Partnership Operations

Sample Problems

Problem 1

Cortez, Padua and Valmoria are partners in CPV Company. They have the following profit and
loss agreement:

- Partners Cortez and Padua will receive salaries of ₱40,000 each.

- Partner Valmoria will get a bonus of 10% of profit after salaries and bonus.
- Remaining profits are shared by Cortez, Padua and Valmoria in the ratio of 3:4:3,
respectively.

For the year ended December 31, 2020, the partnership had a profit of ₱91,000. How much
should be allocated to Valmoria?

Problem 2

The following statement of financial position for the partnership of Mariano, Ellen and
Cassandra were taken from the books on October 1, 2020.

Assets Liabilities
Cash ₱ 100,000 Liabilities ₱ 200,000
Other Assets 400,000 Mariano, Capital 120,000
Ellen, Capital 95,000
Cassandra, Capital 85,000

Total Assets ₱ 500,000 Total Liabilities & Equity ₱ 500,000

The partners agreed to distribute profits as follows:

- Annual salaries to Mariano and Ellen of ₱5,000 each
- Annual interest of 5% on beginning capital
- Bonus of 15% to Mariano based on income after salaries, interest and bonus
- Remaining profit to be divided as follows: 25% to Mariano, 35% to Ellen and 40% to
Cassandra

The partnership began its operations on October 1, 2020 and its income on December 31, 2020
is ₱69,500. How much is the share of Mariano in the income?

Problem 3

Ricardo and Dalisay are partners who have agreed to share profits and loss in the following
manners:
 Ricardo Dalisay
Annual salaries 261,000 259,000
Interest on average capital balances 5% 10%
Bonus (based on income after salaries and interest) 10%
Remainder 50% 50%

During the year ended December 31, 2020, the partnership generated a profit of ₱575,000
before any deductions. Ricardo’s and Dalisay’s average capital balances for the year are ₱600,000 and
₱300,000, respectively. Income is distributed to the partners only as far as it is possible. How much is
the total share of Dalisay in the income for the year ended 2020?