AB Partnership begins its first year of operations with the following capital balances:

A, Capital P 32,000
B, Capital 16,000

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

 A will be allowed a monthly salary of P3,200 and P1,600 to B.

 The partners will be allowed with interest equal to 10% of the capital balances as of
the first day of the year.
 A 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 P1,600 a year.

Assume that the net los for the first year of operations is P2,400 with net income of P8,800
in the following year. Assume further that each partner withdraws the maximum amount
from the business each period.

What is the balance of A’s capital account at the end of the second year?
a. P29,560 c. P42,360
b. P45,560 d. P28,800

The ABC Partnership was formed on January 2, 2012. The original cash investments were as
follows:
A P 96,000
B 144,000
C 216,000

According to the contract, the partners were to be remunerated as follows:

 Salaries of P14,400 for A, P12,000 for B and P13,600 for C.

 Interest at 12% on the average capital balances during the year.
 Remainder divided 40% to A, 30% to B and 30% for C.

Income before partners’ salaries for the year ended December 31, 2012 was P92,080. A
invested an additional P24,000 in the partnership on July 1; C withdrew P36,000 from the
partnership on October 1; and, as authorized by the partnership contract, A, B and C each
withdrew P750 monthly against their shares of net income for the year.

What is the share of A in the net income?

a. P36,832 c. P26,160
b. P35,232 d. P11,760

What is the capital balance of C on December 31, 2012?

a. P217,540 c. P200,224
b. P208,540 d. P198,624

If the salaries to partners are to be recognized as operating expenses by the partnership,

what is the share of B in the net income?
a. P36,832 c. P16,380
b. P28,380 d. P15,624

Using the same data in No. 5, the capital balance of C on December 31, 2012 is
a. P217,540 c. P200,224
b. P208,540 d. P198,624
D and E Partnership was organized and began operations on March 1, 2011. On that date, D
invested P150,000 and E invested land and building with current fair values of P80,000 and
P100,000, respectively. E also invested P60,000 in the partnership on November 1, 2011
because of its shortage of cash. The partnership contract includes the following
remuneration plan:
D E
Annual salary P 18,000 P 24,000
Annual interest on average capital 10% 10%
Remainder 60% 40%

The annual salary was to be withdrawn by each partner in 12 monthly installments. During
the fiscal year ended February 28, 2012, D and E had net sales of P500,000, cost of goods
sold of P280,000, and total operating expenses of P100,000. Each partner made monthly
cash drawings in accordance with partnership contract.

What is the share of D in the net income?

a. P58,800 c. P72,000
b. P66,000 d. P46,800

The capital balance of D on March 1, 2012 should be

a. P190,800 c. P216,000
b. P132,000 d. P198,000

The capital balance of E on March 1, 2012 should be

a. P277,200 c. P294,000
b. P164,000 d. P270,000