CHAPTER 3

Partnership Operations

E 3-1
1. Borres = 250/500 x P600,000 = P300,000
Buendia = 150/500 x P600,000 = P180,000
Bustos = 100/500 x P600,000 = P120,000

2. Borres = 3 / 6 x P600,000 = P300,000

Buendia = 1 / 6 x P600,000 = P100,000
Bustos = 2 / 6 x P600,000 = P200,000

E 3-2
Income Summary 250,000
Banal, Capital 112,250
Benson, Capital 137,750
Banal Benson Total
10% Interest on average capital P 89,000 P114,500 P203,500
Remainder – divided equally 23,250 23,250 47,500
Total P112,250 P137,750 P250,000

Computation of average capital

Banal 1/01 - 3/31 P800,000 x 3 P 2,400,000
4/01 - 8/31 960,000 x 5 4,800,000
9/01 – 10/31 840,000 x 2 1,680,000
11/01 – 12/31 900,000 x 2 1,800,000
P10,680,000 / 12 P890,000

Benson 1/01 - 2/28 P1,200,000 x 2 P 2,400,000

3/01 - 6/30 1,020,000 x 4 4,080,000
7/01 - 9/30 1,160,000 x 3 3,480,000
10/01 – 12/31 1,260,000 x 3 3,780,000
P13,740,000 / 12 P1,145,000

E 3-3
Benito Bunye Total
a. Interest of 10% on excess average capital P 40,000 P 40,000
Salaries 300,000 P200,000 500,000
Remainder – divided in the ratio of 70:30 112,000 48,000 160,000
Total P452,000 P248,000 P 700,000

b. Interest of 10% on excess average capital P 40,000 P 40,000

Salaries 300,000 P200,000 500,000
Remainder –divided in the ratio of 70:30 ( 98,000) ( 42,000) ( 140,000)
Total P242,000 P158,000 P 400,000

E 3-4
1. Blanco = 120/300 x P120,000 = P48,000; Banda = 180/300 x P120,000 = P72,000

2. Blanco = 120/300 x P120,000 = P48,000; Banda = 180/300 x P120,000 = P72,000

3. Blanco Banda Total
Interest of 8% on original investment P 9,600 P14,400 P 24,000
Balance – divided equally 48,000 48,000 96,000
Total P57,600 P62,400 P120,000

4. Blanco Banda Total

Salaries to partners P 54,000 P 45,000 P 99,000
Balance – divided equally 10,500 10,500 21,000
Total P 64,500 P 55,500 P120,000

5. Blanco = 50/125 x P120,000 = P48,000; Banda = 75/125 x P120,000 = P72,000

E 3-5
1. Bueno Beran Total
Interest of 8% on beginning capital P 48,000 P 54,000 P102,000
Salaries to partners 225,000 115,000 340,000
Balance – divided 3:2 (40,200) (26,800) (67,000)
Total P232,800 P142,200 P375,000

2. Beran = P375,000 x 2/5 = P150,000; however, minimum guaranteed amount to Beran is P175,000
Bueno = P375,000 – P175,000 = P200,000

E 3-6
Net income after salaries, interest and bonus P322,000
Interest (P200,000 x 10%) P20,000
Salaries (8,000 x 12) 96,000 116,000
Net income before interest and salaries P438,000
Bonus rate x 25%
Amount of bonus to be credited to Basco P109,500

E 3-7
Income before income tax = P650,000 / 70% = P928,571

1. B = .05 x P928,571 = P46,428

2. B = .05 (P928,571 – B)
= P46,428 / 1.05
= P44,217

3. B = .05 (P928,571 – T)
T = .30 (P928,571) = P278,571
B = .05 (P928,571 – P278,571)
= .05 (P650,000)
= P32,500

4. B = .05 (P928,571 – B – T)
T = .30 (P928,571) = P278,571
B = .05 (P928,571 – B – P278,571)
= .05 (P650,000 – B)
= P32,500 / 1.05
= P30,952
E 3-8
1. Balbin Bagtas Banta Total
Capital balances P240,000 P200,000 P200,000 P 640,000
Required capital 256,000 224,000 160,000 640,000
Cash received (paid) (P 16,000) (P 24,000) P 40,000 ----

Banta, Capital 40,000

Balbin, Capital 16,000
Bagtas, Capital 24,000

2. Balbin Bagtas Banta Total

Capital balances P240,000 P200,000 P200,000 P 640,000
Required capital 320,000 280,000 200,000 800,000
Additional investment P 80,000 P 80,000 -------- P 160,000

P240,000 / 40% = P600,000; P200,000 / 35% = P571,428; P200,000 / 25% = P800,000

Cash 160,000
Balbin, Capital 80,000
Bagtas, Capital 80 000

3. Balbin Bagtas Banta Total

Capital balances P240,000 P200,000 P200,000 P640,000
Required capital 240,000 210,000 150,000 600,000
Additional investment(withdrawals) -------- 10,000 (P50,000) P 40,000

Banta, Capital 50,000

Bagtas, Capital 10,000
Cash 40,000

E 3-9
Drawings charged against capital P520,000
Less Additional investment 100,000
Decrease in capital P420,000
Less Net decrease in capital 240,000
Share in net income P 180,000
Profit share  25%
Net income of the partnership P720,000

P 3-1
1. Income Summary 300,000
Bondoc, Capital 180,000
Barba, Capital 120,000
Bondoc = P300,000 x 60% = P180,000
Barba = P300,000 x 40% = P120,000

2. Income Summary 300,000

Bondoc, Capital 175,000
Barba, Capital 125,000
Bondoc = P300,000 x 210/360 = P175,000
Barba = P300,000 x 150/360 = P125,000
3. Income Summary 300,000
Bondoc, Capital 200,000
Berba, Capital 100,000
Bondoc = P300,000 x 255,000/382,500* = P200,000
Barba = P300,000 x 127,500/382,500** = P100,000

* Jan. 1 – Apr. 30 P210,000 x 4 = P 840,000

May 1 – Sept. 30 300,000 x 5 = 1,500,000
Oct. 1 - Dec. 31 240,000 x 3 = 720,000
P3,060,000 / 12 P255,000

**Jan. 1 – Mar. 31 P150,000 x 3 = P 450,000

Apr. 1 – Dec. 31 120,000 x 9 = 1,080,000
P1,530,000 / 12 127,500
P382,500

4. Income Summary 300,000

Bondoc, Capital 155,100
Barba, Capital 144,900
Bondoc Barba Total
8% interest on ave. cap. P 20,400 P 10,200 P 30,600
Balance – equally 134,700 134,700 269,400
P155,100 P144,900 P300,000

5. Income Summary 300,000

Bondoc, Capital 188,000
Barba, Capital 112,000
Bondoc Barba Total
Salaries P 60,000 P 48,000 P108,000
Bal. – ending cap. ratio 128,000 64,000 192,000
P188,000 P112,000 P300,000

6. Income Summary 300,000

Bondoc, Capital 225,000
Barba, Capital 75,000
Bondoc Barba Total
Bonus P 75,000 P 75,000
Bal. – ave. capital ratio P150,000 75,000 225,000
P225,000 P 75,000 P300,000
Bonus P300,000 x 1/3 divided by 1 1/3 = P75,000

P 3-2
1. Income Summary 350,000
Bernal, Capital 243,300
Burgos, Capital 106,700
Bernal Burgos Total
8% int. on beg. capital P 28,800 P 35,200 P 64,000
Balance – 3: 1 214,500 71,500 286,000
P243,300 P106,700 P350,000
2. Income Summary 350,000
Bernal, Capital 139,000
Burgos, Capital 211,000
Bernal Burgos Total
Salaries P 70,000 P130,000 P200,000
12% int. on ending capital 48,000 60,000 108,000
Balance – equally 21,000 21,000 42,000
P139,000 P211,000 P350,000

3. Income Summary 350,000

Bernal, Capital 184,150
Burgos, Capital 165,850
Bernal Burgos Total
Salaries P 45,000 P 85,000 P130,000
12% int. on ave. cap.* 49,000 50,800 99,800
Balance – 3:1 90,150 30,050 120,200
P184,150 P165,850 P350,000

* Jan. 1 – May 31 P360,000 x 5 = P1,800,000

June 1 – Oct. 31 460,000 x 5 = 2,300,000
Nov. 1 – Dec. 31 400,000 x 2 = 800,000
P7,900,000 / 12 P408,333

Jan. 1 – June 30 P440,000 x 6 = P 2,640,000

July 1 – Oct. 31 360,000 x 4 = 1,4400,000
Nov. 1 – Dec. 31 500,000 x 2 = 1,000,000
P5,080,000 / 12 P423,333

4. Income Summary 350,000

Bernal, Capital 137,567
Burgos, Capital 212,433
Bernal Burgos Total
Salaries P 50,000 P100,000 P150,000
10% int. on ave. capital 40,833 42,333 83,166
Balance – 40%, 60% 46,734 70,100 116,834
P137,567 P212,433 P350,000

5. Income Summary 350,000

Bernal, Capital 164,360
Burgos, Capital 185,640
Bernal Burgos Total
Salaries P50,000 P50,000 P100,000
8% int. on beg. capital 28,800 35,200 64,000
Bonus -.10 (NI – S – I ) 18,600 18,600
Balance – 2:3 66,960 100,440 167,400
P164,360 P185,640 P350,000
P 3-3
Bilbao Bertol Borja Total
1. 6% interest on capital P 33,600 P 24,000 P 14,400 P 72,000
Salaries 96,000 80,000 176,000
Balance – 5:3:2 (149,000) ( 89,400) ( 59,600) (298,000)
Total P(115,400) P 30,600 P 34,800 P(50,000)

2. 6% interest on capital P 33,600 P 24,000 P ,14400 P 72,000

Salaries 96,000 80,000 176,000
Balance – 5:3:2 ( 64,000) ( 38,400) ( 25,600) (128,000)
Total P( 30,400) P 81,600 P 68,800 P120,000

3. 6% interest on capital P 33,600 P 24,000 P 14,400 P 72,000

Salaries 96,000 80,000 176,000
Bonus 27,000 27,000
Balance – 5:3:2 112,500 67,500 45,000 225,000
Total P 146,100 P214,500 P 139,400 P500,000

P 3-4

1. Basa Benito Beltran Bagnes Total

Salaries P400,000 P200,000 P 600,000
Bonus 60,000 40,000 100,000*
Interest 100,000 90,000 P 40,000 P 94,000 324,000
Balance 269,000 269,000 269,000 269,000 1,076,000
Total P829,000 P599,000 P309,000 P363,000 P2,100,000

*B = 5% (P2,100,000 – B) = P100,000 x 3/5 = P60,000

x 2/5 = 40,000

2. Basa Benito Beltran Bagnes Total

Salaries P 400,000 P 200,000 P 600,000
Interest 100,000 90,000 P 40,000 P 94,000 324,000
Balance (431,000) (431,000) (431,000) (431,000) (1,724,000)
Total P 69,000 P(141,000) P (391,000) (P337,000) (P800,000)

3. Basa Benito Beltran Bagnes Total

Interest P 100,000 P 90,000 P 40,000 P 94,000 P 324,000
Bonus 22,857 15,238 38,095
Salaries 291,937 145,968 437,905*
Total P 414,794 P 251,206 P 40,000 P 94,000 P 800,000

B = 5% (P800,000 – B) = P38,095 x 3/5 = P22,857; P38,095 x 2/5 = P15,238

*P437,905 x 4/6 = P291,937; P437,905 x 2/6 = P145,968
P 3-5
1. Balte Bala Total
8% interest on capital P40,000 P 24,000 P 64,000
Salaries 120,000 80,000 200,000
20% bonus on net income 238,000 238,000
Balance – capital ratio 430,000 258,000 688,000
Total P828,000 P 362,000 P1,190,000

2. Sales 4,800,000
Cost of Goods Sold 2,100,000
Operating Expenses 1,000,000
Income Taxes 510,000
Income Summary 1,190,000

Income Summary 1,190,000

Balte, Capital 828,000
Bala, Capital 362,000

Balte, Capital 60,000

Bala, Capital 100,000
Balte, Drawing 60,000
Bala, Drawing 100,000

Balte and Bala Partnership

Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2014

Balte Bala Total

Capital balances, January 1, 2014 P 500,000 P300,000 P 800,000
Add Distribution of net income for 2014:
Interests P 40,000 P 24,000 P 64,000
Salaries 120,000 80,000 200,000
Bonus 238,000 238,000
Balance - capital ratio 430,000 258,000 688,000
Total share in net income P 828,000 P 362,000 P1,190,000

Total P1,328,000 P 662,000 P1,990,000

Less Drawings 60,000 100,000 160,000
Capital balances, December 31, 2014 P1,268,000 P 562,000 P1,830,000

P 3-6
1. Net sales (P1,525,000 – P25,000) P1,500,000
Cost of goods sold:
Purchases P980,000
Less Merchandise inventory, end 305,000 675,000
Gross profit P 825,000
Operating expenses (300,000 – 12,500 – 5,000 + 17,500 + 30,000) 330,000
Income before income tax P 495,000
Income tax 148,500
Net income P 346,500
2. Brenda Brosas Total
Salaries (P150,000 x 8/12) P100,000 P100,000
Additional 10% of NI after salaries 24,650 24,650
Balance – original capital 138,656 P83,194 221,850
Total P263,306 P83,194 P346,500

3. Brenda Brosas Total

Beginning capital P625,000 P375,000 P1,000,000
Add Share in net income 263,306 83,194 346,500
Total P888,306 P458,194 P1,346,500
Less Drawings 100,000 150,000 250,000
Ending capital P788,306 P308,194 P1,096,500

P 3-7
Be on Top Company
Income Statement
For the Year Ended December 31, 2014

Sales P5,100,000
Cost of goods sold:
Purchases P4,920,000
Less: Purchase returns and allowances P 99,000
Purchase discounts 138,000 237,000
Cost of goods available for sale P4,683,000
Less Merchandise inventory, December 31 1,406,000 3,277,000
Gross profit P1,823,000
Other operating income – interest 27,000
Selling expenses (schedule 1) ( 530,300)
Administrative and general expenses (schedule 2) ( 801,800)
Operating income P 517,900
Interest expense ( 30,000)
Net income before Income Tax P487,900
Income Taxes 146,370
Net Income after Income Tax P 341,530

Division of net income:

Bathan Buenas Total
Interest P 60,000 P 48,900 P108,900
Salaries 100,000 100,000
Balance – divided equally 66,315 66,315 132,630
Total P226,3150 P115,215 P341,530

Schedule 1 – Selling expenses Schedule 2 – General and administrative expenses

Sales salaries P480,000 Taxes P 36,500
Store supplies 19,500 Doubtful accounts 9,300
Depreciation 21,300 Others 756,000
Advertising 9,500 Total P801,800
P530,300
 Be on Top Company
Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2014

Bathan Buenas Total

Original capital P600,000 P489,000 P1,089,000
Add Share in net income 226,315 115,215 341,530
Total P826,315 P604,215 P1,430,530
Less Drawing 144,000 54,000 198,000
Capital, December 31, 2010 P682,315 P550,215 P1,232,530

Be on Top Company
Statement of Financial Position
December 31, 2014
Assets
Current assets:
Cash P582,750
Notes receivable 120,000
Accounts receivable P186,000
Less Allowance for doubtful accounts 9,300 176,700
Interest receivable 6,000
Merchandise inventory 1,406,000
Prepaid taxes 10,000
Store supplies 16,500 P2,317,950
Noncurrent assets
Store furniture P222,000
Less Accumulated depreciation 21,300 200,700
Total assets P2,518,650
Liabilities and Capital
Current liabilities;
Notes payable P 360,000
Accounts payable 756,000
Advertising payable 9,500
Taxes payable 10,500
Interest payable 3,750
Income tax payable 146,370
Total liabilities P1,286,120

Bathan, capital P 682,315

Buenas, capital 550,215
Total partners’ capital 1,232,530
Total liabilities and capital P2,518,650
3. Adjusting entries
Adjustment for inventories is included in the closing entries

a. Store Supplies Expense 19,500

Store Supplies 19,500

b. Depreciation Expense 21,300

Accumulated Depreciation 21,300
c. Advertising Expense 9,500
Advertising Payable 9,500

d. Prepaid Taxes 10,000

Taxes 10,000

e. Taxes 10,500
Taxes Payable 10,500

f. Interest Expense 3,750

Interest Payable 3,750

g. Interest Receivable 6,000

Interest Revenue 6,000

h. Doubtful Accounts Expense 9,300

Allowance for Doubtful Accounts 9,300

i. Income Tax 146,370

Income Tax Payable 146,370

Closing entries
a. Merchandise Inventory 1,406,000
Interest Revenue 27,000
Purchase Returns and Allowances 99,000
Purchase Discounts 138,000
Sales 5,100,000
Income Summary 6,770,000

b. Income Summary 6,428,470

General Expenses – Others 756,000
Interest Expense 30,000
Purchases 4,920,000
Sales Salaries 480,000
Taxes 36,500
Store Supplies Expense 19,500
Depreciation Expense 21,300
Advertising Expense 9,500
Doubtful Accounts Expense 9,300
Income Taxes 146,370

c. Income Summary 341,530

Bathan, Capital 226,3150
Buenas, Capital 115,215

d. Bathan, Capital 144,000

Buenas, Capital 54,000
Bathan, Drawing 144,000
Buenas, Drawing 54,000
P 3-8
Bacani, Badeo and Barte
Statement of Changes in Partners’ Equity
For the Three Years Ending December 31, 2014

Bacani Badeo Barte Total

Original capital P1,000,000 P500,000 P 400,000 P1,900,000
Less: Share in net loss – 2012 (sch. 1) ( 8,000) ( 14,000) ( 20,000) ( 42,000)
Drawing (72,000) (86,800) ( 96,000) (254,800)
Capital, January 1, 2013 P 920,000 P 399,200 P 284,000 P1,603,200
Add Share in net income – 2013 (sch. 2) 107,200 99,952 93,040 300,192
Total P1,027,200 P 499,152 P 377,040 P1,903,392
Less Drawing 139,600 163,200 177,200 480,000
Capital, January 1, 2014 P 887,600 P 335,952 P 199,840 P1,423,392
Add Share in net income – 2014 (sch. 3) 170,855 153,656 145,489 470,000
Total P1,058,455 P 489,608 P 345,329 P1,893,392
Less Drawing 163,200 195,200 169,600 528,000
Capital, December 31, 2014 P 895,255 P 294,408 P 175,729 P1,365,392

Schedule 1 – Distribution of 2012 net loss

Bacani Badeo Barte Total
Salaries P 96,000 P 120,000 P 120,000 P336,000
Interest on beginning capital 60,000 30,000 24,000 114,000
Balance – equally ( 164,000) ( 164,000) ( 164,000) ( 492,000)
Total P( 8,000) P( 14,000) P(20,000) P( 42,000)

Schedule 2 – Distribution of 2013 net income

Bacani Badeo Barte Total
Salaries P 96,000 P 120,000 P 120,000 P336,000
Interest on beginning capital 55,200 23,952 17,040 96,192
Balance – equally ( 44,000) ( 44,000) ( 44,000) ( 132,000)
Total P 107,200 P 99,952 P 93,040 P300,192

Schedule 3 – Distribution of 2014 net income

Bacani Badeo Barte Total
Salaries P 96,000 P 120,000 P 120,000 P336,000
Interest on beginning capital 53,256 20,157 11,990 85,403
Bonus 8,100 8,100
Balance – equally 13,499 13,499 13,499 40,497
Total P 170,855 P 153,656 P 145,489 P470,000
Bonus = P470,000 – (P336,000 + P85,403) x 20/120 = P8,100

P 3-9
1. Balmes = 5/10 x 80% = 40%
Bamban = 3/10 x 80% = 24%
Buela = 2/10 x 80% = 16%
Bagnes 20%
2. Corrected net income = P400,000 – ( P24,000 - P62,000 - P40,000 + P30,000 + P18,000
x 70%) = P379,000

Balmes = P379,000 x 40% = P151,600 Buela = P379,000 x 16% = P60,640

Bamban = P379,000 x 24% = P 90,960 Bagnes = P379,000 x 20% = P75,800

Multiple Choice
1. C Jan. 1 – Mar. 31 P 80,000 x 3 = P 240,000
Apr. 1 – May 31 96,000 x 2 = 192,000
June 1 – Aug. 31 112,000 x 3 = 336,000
Sept. 1 – Dec. 31 72,000 x 4 = 288,000
P1,056,000 / 12 = P88,000

2. B Bañas Belda
Capital beg. P 120,000 P 118,000
Share in net loss (32,000) (16,000)
P88,000 P102,000

3. A Bernardo Belo
Salaries P 110,000 P 90,000
Balance – 60:40 (12,000) (8,000)
P98,000 P82,000

4. D Bustos
Net Profit P220,000
Bonus P220,000 x 10%/110% (20,000) 20,000
Interest P220,000 – P200,000 = P20,000 x 10% (2,000)
Salaries ( 44,000) 24,000
Balance P 154,000
Share of Bustos x 2/10 30,800
Total profit share of Bustos P74,800
5. B Banta:
Jan. 1 – June 30 P200,000 x 6 = P 1,200,000
Jul. 1 - Dec. 31 320,000 x 6 = 1,920,000
P 3,120,000 / 12 = P260,000 x 10% = P26,000

Berba: P300,000 x 10% = 30,000

Borja:
Jan. 1 – Sept. 30 P450,000 x 9 = P4,050,000
Oct. 1 – Dec. 31 310,000 x 3 = 930,000
P4,980,000/12 = P415,000 x 10% = 41,500
P97,500

6. C Salaries = P120,000 + P96,000 + P72,000 P 288,000

Interest 97,500
Balance = P10,000 x 3 30,000
Total P 415,500
7. C Original capital P 950,000
Additional investment 120,000
Withdrawals ( 140,000)
Net income 415,500
Total partnership capital P1,345,500
8. B Besa Basco Buan Baduel Total
Interest P 7,500 P3,750 P3,750 P3,000 P18,000
Salaries 15,000 9,000 24,000
Add’l profit to Baduel 5,000 5,000
Balance 15,000* 15,000 10,000 10,000 50,000
P37,500 P27,750 P13,750 P18,000 P97,000
*P37,500 – P7,500 – P15,000 = P15,000/30% = P50,000
9. B
10. C

11. C try distributing any profit or loss amount

12. C Bulan Bustos Bucao Total

Salaries P24,000 P18,000 P12,000 P 54,000
Interest 19,500 24,700 29,400 73,600
Balance – 2:4:4 10,480 20,960 20,960 52,400
Total P53,980 P63,660 P62,360 P180,000
Bulan
Jan. 1 – July 1 P150,000 x 6 = P 900,000
July 1 – Oct. 1 180,000 x 3 = 540,000
Oct. 1 – Dec. 31 170,000 x 3 = 510,000
P1,950,000 / 12 = P162,500
Bustos
Jan. 1 – Aug. 1 P200,000 x 7 = P1,400,000
Aug. 1 – Oct. 1 220,000 x 2 = 440,000
Oct. 1 – Dec. 31 210,000 x 3 = 630,000
P2,470,000 / 12 = P205,833
Bucao
Jan. 1 – Nov. 1 P250,000 x 10 = P2,500,000
Nov. 1 – Dec. 31 220,000 x 2 = 440,000
P2,940,000 / 12 = P245,000

13. A Bulan Bustos Bucao

Original capital P150,000 P200,000 P250,000
Additional investment 30,000 20,000
Withdrawals ( 10,000) ( 10,000) ( 30,000)
Share in net income 53,980 63,660 62,360
Capital, Dec. 31, 2005 P223,980 P273,660 P282,360
14. D Briones Balen Burgos Total
Interest P 94,500 P 47,730 P 32,470 P174,700
Salaries 244,650 165,250 409,900
Balance –Equally (278,616) (278,616) (278,616) (835,848)
Total P 60,534 (P80,896) (P251,248)

TM 10
1. F 5. T 9. F 13. T 17. T
2. F 6. F 10. T 14. T 18. F
3. T 7. T 11. T 15. F 19. T
4. T 8. T 12. T 16. T 20. T

TM 11
1. L 4. J 7. E 10. N 13. I
2. B 5. M 8. A 11. P 14 Q
3. K 6. D 9. O 12. G 15. C

TM 12
1. D
2. B
3. B
4. C
5. C
6. C Beltran Barba Total
Capital beginning P400,000 P500,000 P900,000
Share in net income-equally 200,000 200,000 400,000
Share in net loss – 2:1 ( 160,000) ( 80,000) ( 240,000)
Capital, end P440,000 P620,000 P1,060,000

7. C P2,500,000 + (P1,800,000 + P400,000) = P4,700,000 – P2,000,000 = P2,700,000

8. B Beran and Banda = 300/1,100 x P1,100,000 = P300,000;

Banjo = 500/1,100 x P1,100,000 = P500,000

9. B Banzon Borja Total

Salaries P160,000 P200,000 P360,000
Interest on beginning capital 36,000 60,000 96,000
Remainder – equally 72,000 72,000 144,000
Total P268,000 P332,000 P600,000

10. B P520,000 – P100,000 – P240,000 = P180,000 / 20% = P900,000

11. D Jan. 1 – June 30 P 840,000 x 6 = P5,040,000

July 1 – July 31 1,080,000 x 1 = 1,080,000
Aug. 1 – Dec. 31 990,000 x 5 = 4,950,000
P11,070,000/12 = P922,500 x12%=P110,700

12. D Basilio Bituin Total

Salaries P220,000 P 180,000 P400,000
Remainder – Equally ( 20,000) ( 20,000) ( 40,000)
Total P 200,000 P 160,000 P360,000
13. A P1,000,000 + (P900,000 x 20%) – P200,000 = P980,000
14. C P600,000 + P200,000 = P800,000/2 = P400,000
15. B P400,000 – P30,000 + (P450,000 x 60%) = P640,000

TM 13
Problem A

Beltran, Bernal and Basco Partnership

Schedule of the Distribution of Partnership Profit

Beltran Bernal Basco Total

Salaries P57,600 P48,000 P38,400 P144,000
Interest 34,560 46,080 66,240 146,880
Balance – equally 53,040 53,040 53,040 159,120
Total distribution of net income P145,200 P147,120 P157,680 P450,000

Beltran, Bernal and Basco Partnership

Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2014

Beltran Bernal Basco Total

Original capital P384,000 P576,000 P864,000 P 1,824,000
Add: Additional investment 96,000 96,000
Share in net income 145,200 147,120 157,680 450,000
Total P625,200 P723,120 P1,021,680 P2,370,000
Less Drawing ( 48,000) ( 48,000) (192,000) ( 288,000)
Capital, December 31, 2014 P577,200 P675,120 P829,680 P2,082,000

Problem B
1.
Double B Partnership
Income Statement
For the Year Ended December 31, 2014

Sales P1,800,000
Cost of goods sold:
Inventory, January 1 P 800,000
Purchases 1,200,000
Cost of goods available for sale P2,000,000
Less Inventory, December 31 1,050,000 950,000
Gross profit P850,000
Operating expenses:
Depreciation – building P30,000
Depreciation – furniture and fixtures 30,000
Other operating expenses 300,000 360,000
Net income before Income Tax P490,000
Income Tax 147,000
Net Income after Income Tax P343,000
2. Net income is allocated as follows:
Bilbao Bragas Total
Salaries P240,000 P240,000 P480,000
Interest on beginning capital 75,000 62,000 137,000
Remainder -2:3 (109,600) (164,400) (274,000)
Total P205,400 P137,600 P343,000

Income Summary 343,000

Bilbao, Capital, 205,400
Bragas, Capital 137,600

3. Bilbao, Capital 200,000

Bragas, Capital 240,000
Bilbao, Drawing 200,000
Bragas, Drawing 240,000

Double B Partnership
Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2014

Bilbao Bragas Total

Capital, January 1 P1,300,000 P1,240,000 P2,540,000
Add: Additional investment 200,000 200,000
Share in net income 205,400 137,600 343,000
Total P1,705,400 P1,377,600 P3,083,000
Less Drawing 200,000 240,000 440,000
Capital, December 31 P1,505,400 P1,137,600 P2,643,000