profit after deductions for sal
but before deduction for interest
A B C Total c. 12% interest on B's weighted average capital balance.
100,000 B initially contributed P30,000. During the period, B con
P10,000 on July 1 and P6,000 on November 30, and with
12,000 8,000 20,000 d. Balance is shared equally
8,000 8,000

10,000 10,000
6,000 6,000
12,000 12,000

17,600 13,200 13,200 44,000

47,600 19,200 33,200 100,000

p earns profit of P10,000. Compute for the partner's

A B C Total
10,000

12,000 8,000 20,000

0

10,000 10,000
6,000 6,000
12,000 12,000

- 15,200 - 11,400 - 11,400 -38,000

6,800 -5,400 8,600 10,000

p incurs loss of P20,000. Compute for the partner's

A B C Total
-20,000
 12,000 8,000 20,000
0

10,000 10,000
6,000 6,000
12,000 12,000

-₱27,200 -₱20,400 -₱20,400 -₱68,000

-₱5,200 -₱14,400 -₱400 -₱20,000
tipulates the following: Case #1: Full year
The partnership earned profit of P90,000, before salaries, bonus and interest
ofit after deductions for salary and bonus, for the year ended Dec 31, 2020

average capital balance. Requirement:

00. During the period, B contributed additional Provide the journal entry to close the income summary account to the partne
0 on November 30, and withdrew P4,000 on Oct 1 respective capital accounts

A B
Amount being allocated
Allocation:
a. Salaries (4,000 x 12mos) 48,000
b. Bonus 7,000
c. Interest on weighted ave. capital 4,140
d. Remainder
30,860 15,430 15,430
70,430 19,570

Bonus = 20% (90,000 - 48,000 - Bonus)

= 20% (42,000 - Bonus)
= 8,400 - (20%Bonus)
120% Bonus = 8,400
Bonus = 7,000

Balances
Beg. Balance 30,000 30,000
Jul-01 10,000 5,000
Oct-01 -4,000 -1,000
Nov-30 6,000 500
34,500
12%
4,140

Income summary 90,000

A, capital 70,430
B, capital 19,570
 Case #2: Partial year
The partnership earned profit of P90,000, before salaries, bonus and int
salaries, bonus and interest on capital for the eight months ended Dec 31, 2020

Requirement:
Provide the journal entry to close the income summary account to the p
mmary account to the partners' respective capital accounts

A B
Total Amount being allocated
90,000 Allocation:
a. Salaries (4,000 x 8mos) 32,000
48,000 b. Bonus 9,667
7,000 c. Interest on weighted ave. capital 2,940
4,140 d. Remainder
45,393 22,697 22,697
30,860 64,363 25,637
90,000

Bonus = 20% (90,000 - 32,000 - Bonus)

= 20% (58,000 - Bonus)
= 11,600 - (20%Bonus)
120% Bonus = 11,600
Bonus = 9,667

Balances
Beg. Balance 30,000 20,000
Jul-01 10,000 5,000
Oct-01 -4,000 -1,000
Nov-30 6,000 500
24,500
12%
2,940

Income summary 90,000

A, capital 64,363
B, capital 25,637
efore salaries, bonus and interest on capital

e summary account to the partners'

Total
90,000

32,000
9,667
2,940

45,393
90,000