Activity 2 Partnership Operations 1st Sem A.Y.

2021-2022

Problem 1

On January 2, 2015, Tank Partnership begins its operations with the following investments:

Johnson P80,000
Khufra 40,000

According to the partnership agreement, all profits will be distributed as follows:

• Johnson will be allowed a monthly salary of P8,000 with P4,000 assigned to Khufra
• The partners will be allowed with interest equal to 10% of the capital balance as of the first day
of the year
• Johnson will be allowed a bonus of 10% of the net income after bonus
• The remainder will be divided on the basis of the beginning capital for the first year and equally
for the second year
• Each partner is allowed to withdraw up to P4,000 a year

Partnership’s operation results in a net loss of 6,000 in 2015 and a profit of P22,000 in 2016. Each
partner withdraws the maximum amount each year.

Requirement: What is the capital balance of Johnson on December 31, 2016?

Problem 2

Jayzm, a partner in the Jamill Partnership, is entitled to 40% of the profits and losses. During 2016,
Jayzm contributed land with a fair value of 60,000. Also during 2016, Jayzm had drawings of 80,000. The
balance of Jayzm’s capital account was P120,000 at the beginning of 2016 and P150,000 at the end of
the year.

Requirement: What is the partnership’s profit (loss) for 2016? (show your solution)

Problem 3

On January 1, 2016, Nana, Diggie and Harley formed a partnership with the following contributions:

Nana P280,000
Diggie 300,000
Harley 170,000

The partnership agreement of Nana, Diggie and Harley provides for the division of net income as
follows:

• Diggie, who manages the partnership is to receive a salary of P16,500 monthly

• Each partner is to be allowed interest at 15% on beginning capital
• Balance is to be divided 25:30:45

On December 31, 2016 after the following partners additional investments and capital withdrawals, the
partnership has a total capital of P975,000

Additional Investment Withdrawals

Nana P96,000 -
Diggie 60,000 P90,000
Harley - 72,000

What are the capital balances of the partners on December 31, 2016? (Show your solution)
Problem 4

The partnership agreement of Ohmyv33nus and Wise states the following:

• Annual salaries of P96,000 for Ohmyv33nus and P60,000 for Wise.

• 10% bonus to Ohmyv33nus, based on profit after salaries and bonus
• P/L ratio of 60:40

The partnership earned profit of P200,000 before salaries and bonus.

Requirement: Compute for the respective shares of the partners in the profit. (Prepare profit
distribution schedule)

Problem 5

Jennie, Lisa, Rose, and Jisoo own a publishing company that they operate as a partnership. Their
agreement includes the following:
• Jennie will receive a salary of P20,000 and a bonus of 3% of income after all the bonuses.
• Lisa will receive a salary of P10,000 and a bonus of 2% of income after all the bonuses.
• All partners are to receive the following: Jennie – P5,000; Lisa - P4,500; Rose – P2,000; and Jisoo
– P4,700, representing 10% interest on their average capital balances.
• Any remaining profits are to be divided equally among the partners.

QUESTION:
I. If the partnership incurred a net loss of P40,000, how would it be allocated among the
partners?
1. Jennie: P _
2. Lisa: P _
3. Rose: P _
4. Jisoo: P _

II. Assuming a profit of P40,000, how would this amount be distributed to them given the
following order of priority: Interest on invested capital, then bonus, then salary, and then
according to profit and loss percentage?
1. Jennie: P _
2. Lisa: P _
3. Rose: P _
4. Jisoo: P _