BAM201

NOTE:
● Read Chp1-2
● Modules
● TYPE OF EXAM (T/F, MCQ, PROBLEM SOLVING)

Partnership Operation

Example:

· Annual salary allowance of P100,000 for A, the managing

partner.
. 10% bonus to A after salaries but before deduction for the
Bonus.
(After Salaries means deduction of salary to the Net Income. Next, Before Bonus means before
deduction, multiply to the %) (1,000,000 - 100,000) *10% = 90,000
. The partners share in profits and losses equally.

Case 1: With profit

1. Partnership earned a profit of P1,000,000 before salary allowance

Requirements:
a. Compute for the respectives shares of the partners in the profit
b. Provide the journal entries to close the income summary account to the partners respective equity
account
Solution:

Requirement (a):
A B Total
Amount being allocated 1,000,000
Allocation:

1. Salary of A 100,000 - 100,000

2. Bonus (1M – 100K) x 10% 90,000 - 90,000
3. Allocation of remaining profit
(1M profit – 100K – 90K) =
810K
(810K x 50%); (810K x 50%) 405,000 405,000 810,000

595,000 405,000
As allocated (2PTS) (2PTS) 1,000,000

Requirement (b): 2 POINTS

Closin Income summary 1,000,000
g entry A, Capital 595,000
B, Capital 405,000

Note:
● if partnership incurred loss, no need to compute the bonus. But still you have to
consider the salary, next step the allocation of profit.
● Interest 30% on the beginning capital ( example: Beg Capital of X is amounting to 60K,
60k* 30%= 18K)
● Interest 30% of ending capital (example: End capital of X is amounting to 20k, 20K*
30%= 6k)
● If weighted average follows the computation of average capital, double check the dates,
amount, and less any withdrawals.
● Bonus to A of 1% of the profit after partners salaries but before bonus and interest
(Same computation with the given example above, deduct salary and then multiply
with the bonus rate)

BAM040

● Macroeconomics and Microeconomics Issues (search or read your modules if meron

don)
● Marginal Analysis (review your quiz 1)
● Read your modules
● Accounting and Economic Profit
● Demand and Supply
● Demand and Supply Curve
● Shifters of Demand and Supply
●