Partnership Operations

Problem # 1 – Salaries

Ser Geybin and Kuya Norvin formed a partnership with initial capital contributions of 300,000 and
600,000 respectively. Partnership agreement are as follows:

• Monthly salary allowance of 10,000 for Ser Geybin and a Quarterly salary of 25,000 for Kuya
Norvin

• Profit and loss are to be distributed equally

• Net income for the current year amounted to 1,000,000

Requirements:

1. Compute for each partner’s share in profit or losses of the partnership

a) Assuming all facts presented above are present

b) Assuming the partnership’s Net income for the years was only 150,000

c) Assuming no profit and loss sharing agreement.

2. For each scenario above, provide for the journal entry to close the income summary account to
the partner’s respective equity accounts.

Problem # 2 – Bonus

Donna, Jelai and Zeinab formed a partnership which they call DOLAINAB Partnership. The partnership
agreement stipulates the following:

• Monthly salary allowances of 30,000 for Jelai and 50,000 for Zeinab.

• Bonus to Jelai of 10% of profit after partners’ salaries but before deducting the bonus

• Profit and losses are to be distributed on a 20:30:50 ratio.

• Net income for the current year amounted to 2,500,000

Requirements:

1. Compute for each partner’s share in profit or losses of the partnership

a) Assuming all facts presented above are present

b) Assuming instead that the partnership incurred a Net loss of 30,000

2. For each scenario above, provide for the journal entry to close the income summary account to
the partner’s respective equity accounts.

Problem # 3 – Bonus with limit

Cong TV and Geo Ong formed a partnership. The partnership agreement stipulates the following:

• First, Cong TV shall receive 10% of profit up to 500,000 and 15% over 500,000

• Second, Geo Ong shall receive 5% of the remaining profit over 100,000

• Remainder shall be shared equally

• Net income for the current year amounted to 3,000,000

Requirement:

1. Compute for each partner’s share in profit or losses of the partnership

Problem # 4 – Interest on capital

Ninong Ry and Chef JP formed a partnership with initial capital contribution amounted to 100,000 and
150,000 respectively on January 1, 2023. On June 1, Chef JP withdrew 50,000, made additional
investment of 30,000 on October 30 and another 50,000 on December 1. Ninong Ry on the other hand
made on withdrawal nor investment during the year. The partnership agreement stipulates the
following:

• Quarterly salary allowance of 30,000 for Ninong Ry.

• Interest of 15% on Initial capital contribution for Chef JP

• The partners share in profits and losses on a 60:40 ratio

• Net income for the current year amounted to 800,000

Requirement:

1. Compute for each partner’s share in profit or losses of the partnership

a) Assuming all facts are present

b) Assuming instead that interest is based on weighted average capital balances

2. Compute for each partner’s ending capital balances after distribution of profit and losses.
Problem # 5 – Profit after salaries

Rendon and Whamos formed a partnership. The partnership agreement stipulates the following:

• Annual salary allowances of 150,000 for Rendon and 80,000 for Whamos. The salaries are
recognized as expense.

• The partners share in profits equally.

• Net income for the current year is 500,000

Requirement:

1. Compute for each partner’s share in profit or losses of the partnership

Problem #6 – Reconstruction of information

Ivana Alawi is a partner to a partnership with 20% participation if profits. During the year, Ivana Alawi’s
capital accounts has a net increase of 200,000. Ivana Alawi made the following transactions during the
year:

• Additional investments – 50,000

• Capital Withdrawals – 30,000

Requirement:

1. How much profit did the partnership earned during the year?

Problem #7 – Reconstruction of information

Mr. Beast and Jake Paul formed a partnership. The partnership agreement stipulates the following:

• Semi-annual salary of 75,000 for Mr. Beast.

• The partners share in profits and losses on a 30:70 ratio.

Requirement:

1. If Mr. Beast’s share in the partnership profits was 500,000, how much was the share of Jake
Paul?

Problem # 8 – Comprehensive problem

Ranz and Niana and Natalia formed a partnership on January 2, 2023.

According to the general partnership contract, the partners were to be renumerated as follows:

• Salaries of 48,000 and 36,000 would be allocated to Ranz and Niana respectively.

• Interest of 8% on average capital balances will be allocated.

• Niana will receive a bonus of 10% on income after interest and bonuses.

• Remainder shall be divided 60:40

• Net income for the current year is 85,000

The following transactions were made by Ranz and Niana During the year

Ranz:

January 1 – 20,000 cr

April 1 - 5,000 cr

October 1 5,000 cr

Niana:

January 1 - 40,000 cr

March 1 - 10,000 dr

September 1 - 10,000 dr

November 1 - 10,000 cr

Requirement:

1. Compute for each partner’s share in profit or losses of the partnership