Ping and Pang became partners during 2019 with capital accounts below.

Computation of average
Required: Solve and prepare the profit distribution on the following different
profit sharing agreement on the partnership of Ping and Pang. The
income is P 700,000. Date
1-Jan
Date Ping Pang 28-Feb
1-Jan 150,000 165,000 30-Apr
28-Feb (25,000) 30-Sep
31-Mar 80,000
30-Apr 60,000
30-Jun (30,000)
31-Aug 75,000
30-Sep 35,000
31-Oct (30,000) Date
1-Jan
31-Mar
30-Jun
31-Aug
31-Oct
Computation of average capital ratio : A.) Ping share in net income (700,000 x 177,917/4
Pang share in net income (700,000 x 230,000/4
PING TOTAL
Capital balance No. of months used Pesos mos.
150,000 2 300,000
125,000 2 250,000 B.)
185,000 5 925,000 Salaries
220,000 3 660,000 Bonus
Total 2,135,000 Balance equally
Divided by 12 months 12 Totals
Average capital 177,917
Computation of bonus to Ping :
PANG let b = bonus
Capital balance No. of months used Pesos mos.
165,000 3 495,000 B = 20% (Net income - Salaries - B)
245,000 3 735,000 B = 20% (700,000 - 160,000 - B )
215,000 2 430,000 B = 20% (540,000 - B )
290,000 2 580,000 B = 108,000 - .20B
260,000 2 520,000 B + .20B = 108,000
Total 2,760,000 1.20B = 108,000
Divided by 12 months 12 B = 108,000/1.20
Average capital 230,000 B = 90,000

C.)
Interest on ACB at 12%
Salaries
Bonus to Ping
Balance equally
Total

Computation of bonus to Ping :

let b = bonus

B = 20% (Net income - Interest - Sala

B = 20% (700,000 - 48,950 - 300,000
B = 20% (351,050)
B = 70,210
e in net income (700,000 x 177,917/407,917 305,312
e in net income (700,000 x 230,000/407,917) 394,688
700,000

Ping Pang Total

60,000 100,000 160,000
90,000 - 90,000
225,000 225,000 450,000
375,000 325,000 700,000

tion of bonus to Ping :

let b = bonus

B = 20% (Net income - Salaries - B)

B = 20% (700,000 - 160,000 - B )
B = 20% (540,000 - B )
B = 108,000 - .20B
B + .20B = 108,000
1.20B = 108,000
B = 108,000/1.20
B = 90,000

Ping Pang
n ACB at 12% 21,350 27,600 48,950
150,000 150,000 300,000
70,210 - 70,210
140,020 140,020 280,040
381,580 317,620 700,000

tion of bonus to Ping :

let b = bonus

B = 20% (Net income - Interest - Salaries)

B = 20% (700,000 - 48,950 - 300,000)
B = 20% (351,050)
B = 70,210