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

MULTIPLE CHOICE: ( 30 points ) – Select the best answer by choosing the appropriate letter.

Item Nos. 1 to 3 are based on the following information:

Marlon and Brando are partners. Their capital accounts during 200C are shown below:

Marlon Capital Brando Capital

Mar. 1 20,000 Jan. 1 120,000 Nov. 1 142,500 Jan. 1 130,000

Nov. 1 25,000 May 1 20,000 July 1 187,500

Oct. 1 30,000

The partnership earned a profit of P360,000.

1. If the profit is to be distributed using the opening capital ratio, how much would be the share of
Brando?
a. P172,800
b. P178,200
c. P178,800
d. P187,200

2. Assume that the profit is to be divided using the closing capital ratio, what would be share of
Marlon?
a. P125,000
b. P150,000
c. P157,000
d. P175,000

3. Using the average capital as the basis for distributing the profit, how would the profit be
distributed?
a. P172,800 to Marlon and P187,200 to Brando.
b. P153,000 to Marlon and P252,00 to Brando.
c. P150,000 to Marlon and P210,000 to Brando.
d. P135,000 to Marlon and P225,000 to Brando.

Item Nos. 4 to 6 are based on the following information:

Polly and Yester invested P500,000 and P800,000 on the date of the formation of their partnership.
Their profit and loss agreement provides for the following:
12% interest on the original investments;
P10,000 salary per month for Polly and P12,000 per month for Yester; and
Polly, the managing partner is entitled to a bonus of 20% of the profit.

During the year 200E, the partnership earned profit before interest, salaries, and bonus of P600,000.

4. If the bonus is based on the profit before interest, salaries, and bonus and the balance will be
divided equally, how much is the share of Polly in the profit?
a. P278,000
b. P285,000
c. P288,000
d. P330,000

5. If the bonus is based on the profit after interest and salaries but before bonus and the balance,
after subtracting these allowances, will be divided equally, how much is the share of Yester in
the profit?
a. P285,000
b. P288,000
c. P312,000
d. P315,000

6. If the bonus is based on the profit after interest, salaries, and bonus, how much is the bonus of
Polly?
a. P30,000
b. P36,000
c. P40,000
d. P120,000