Final Term Assignment 2 on Financial Accounting and Reporting – Partnership Operations

MULTIPLE CHOICE: ( 20 points ) – Select the best answer by choosing the appropriate letter.

Item No. 1 is based on the following information:

Tani and Guchi are partners sharing profits in the ratio of 40% and 60%, respectively. Tani’s capital at
the end of 200B decreased by P60,000. During the year, Tani withdrew P140,000 ( charged to his capital
account) but made additional investment of P20,000.

1. What was the profit for the year 200B?

a. P100,000
b. P125,000
c. P150,000
d. P200,000

Item No. 2 is based on the following information:

Lyon and Tyger are partners with capital balances of P20,000 and P30,000, respectively at the beginning
of 200B. Their profit and loss sharing agreement has the following provisions:
10% interest on the opening capital;
Salaries per month: P10,500 to Lyon and P12,500 to Tyger;
Bonus of 10% to Tyger ( bonus is based on net profit before interest, salaries, and bonus);
Residual income: equally

For the year 200B, the partnership earned profit of P285,000.

2. How should the profit be distributed?

a. P115,570 to Lyon and P169,250 to Tyger,
b. P115,750 to Lyon and P169,250 to Tyger,
c. P115,750 to Lyon and P169,520 to Tyger,
d. P169,250 to Lyon and P115,750 to Tyger

Items 3 and 4 are based on the following information:

Caloy and Daboy agreed to divide profits and losses as follows:

10% interest on the average capital;
Salaries of P72,000 to Caloy and P84,000 to Daboy; and
Balance : 4:6

The average capital of Caloy is P25,000 while Daboy’s average capital is P45,000. The loss after interest
and salaries is P21,000.
3. How much is the profit before interest and salary allowances?
a. P138,000
b. P140,000
c. P142,000
d. P143,000

4. How much is the share of Daboy in the profit?

a. P66,100
b. P74,700
c. P75,900
d. P76,000