Problem #15

Distribution of Profits or Losses Based on Partners’ Agreement

A summary of changes in the capital accounts of the Rialubin, Rabena and Dela Cruz partnership for 2018, before
closing, follows:

Rialubin Rabena Dela Cruz Total

Balance, Jan 1,2018 P80000 P80000 P90000 P250000
Investment, Apr 1 20000 20000
Withdrawal, May 1 (15000) (15000)
Withdrawal, July 1 (10000) (10000)
Withdrawal, Sept 1 (30000) (30000)
P90000 P65000 P60000 P215000
Required:
Determine the allocation of the 2018 profit to the partners under each of the following independent assumptions:
1. Profit is P48000 and profit is divided on the basis of average capital balances.
2. Profit is P50000. Rialubin receives a bonus of 10% of profit for managing the business, and the balance to be
divided on the basis of beginning capital balances.
3. Loss is P35000, each partner is allowed 10% interest on beginning capital balances, and the balance to be
divided equally.

  Rialubin Rabena Dela Cruz Total

Average Capital Balances 90000.00 70000.00 80000.00 240000.00
Remainder -72000.00 -56000.00 -64000.00 -192000.00
Profit 18000.00 14000.00 16000.00 48000.00

  Rialubin Rabena Dela Cruz Total

Beginning Capital Balances 80000.00 80000.00 90000.00 250000.00
Bonus 10% 5000.00     5000.00
Remainder -65600.00 -65600.00 -73800.00 -205000.00
Profit 19400.00 14400.00 16200.00 50000.00

  Rialubin Rabena Dela Cruz Total

Beginning Capital Balances 80000.00 80000.00 90000.00 250000.00
Interest 10% 8000.00 8000.00 9000.00 25000.00
103333.3 103333.3
Remainder 3 3 103333.33 -310000.00
Profit -15333.33 -15333.33 -4333.33 -35000.00
 AVERAGE CAPITAL BALANCES
Dela
  Rialubin   Rabena   Cruz
1/1/201 80000.0 1/1/201 80000.0 1/1/201 90000.0
8 0 8 0 8 0
4/1/201 15000.0 5/1/201 10000.0 9/1/201 10000.0
8 0 8 0 8 0
7/1/201 -
8 5000.00        
90000.0 70000.0 80000.0
Total 0 Total 0 Total 0

Ratio           Total
Dela 240000.0
Rialubin 0.38 Rabena 0.29 Cruz 0.33 0