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Activity No. 2
Partnership Operations
NAME: Aretha Joi D. Preza Date:

Professor: Mr. Anuar Lobo Section: Score:

QUIZ:
1. A and B formed a partnership on March 1, 20x1. The partnership
agreement stipulates the following:
• Monthly salary allowances of ₱10,000 for A and ₱6,000 for B. Salary allowances
are to be withdrawn by the partners throughout the period and are to be
debited to their respective drawings accounts.
• The partners share profits equally and losses on a 60:40 ratio.

During the period the partnership earned profit of ₱100,000 before salary
allowances. How much is the share of Partner B in the partnership profit?
a. 64,000
b. 60,000
c. 36,000
d. 0

Solution:

2. The partnership agreement of A and B states the following:

• Monthly salary of ₱10,000 for A.
 • 20% bonus to A, before deductions for salary, interest,
and bonus. • 10% interest on the weighted average
capital of B.
• Balance is shared equally.

B’s weighted average capital balance is ₱200,000. The partnership reported

profit of ₱60,000 for the year, net of salaries, bonus and interest. How much
is the share of B in the profit?
a. 50,000
b. 151,300
c. 48,700
d. 200,000

Solution:

3. Mr. A, a partner in ABC Co., is deciding on whether to accept a salary of

₱8,000 or a salary of ₱5,000 plus a bonus of 10% of profit. The bonus shall be
computed on profit before salaries and bonus. Salaries of the other partners
amount to ₱20,000. What amount of profit would be necessary so that Mr. A
would be indifferent between the choices?
a. 30,000
b. 33,000
c. 48,000
d. 58,000
 Solution:

4. A and B formed a partnership. The partnership agreement stipulates the

following: • Monthly salaries of ₱6,000 for A and ₱2,000 for B.
• 20% bonus to A, after deductions for salary, interest, and bonus.
• 10% interest on the weighted average capital of B.
• Any remaining amount is shared equally.

The partnership’s records show the following:

Revenues 150,000 Expenses (including salary, interest, and bonus)
(120,000) Profit 30,000

The movements in B’s capital account are as follows:

B, Capital
60,000 beg.
Aug. 1
withdrawal 30,000 20,000 40,000
10,000
end. 100,000
Mar. 31 additional investment
Oct. 1 additional investment
Dec. 31 additional investment

How much is the share of B in the partnership profit?

a. 93,000
b. 52,250
c. 46,250
d. 45,000
Solution:

5. The partnership agreement of partners A, B and C stipulates

the following: • A shall receive a salary of ₱40,000.
• Interest of 10% shall be computed on the partners’ capital contributions of
₱40,000, ₱100,000 and ₱200,000.
• Balance is divided among the partners on a 2:3:5 ratio. However, C is
guaranteed a minimum share of ₱40,000, inclusive of interest, if the
partnership earns profit.

How much is the minimum level of profit necessary so that A shall receive a
total of ₱50,000, inclusive of salary, interest and share in remaining profit,
and C shall also receive his guaranteed minimum share?
a. 109,000
b. 110,000
c. 112,000
d. 120,000
 Solution:

6. The partnership agreement of AAA, BBB and CCC provides for the
year-end allocation of net income in the following order:
• First, AAA is to receive 10% of net income up to ₱100,000 and 20% over
₱100,000 • Second, BBB and CCC each are to receive 5% of the
remaining income over ₱150,000
• The balance of income is to be allocated equally among the three
partners

The partnership’s 2009 net income was ₱250,000 before any allocations to
partners. What amount should be allocated to BBB?
a. 71,000
b. 68,000
c. 108,000
d. 110,000
 Solution:

7. A, B, and C’s partnership agreement requires the partners to maintain

average investments ₱2,500,000, ₱1,250,000, and ₱1,250,000, respectively.
Six percent (6%) interest per annum is to be computed on any excess or
deficiency in the contributions. After the interest allowances, any remaining
profit or loss is shared in the ratio of 5:3:2. Average amounts invested during
the first six months were as follows: A, ₱3,000,000; B, ₱1,375,000; and C,
₱1,000,000. Loss of ₱62,500 was incurred for the first six months. How is the
loss distributed among the partners?
ABC
a. 12,500 10,000 49,500
b. 18,375 21,875 22,250
c. 21,875 18,375 22,250
d. 31,250 18,750 12,500

Solution:
8. A has a 25% participation in the profits of a partnership. During the year, A’s
capital account has a net decrease of ₱40,000. A made contributions of
₱160,000 and capital withdrawals of ₱240,000 during the year. How much
profit did the partnership earned during the year?
a. 120,000
b. 560,000
c. 480,000
d. 160,000

Solution:

9. The ABC Co., on which A, B and C are partners, reported profit of ₱360,000
during the year. If partners A, B and C have a profit sharing agreement of
2:3:4, respectively, how much is the share of A in the profit?
a. 60,000
b. 72,000
c. 80,000
d. 84,000

Solution:

(360,000 x 2/9) = 80,000

10. AB Partnership was formed on February 28, 20x1. Partner A invested ₱150,000
cash while Partner B invested land that he originally bought for ₱70,000 but
has a current fair value of ₱180,000. Because of cash shortage, B invested
additional cash of ₱60,000 on November 1, 20x1. The partnership contract
states the following:
A B

• Monthly salary (recognized as expenses and 10,000 20,000

withdrawn
periodically)

• Interest on beginning capital 12% 12%

p.a. p.a.

• Bonus on profit before salaries and interest but after 20%

bonus

• Remaining profit or loss 50% 50%

AB Partnership earned profit of ₱120,000 in 20x1 before deducting the bonus

and interests. What is the capital balance of A on December 31, 20x1?
a. 243,500
b. 226,500
c. 193,500
d. 266,500

Solution: