1. Chris is a partner in a local partnership.

The profit and loss sharing agreement includes an interest

allocation of 7 percent on the invested capital. The capital account of Chris reveals that he had a
beginning capital account balance of P50,000. He withdrew P10,000 on May 1 and invested P25,000 on
October 31. Rounded to the nearest peso, what is Chris’ weighted average capital balance?

2. Richard is a partner in a local partnership. The profit and loss sharing agreement includes an interest
allocation of 8 percent on the invested capital. Richard had a beginning capital balance of P60,000. He
invested P30,000 on March 1, withdrew P20,000 on August 1, and invested P40,000 on December 1.
Rounded to the nearest dollar, what dollar amount is allocated to Richard as interest on capital balance
if the weighted average capital balance is used as the basis of the computation?

3. Shawn is a managing partner in a local business. Part of his profit allocation is a bonus based on the
store’s operating income. The bonus is 8 percent of operating income in excess of P200,000 after
deducting the bonus. If operating income for the year is P250,000, what is Shawn’s bonus (rounded to the
nearest dollar)?

4. Norman, Sarah, and Taylor are partners. The partnership income for the period is P130,000. The partnership
agreement assigns salaries to the partners of P10,000, P15,000, and P18,000, respectively. In addition, the
partners have profit and loss residual ratios of 30%, 45%, and 25%. What is the amount of profit and loss
allocated to Sarah as a result of applying the residual ratios?

5. Nick, Joe, and Mike are partners. The company has P150,000 net income for the period. How is this
income divided to the partners if the following profit and loss allocation process is followed?
Nick Joe Mike
Weighted average capital P200,000 P350,000 P180,000
Salary 25,000 15,000 35,000
Bonus .1 (NI - P100,000)
Residual profit/loss ratios .25 .45 .30
Return on invested capital 9%

6. Harriet, Bob, and Tim are partners. Income for the current year is P500,000. The profit and loss agreement
states that salaries are P35,000, P50,000, and P40,000, respectively. In addition, the residual profit and loss
ratios are 40%, 30%, and 30%, respectively. How much of the profit is allocated to Harriet?

7. Suzanne, Thomas, and Vicky are partners. They have average capital account balances of P200,000,
P250,000, and P400,000, respectively. In addition, they have residual profit and loss ratios of 15%, 25%, and
60%, respectively. If income for the year is P300,000 and the partners earn 8 percent return on invested
capital, how much will be allocated to Thomas?

8. Johnson and Pritchard are partners. They are changing the profit and loss ratios from the current 60/40 to
70/30. At the date of the change, vacant land owned by the partnership has a book value of P50,000
and a market value of P60,000. The partners choose to prepare an itemized list of assets with market
values different from book values. If the land is sold in the future for P80,000, how much of the gain will be
assigned to Pritchard?

9. Karen and Andrea are currently changing their partnership profit and loss ratios from 75/25 to 60/40. They
have created a list of assets that have market and book value differences. One of the assets is a building
with a P300,000 market value and P200,000 book value. Two years after changing the profit and loss ratios,
the building is sold for P380,000. How much of the profit is allocated to Andrea?

10. Peter and Ronald are partners. They have shared profits and losses 65/35 for a number of years. Peter
has indicated that he is going to reduce his involvement in the partnership so the profit and loss ratio is
being modified to 45/55. At the date of the change in the profit and loss ratio, the partnership own vacant
land with a market value of P300,000 and a book value of P100,000. Peter and Ronald compile a list of
assets with market and book value differences. Two years after the change in the profit and loss ratios,
the land is sold for P450,000. How much of the gain is allocated to Peter?

11. Jennifer and Robert are partners who are changing their profit and loss ratios from 60/40 to 45/55. At the
date of the change, the partners choose to revalue assets with market value different from book value.
One asset revalued is land with a book value of P50,000 and a market value of P120,000. Two years after
the profit and loss ratio is changed, the land is sold for P200,000. What is the amount of change to
Jennifer’s capital account at the date the land is revalued?

12. The same information in No. 11, what is the amount of change to Jennifer’s capital account at the date
the land is sold?