Activity 1.2.

Direction: Provide what is asked. Show your solution

1. U, V, and W, a partnership formed on January 1, 2017 had the following initial investment:
U P 500,000
V 750,000
W 1,125,000

The partnership agreement states that profits and losses are to be shared equally by the partners after consideration is made
for the following:
• Salaries allowed to partners: P 300,000 for U; P 240,000 for V; and P 180,000 for W.
• Average partner’s capital balances during the year shall be allowed 10% interest.
• On June 30, 2017, U made an additional investment of P 300,000.
• On September 30, 2017, W withdrew P 350,000 from the partnership.
• Share on the remaining partnership profit was P 25,000 for each partner.

What is the total interest on average capital balances of the partners? _____________
What is the partnership net profit at December 31, 2017 before salaries, interest and partner’s share on the balance?
__________

2. Riza and Mark partnership operates on January 1, 2016 which reflects the following data:

Revenue 108,000
Cost of sales 80,000
Depreciation 5,000
Interest on partners 5% on average capital

Additional information:
• Rizal withdraws P 5,000 on March 1
• Mark withdraws P 8,000 on April 1, representing his yearly salary as agreed by the partners.
• Riza and Mark have 25,000 and 18,000 beginning capital balances respectively.
• Profit sharing for Riza is 2/3 and 1/3 for Mark

How much is the ending balance of each partner after closing the net income to their capital balances?
Riza _____________ Mark ________________

3. Romeo and Parco are partners in a merchandising business. During 2016, they withdrew their salary allowances of P
34,000 and P 59,000 respectively. Bonus is given to Parco based on 25% of net income after salaries and bonus. Remaining
profit or loss are shares in the ratio of 3:2 by Romeo and Parco. The partners’ capital accounts show the following:

Romeo Parco
Beginning Balance P 85,000 P 67,000
Additional investments 40,000 43,000
Withdrawal other than salary allowance (35,000) (20,000)
Subtotal 90,000 90,000

What is the total amount of net income for the period if Romeo’s equity balance after dividing net income is P 142,200?
_______________