PROBLEM 1

Matt, Matty and Matthew entered into a partnership on March 1, 2022

contributing capital of P 200,000, P 250,000 and P 300,000 respectively. On
July 1, 2022 Matt added capital of P 100,000 while Matty withdrew P 20,000
capital. On October 1, 2022, Matthew made additional cash investment of P
40,0000.

During the year, the partnership generated income of P 500,000.

The following will also be given to the partners:
Bonus to Matt of 15% of profit after salaries and interest but before bonus
Annual salaries of P 240,000 to be divided according to beginning
capital. (round to full percentage)
Interest on average capital of 10% to Matt, 15% to Matty, 20% to Matthew.
Determine the profit share of each partner based on the following
instances:

1.Equal distribution of profit.

2.Profit to be distributed to Matt (40%), Matty (35%), Matthew (25%)
3. Profit to be distributed based on beginning capital. (round
to whole percentage)
4. Profit to be distributed based on ending capital. (round to whole
percentage)
5. Profit to be distributed based on average capital. (round to
whole percentage)
 QUESTIONS
Determine the correct answer:

1. For the remainder of profit after salaries, interest and

bonus, which scenario will give the highest share for
the remainder for:
a. Matt
b. Matty
c. Matthew
2. How much is the balance of profit after salaries, interest
and bonus?
 QUESTIONS
Determine the correct answer:

3. Which scenario will give the highest total profit share for:
a. Matt
b. Matty
c. Matthew
4. Which scenario will give the lowest total profit share for:
a. Matt
b. Matty
c. Matthew
5. Who has the highest average capital?
Capital:
CAPITAL:

MATT MATTY MATTHE

W

BEGINNING
P P
CAPITAL P
200,000 250,000
300,000

ENDING
Average Capital:

Matt - Beginning Capital (3/1) P 200,000 x 4 = P 800,000

Ending Capital (7/1) P 300,000 x 6 = P
1,800,000 Total P 2,600,000
Divide by 10 (Average Capital) P 260,000

Matty - Beginning Capital (3/1) P 250,000 x 4 = P 1,000,000

Ending Capital (7/1) P 230,000 x 6 = P 1,380,000
Total P 2,380,000
Divide by 10 (Average Capital) P 238,000

Matthew - Beginning Capital (3/1) P 300,000 x 7 = P 2,100,000

Ending Capital (10/1) P 340,000 x 3 = P 1,020,000
Total P 3,120,000
Divide by 10 (Average Capital) P 312,000
BONUS, INTEREST AND
SALARIES

MATT MATTY MATTHE TOTAL

W
SALARIE
P P P
S
P 96,000 240,000
64,800 79,200
INTEREST
P 62,400 P
124,100
BONUS (135,900* P

26,000

*500,000 - (240,000 + 124,100) = 135,900

** Balance: 135,900 - 20,385 = 115,515
PROFIT AND LOSS
DISTRIBUTION (REMAINDER)
MATT MATTY MATTHEW TOTAL

EQUALLY P 38,505 P 38,505 P 38,505 P

115,515

PERCENTAGE P 46,206 P 40,430.25 P 28,878.25 P

115,515

BEGINNING P 31,189.05 P 38,119.95 P 46,206 P

115,515

ENDING P 39,275.10 P 30,033.90 P 46,206 P

115,515

AVERAGE P 36,964.80 P 33,499.35 P45,050.85 P

115,515
 PROFIT AND LOSS
DISTRIBUTION TOTAL (MATT)

REMAINDER SALARIES INTEREST BONUS TOTAL

EQUALLY P 38,505 P 64,800 P 26,000 P 20,385 P 149,690

PERCENTAGE P 46,206 P 64,800 P 26,000 P 20,385 P 157,391

BEGINNING P P 64,800 P 26,000 P 20,385 P 142,374.05

31,189.05

ENDING P P 64,800 P 26,000 P 20,385 P 150,460.10

39,275.10

AVERAGE P P 64,800 P 26,000 P 20,385 P 148,149.80

36,964.80
 PROFIT AND LOSS
DISTRIBUTION TOTAL (MATTY)

REMAINDER SALARIES INTEREST TOTAL

EQUALLY P 38,505 P 79,200 P 35,700 P 153,405

PERCENTAGE P 40,430.25 P 79,200 P 35,700 P 155,330.25

BEGINNING P 38,119.95 P 79,200 P 35,700 P 153,019.95

ENDING P 30,033.90 P 79,200 P 35,700 P 144,933.9

AVERAGE P 33,499.35 P 79,200 P 35,700 P 148,399.35

 PROFIT AND LOSS DISTRIBUTION
TOTAL (MATTHEW)

REMAINDER SALARIES INTEREST TOTAL

EQUALLY P 38,505 P 96,000 P 62,400 P 196,905

PERCENTAGE P 28,878.25 P 96,000 P 62,400 P 187,278.75

BEGINNING P 46,206 P 96,000 P 62,400 P 204,606

ENDING P 46,206 P 96,000 P 62,400 P 204,606

AVERAGE P45,050.85 P 96,000 P 62,400 P 203,450.85

 PROBLEM 2
Clara, Charles, Danny and Desiree formed a partnership on January 1, 2022. Here are the
key dates and transactions after the formation:

January 1, 2022: Capital Contribution

Clara - P 150,000
Charles - P 175,000
Danny - P 125,000
Desiree - P 100,000

April 1, 2022:
Additional Investment of P 25,000 from Clara, P 2,000 from Danny

October 1, 2022:
Withdrawal of P 15,000 from Charles
Operations for the year are as follows:

Sales: P 1,800,000
Inventory, Jan 1 200,000
Purchases 780,000
Inventory, Dec 31 130,000
Selling Expenses 200,000
General Expenses 120,000
Income Tax Expense 189,000
 ASSUMPTIONS
The following will also be given to the partners:
Bonus to Clara of 12% of profit after salaries and interest but before bonus
Bonus to Desiree of 10% of profit after salaries, interest and bonus (round to
nearest whole number)
Annual salaries of P 200,000 to be divided according to ending capital.
(round to full percentage)
Interest based on the following:
Clara - 10% on beginning capital
Charles - 10% on ending capital
Danny - 10% on average capital
Desiree - P 6,000
Determine the profit share of each partner based on the following
instances:

1.Equal distribution of profit.

2.Profit to be distributed to Clara (35%), Charles (30%), Danny
(25%) and Desiree (10%)
3. Profit to be distributed based on beginning capital. (round to
whole percentage)
4. Profit to be distributed based on ending capital. (round to
whole percentage)
5. Profit to be distributed based on average capital. (round to whole
percentage)
 QUESTIONS
1.How much is the interest received by Clara?
2.What is the average capital of Charles?
3.Who has the highest average capital of the 4 partners?
4.What is the annual salary of Danny?
5.How much is the difference between salary of Clara and Charles?
6.What is the Profit after tax of the partnership?
7.How much is Clara's bonus?
8.How much is Desiree's bonus?
9.What is the total amount received by Charles after distribution of all payments and
profits?
10. Which scenario will result into the highest over-all amount received by Danny?
 QUESTIONS
11. How much more is Desiree's total profit share (including salaries, interest and
bonus) if compared when computed using ending capital and average capital?
12. How much is the bonus of Desiree?
13. How much more does Clara receive in salaries compared to Charles?
14. How much is the total interest received of all four partners?
15. In which scenario does Charles received the highest total profit share (including
salaries, interest and bonus)?
16. In which scenario will Desiree receive a higher total share than Danny?
17. How much more is Clara's ending capital compared to her average capital?
18. Which is higher - Charles ending capital or Charles average capital?
19. Who has the highest average capital in figures?
20. How much is the difference between Clara and Desiree's bonus?
Capital:

CLARA CHARLE DANNY DESIRE

S E

BEGINNIN
P P
G 150,000 P 125,000 P
CAPITAL 175,000 100,000

ENDING
P P
CAPITA 175,000 P 127,000 P
L 160,000 100,000
Average Capital:

Clara - Beginning Capital (1/1) P 150,000 x 3 = P 450,000

Ending Capital (4/1) P 175,000 x 9 = P
1,575,000 Total P 2,025,000
Divide by 12 (Average Capital) P 168,750

Charles - Beginning Capital (1/1) P 175,000 x 9 = P 1,575,000

Ending Capital (10/1) P 160,000 x 3 = P 480,000
Total P 2,055,000
Divide by 12 (Average Capital) P 171,250

Danny - Beginning Capital (1/1) P 125,000 x 3 = P 375,000

Ending Capital (4/1) P 127,000 x 9 = P 1,143,000
Total P 1,518,000
Divide by 12 (Average Capital) P 126,500
 BONUS, INTEREST AND
SALARIES
CLARA CHARLE DANNY DESIREE TOTAL
S
SALARIE P P P 36,000 P
P 200,000
S 62,000 P 46,000 P 6,000
56,000
INTERES 15,000 P P

*441,000 - (200,000 + 49,650) = 191,350, thus 191,350 x 12%

** B = 10% (441,000-200,000-49,650-22,962-B)
** Balance: 191,350 - 22,962 - 15,308 = 153,080
PROFIT AND LOSS
DISTRIBUTION (REMAINDER)
CLARA CHARLES DANNY DESIREE TOTAL

EQUALLY 38,270 38,270 38,270 38,270 153,080

PERCENTAGE 53,578 45,924 38,270 15,308 153,080

BEGINNING 41,331.60 48,985.60 35,208.40 27,554.40 153,080

ENDING 47,454.80 42,862.40 35,208.40 27,554.40 153,080

AVERAGE 45,924 45,924 33,677.6 27,554.40 153,080

 PROFIT AND LOSS
DISTRIBUTION TOTAL (CLARA)

REMAINDER SALARIES INTEREST BONUS TOTAL

EQUALLY 38,270 62,000 15,000 22,962 138,232

PERCENTAGE 53,578 62,000 15,000 22,962 153,540

BEGINNING 41,331.60 62,000 15,000 22,962 141,293.60

ENDING 47,454.80 62,000 15,000 22,962 147,416.80

AVERAGE 45,924 62,000 15,000 22,962 145,886

 PROFIT AND LOSS DISTRIBUTION
TOTAL (CHARLES)

REMAINDER SALARIES INTEREST TOTAL

EQUALLY 38,270 56,000 16,000 110,270

PERCENTAGE 45,924 56,000 16,000 117,924

BEGINNING 48,985.60 56,000 16,000 120,985.60

ENDING 42,862.40 56,000 16,000 114,862.40

AVERAGE 45,924 56,000 16,000 117,924

 PROFIT AND LOSS DISTRIBUTION
TOTAL (DANNY)

REMAINDER SALARIES INTEREST TOTAL

EQUALLY 38,270 46,000 12,650 96,920

PERCENTAGE 38,270 46,000 12,650 96,920

BEGINNING 35,208.40 46,000 12,650 93,858.40

ENDING 35,208.40 46,000 12,650 93,858.40

AVERAGE 33,677.6 46,000 12,650 92,327.60

 PROFIT AND LOSS
DISTRIBUTION TOTAL (DESIREE)

REMAINDER SALARIES INTEREST BONUS TOTAL

EQUALLY 38,270 36,000 6,000 15,308 95,578

PERCENTAGE 15,308 36,000 6,000 15,308 72,616

BEGINNING 27,554.40 36,000 6,000 15,308 84,862.40

ENDING 27,554.40 36,000 6,000 15,308 84,862.40

AVERAGE 27,554.40 36,000 6,000 15,308 84,862.40