Chapter |

$8

KR Totol
15. (c)
P3O,.000 P 90.000
P&0.000
12000 42,000
Solory 30,000
interest
60.000 50,000
Bolonce or Residuol profM P282,000 (c)

Given rotio Plso.000

P6Q.000 + 405 prof ond koss
16 (b]
P70.000
Soles. 40,000
less: Cost of goods sokd P30,000
Gross proft 10,000
Less: Operoting epenses
P20,000
Operohing income. 2,000
Iinterest expense
Less Other expenses
PI8,000 (b)
Net ncome
rather thon
patnes ore considered os an olocotions of net income
Solonies to solonies to portners ore not expenses of
deteminont of et income. in other worcs shoning plan.
and koss
he potnership. but pot o proft
17. (b) should amount to PI5,000 (P40.000
To equote F$0.000 to P25.000 plus bons, the bonus
eqUation should be developed
-P25.000). Bcsed on the foregoing the following
Bonus= 10% (NI - Sakaries- Bonus)
P15.000 .10 [NI - (PI00.000 + P25,000) - P15,000]
PI5.000 .10 (NI - Pl40.000)
PIS.000 .10 NI -PI4,000
P29,000/.1 NI
NI P290,000 (b)

a, oltemativety:
PAO,000 P25.000 + .10 (NI - sakories -bonus)
PA0,000 P25,000 +.10 [NI -(PIC,000 +P25,000) - P15,000]
P40.000 P25,000 + .10 (NI - Pi40,000]
P40,000 P25.000 +.10 NI - Pl4,000
P40,000 PIl,000 +.10 NI
P29,000 .10 N!
NI P290.000 (b)
 39
Partnership

18. (d)

bonu shoukd amount to P12.000 PS2.000

To equote PS2.000 to P40. 000 plus bonus. he profit-sharing
- P4.0.000) to be indifferent under the wo options. Since Cob woutd
Bosed
receve he some bonus, the loto bons woud hove to be P24.000 (PI2.000 2).
on he toregoing. the following equation shoukd be deveiopet
Bopus 10 (Netincomne - Sakares - Bons)
P24,000 10 [NI -(P30.000 +P40.000 - P24.000)
P24.000 10 [NI - P94,000
P24.000 n 10 NI - P9,400
P33,400 10 NI
P33,400 / .10 NI
NIP334.000 (d]
or, alternatlvely.
Bonus PS2,000 - P40,000 = P12,000 x2 mP24,000
P24,000 10 (NI - Sataries - Borus)
P24,000 10 (NI- P70,000 -P24,000)
P24,000= 10 NI - P9,400
P33,400 =.10 NI
NI= P334,000
19. (b)
XX YY Totol

XX Frst P200,000 x 10% 20,000 P 20.000

Over P200,000: (500,000 -
P200,000) x 20%. 60,000 60,000
YY and 2Z: 5% of remaining income
over P300,000: (PS00,000- P20,000
P60,000 - P300,000) x S%.. P 6.000 P .000 12.000
Balance: Allocate equally 136,000 136.000 136.000 4(08,000
P216.000 Pl42.00O0 Pi42,000 PSO0,000 (b}

20. (c)
The weighted-qveroge copital is computed as tokows
January l- July I PA20,000xó months P2.520.0o0
Juty I-August 1 PS40.000xl month S40.000
August - December 31 P495.000 x S months 2475.000
P3.535,Q00
Divided by.. 12 months

Weighted-average capital P 461.250

Multiply by: interest rate peryear 10%
Amount ot interest per year 46,125 (c)
 Chaer
AA
Tota
evest on Avee Capho P36.00O PI8000
PI2000
60.000 P66.000
90.000 (105.00o 150.000
Soiyies (105.000} (105.000)
(315.000
norecse (deceOset
P21,000 P(87,000) P(3.000
P99.000 (a
22 AA DO Totol
PI8.00O
I500 PJ,500 P18.000
Solory PI.500
3.000
Sakonce: fquoly P19.500 P21,000
Income for yeg 016 oniy 2.400 L600 4,000
income for yeor 2015 (6040) P21,900 P3. 100
P25.000
Reported income far yeor 2016
DD EE Total
23. (b}
Interest on Averoge Copita: P8.400
DD: 20%xP42,000. P 6.00O P 14,400
EE: 20% x 30.000. 52,800 52,800 i0S,600
8alarce: equolly
P61.200 P58,800 PI29,000 (bl
Average Copitals:
DO:
i/| - 4/I:P40,000 x 3 PI20,000
4/1 - 8/I:P35,000 x4 140,000
8/|- 10/1 : P45,000 x2 90,000
10/- 12/1 : P50,000 x2 100.000
12/1 - 12/31 : PS4,000 x l S4,000
PS04.000
Divided by: 12 months

weighted - overoge capital. P 42.000

EE:
/|- 6/1:P25,000x5 PI25,000
6/1 - 9/1 :P35,000 x3. I05,000
9/1 - 10/l:P32000 xI 32.000
10/1- 12/1 : P31,.000 x2 62,000
12/1 - 12/31 : P36,000 x I 36,000
P360,000
Divided by: 12 months
Weighted - average copital. P 30.000
 61
Partnershup

24. (d) Totol

DD BB

P 8,000* P1O,000* PI8,000

Salary Allowances 2,800** 3,600* 6,400
Interest on Average Copital 200) 400)
Balance (equally) ( 200)
P10,600 PI3,40O P24,000 (d)

Net incorne of P24,000 would be computed as follows. PSO,000

Service Revenue
Less: Expenses: PIZ.000
Supplies 4.000
Utilities 24,000
Other rniscellaneoUs expenses 5,000
P24,000
Net Income

"DD :P800 x 10 = P8,000

"B8 : PI,000 x 10 - PIO,000
Reter to No. 16 lor discUssion on salaries.
*inlerest on Average Copital:
DD: P30,000 x 2 = P 60,000
P26,000x5= 130,000
P30,000x3 = 90,000
P280,000
x 12% x 10/12
i0 month Average Capitol: P280,000/ 10 P28,000x 12% P2,800
Annual Average Copilal: P280,000/ 12 =P23,333 P2,800
B8 P30,000x4 PI20,000
P40,000 x6= 240,000
P360,000
10-month Averoge Capital :P360,000 | 10 P36,000 x 12%x 10/12 P3.600
Annual Average Copital: P36,000 / 12 P30,000 x12% P3,600
25 (d)
AA BB Total

Salarles P30,000 P30,000 P60,000

Bonus. 2.967
Interest on Average Capitol* 2,167 B00
balonce (equallyl LI483) J484) 2.967)
P30,684 P29,316 PO,000 (di

Reter to No. 16 for discusson on salcaries.

"No bonus, since the bosis of such cornputation woukd be zero
*"interest on Average Capital:
AA: P30,000 x3 P 90,000
P20,000u 2 40,000
P40,000 4= 160,000
P35,000 z 35,000
P325,000
 62 Chapter I
=
10/12 = P2,I67
P32,500 x 8% x P2,
P325,000 / I0 l67
10-Month Averog aoial:
Annual Average
Copital:
P32,500 / 12 P27,083 x
8 =

P 60.000
B8: P20,000 x 3 =
PI0,000 x 2 = 20 /000
P 8,000 x S = 40,000
Pl20.00Q
= PI2,000 x8%x 10/12 PEOO
Coptal: Pl20,D00 / 10 PIO.000
10-Month AverogeCapial: x 8% = P800
PI2O,000 / 12 =
Annual Averoge
26. (b)
copital would be:
The annuai weighted averoge
' Morch i: PSO,000 x 3 PI50,000
210,000
June l: PZ0,000 x 3
Septermber I: P65,000x 4. 260,000
Divided by: Months per onnum
12P620,000
months
P 51667 (b)
The folowing Only
1. 000 noted:
PS, be
should withdrowols should be deducted from capitat to compute
overoge copitol.
2 The guestion is bosed on annual. therefore the denominator should be
welve (12) months. However,10 the 10-month weighted averoge capita
months)
would be P62,000 (P620,000
27. (o)
The weighted averoge copital would be:
WW:
January PI00,000 x6 (Jan. -Jun.) P 600,000
Juty P 88.000 *1 (Jutyl 88,000
August P128.000 x5 (Aug. - Cec.) 640.000
PI,328,000
Divided by: Months per annum 12 monhs
P I10,667 (a]
It should be noted that the number of months in the
computation includes the
curent month (before the dote of investment or dgte of withdrawal)
should stort ot the beginning of the month (iet's soy June 3, since the counting
June should be included in the counting to compute the therefore the month of
PIO0,000). overoge copitai for the
RR:
Janvary PI20.000 x5 (Jon. - May) P 600.000
June P105,000 x 5 (June - Oct.)
November 525.00)
P155,000 x 2(NOv. - Dec.) 310,000
Divided by: Months per unnum PI,435,000
12 months
Drawings are ignored as stated in the P 19,583 (o)
problem.
 63
l'artnership

28. (d) HH
MM AA Total
P200,000 P250.000 P600,000
Copital. Janvory , 2015. PI50,000 50,000
Add Investment 30.000 20,000
60,760 i76,000
Net Income 53,180 62,060
P282,060 P310.760 P826.000
Tota! P233,180
10.000 30.000 50,000
Less: W#hdrawals 10.000
P223,180 P272,060 P280,760 P776,000 (d)
Capitol, December 31, 2015
MM AA Total
HH
P 18.000 P 12.000 P 54,000
Salary P 24,000
Interest on Average Capita
HH: 12%x Pl62,500 19,500
24,700
MM: 12% xP205,833 29,400 73,600
AA: 12%x P245,000. 19,360 48.400
Balance:2:4:4 9.680 19.350
P 53,180 P62,060 P 60,760 PI76.000

"Average Capi#als:
HH:
P 900.000
1/1-7/| : P150.000 x6 540.000
7/1 - 10/1: P180,000 x3
10/1 - 12/31 :P170,000 x 3 510.000
P 1,950,000
12 rmonths
Divided by: Months per annum
162.500
Weighted-average copital.

MM:
i/1 - 8/I:P200,000 x7 P400.000
8/1 - 10/1 : P220,000 x 2 440.000
10/1 - 12/31 : P210,000 x 3 630.000

2,470.000
Divided by: Months per annum 12 months
Weighted-average copita P 205.833

AA:
1/1-11/1: P250.00 x10 p 2,300.000
1/1-12/31 : P220.000 x 2... 440.000
P 2.940,000
Divided by: Months per annum 12 months

Weighted-average capita P 245.000

 Chapter 1

29. (a)
P(2.600,000)
500,000
Withdrawots
Investment
(bokoncing figure)
900.000
Share in net income P(L.200,000)
Net (dececse) ingease P3,000,000 (o]
the partnership: P90.000, 30%
Net income of
and bonus) bonut
30. (c} before soiornies. interest
andbonus t solories + interest +
Bonus .15 (NI sokoies, interest P200,000) + B)
15 (NI Ofter (P5.000 x 12) + (5%x
(P32000 P60.000+ PI0.000+ 8]
15 P32000+
.15 [PI02.000+ 8)
.15
P15.300.158
.15B = P15.300
85 8= P15.300
B= P15,300/ 85
B = Pl8.000 (c)
D Totol
31. (d)
Pl.250 PI,000 P 6,000
P 2.500 Pl.250
5% interest on cepital 5,000 3.000 3,333
8,000
Salaries 5.000 5.000 3,333
1,667
16.666
Boionce (3:32-2) 1,667
Aodifional proft.
PI2.500 P9,250 P4,.583 P6,000
P32,333 (d)
P2.500
A :P50,000 x 5%= 1.250
B:P25,000 x5% =
C:P25,000 x5% = 1250
I000
D :P20,000 x 5%=
Commds
First, determine who amnong theAApartners wil receive a fixed omount, then, share in h
PI2500- P2,500 - P5.000 resulting to ß
for the residuo amount, ie. for of AA represernts 30%, therefore
residua profits of P5,000. The P5,000 shore in residual profits allocoted to oll partners boses
copitalze P5.000 by 30% to arive ot Pló.666 which wil be
on thet profit and ioss ratio.
Second, determine who among the partners will receive o minimum amount, Any
portner who receives an omount lower than the minimum amount is reguired to have
an odditiongl profit, ie. for portner DD, which in DD's case PI,667 is needed to satisty
the minimum omount provided therein. Any partner who receive an amount equo.
or more than the minirmum amount obviousiy does not need on gdditionol profit.
32. (a)
AA B8 CC Total
10% Interest on average copitar P47.250 P 23.865 P 16.235 P 87,350
Salaries 122,325 82,625 204.950
Baiance: equoly (139.308) (139,308) (139,3O8) (417.924)
Increase (decrease). P30.267 P{115,443) P{40,448) P(125,624) (o!
AA: 10% xP472,500 = P47,250
88: 10%xP238,650 = P23,865
CC: 10% xPi62,350 = Pl6,235
 65

Partnership

33. (d) AA B8 CC Total

P 23.865 Pi6.235 P 87.350
P 47,250 82.625 204 950
10% trierest on average cop 122.325 (125,624)
Salaries... (41.875)" (41,875)* (41 874)*
Baiance: Equaly PS6.985 PI66,676 (d)
P 85,200 P(18.01Oj

"Nol rounded due to ciscrepancy of P.

Totai
34. (c) XX
PI20.000 P120.000 P360,000
Capifal, Jonuary 1, 2015
P120.000
Add: Net Income P 30,000 P 45.000 PI0S,000
P 30.000 3.000
SaBaries. L500 L,500
Bonus 3,600 3.600 4,800 12.000
Baiance: 30%: 30%: 40%
P 35.100 P 49,800 PI20.000
P 35,100
Share in Net income 30,000 45.000 105,000
less: drawings - personal 30,000
P 5,100 P 4,800 P 15.000
P 5.100
PI25.100 P124.80O P375.000 (c)
PI25.100
Capital, December 31. 2015
"8onus = 25% (N - Salaries - Bonus)
B=25 (P120,000 - Pl05000- 8)
B = P3,750- .25 B
1.25 B = P3.750
B= P3.000; PI,500 for XX and YY.

35. (b) PP AA Totoi

CC_
P28.000 P28.000
Salary P28.000 Pl6.800 ?1.200 36.000
Balance (P84,000 - P28,0Ø0). .5:3:2 (3.000) 4.200 (1200}
Additional profit to PP (P2,000- P!6,800}
P25.000 P21.000 P38,000 P84,000* (b)

"Net Income wOuld be:

Fees
P180.000
96.000
Less:.Expenses
P 84.000

come trom CC ond

It should be noted thai the additiongl profit given to PP octuoly doitionat prot.
AA based on their respective revised P&L rotio (5:2). The P4.200.
should not be added to total net income becaUSe by doing so, it wouio be tontomoun:
to distorting the net income of P84,000.
of P84 O00.
On the other hond, ossuming the P4.200 woula be odded to net income shouc be
the totol net income will now be P88.200, but an ad; ustments of P4.200
reflected to moke it P84,000, and such acjustments wi be shored Occordng'y by
and AA (5:2). Mathematicaly, the tinol results remain the some.
66
Chapie
Kelly
Rob
Turman Totai
36 (a) Hunt
P20,000
Pi0.000
2,000 P 4.700
P30,000
5,000
Salaries 3.000
4,500
P 2,000
13,450 16,200
Bonus
i0% Interest on Averoge Cop
5.000
13.4 50
13,450
13.45O
53,800
Bolance (equalBy)
P41,450
P29,950
P15,450 PI8,150
Pl05,000 (a
Incone - Bonus)
*Bonus =(3% + 2%) (Net
B= 5% (P105,000- 6)
B = P5,250 - 0S B
1.05 B = P5.250 (PS.000 x 3/5). whiie Rob wil
B = PS.250 / 1.05
6 = P5,000.
therefore Hunt shouid
receive P3,000
receive
P2.000 (PS.000 x 2/5).

37. (d)
net income: PP
Corecting the oliocated
RR
P 3,000
Total
P 3,000 P 6.000*
income, equally 9,750 9,750
Corect allocation of net per books, equaity 19,500
Aliocation of net incoe
Adjustments increased (decreosed) P(6.750) P{6,750) P13,500 (d!
recorded in the ood
noted that the Pi9,500 waS erroneouslynecessory to reflect the
# shouid be Iooking for are cdjustments
books: what we ore simply
ollocafion of net incCome.
be:
"The adjusted/corected net income for 2015 would
income (per books) P19,500
Unadjustea Net
Add (deduct): odjustments
Understaternent of depreciafion (2,100)
Overstatenent of ending inventory (1,400)
Adjusted net income P6,000
38. (c) 2015 2016

Unadjusted net income Pl4,400 P13,600

Add (deduct): adjustments:
Prepoid expense - 2015 1,600 ( I,600)
ACCrUed expense - 2015 L200) 1,200
Deferred income-20i6. ( L400)
Accrued incorme - 2016 1,000
Adjusted Net income Pl4,800 P12,800

Totaladjusted Nei income (P14,800 + PI2.800) P27.600

D'vided by .. 2
Average net income PI3,800
Divided by (capitaized af) 20%
Aggregate capitat P69,000 (c)
 67
Partnership

39. (b)
() Profit and loss ratio:
New
Old
90% 45%
MM 50% 27%
NN 30% X
18%
20%
PP 10% 10%
100% 100% (D)
100%
Pi2.500
(2) Reported Net Income
Add (deduct): adjustments 800)
Prepaid expense - 2015
b. AccrUed expense - 2016
600)
700
Cc. Unearned income - 2015
500
d. ÁCcrued income - 2016
P12.300
Adjusied Net Income 18%
Multiply by: P &L ratio of 00
P 2.214 (b
Share of GO in et income
indicotes the exDense was
a. Omission of prepaid expense at the end of 2015 understating
thereby
recognized when paid in 2015 and not when used in 2016,
fhe expenses and overstating income in 2016. understate epenses ond overstale
b. Omission of accrued expense at the end of 2016
income. wus recognized
C. Cmission of uneamed income at the end of 2015 indicotes incomeunderstating the
thereby
when received in 2015 and not when earned in 2016,
2016 income.
income.
d. Omission of gccrued income at the end ot 2016 understate

40. (c) B Torai

P4,000 P4,000
Bonus®.
Interest: 10% (Pl10,000- Pl00,000) PI.000 1,000
Pl0,000 12000 22 000
Salaries
3400 17 000
Balance: 4:4:2.
PI9.400 P44.000 {c)

*Bonus = 10% (NI- Bonus)

B=.10 (P44,000- 6)
B= P4,400- 108
1.108 = P4,400
B=PA,000
 Chapter
Totat
Copital, January i. 2015
Add: lnvestrnent P475.00
Net income* 60.00
Total
207.750
Less: withdrawats P742.750
70,000
Copitai, December 31, 2015
"Net Income:
P672,750 (d)
P36.000
Totol
Salaries P60.000 P 48,000 Pl44,000
interesf on Average Capital: 13,000
X: 10% xPI30,000 15,000
Y: 10xP15O,000 20,750
Z: 10 xP207,500 5.000 5,000 48,750
Baionce 5,000 15,000
Average Capital:
P207,750
X: PI00,000 x6 = P 600000
PI60,O00 x 6 = 960,000
Pi.560,000+ 12 = P130,000

Z: P225,000 x 9 = P2.025.000
P155,000 x3 465.000
P2,490.0o00 12 = P207.500
42. (a)
Frst 6 mnonths X
Eovally 100.000 0Õ. 000 Total
200,000
Second 6 months
Bad debts expense (equaily) (20,000) (20,000) (40.000)
Baiance (40%:40%:20%) 136.000 136,000 68,000 340,000
300,000
Share in profit 216.000 500,000
43. (a)
First 6 months
I Ioto!
Salaries 15,000 15,000
Balance (60%:40%) 96.000 64,000 l60,000
175,000
Second 6months
Salaries 25,000 25.000
Balance (40%:40%:20%) 60,000 60.000 30.000 150,000
175,000
196.000 124,000 30,000 350,000
Eventy means overage
 69
Partnership

44. (b) Total

PI25.000 P75.000 P200.00

Copitol, March 1. 2015 34.540 4860 39 400
Add Net income
P159.54) P79 860 P239,400
Total 30.000 30,000
20.000
Less: Drawings
P139,54o P49 R60 P189 400 (b!
Capital,Decernber 31, 2015.
AA BB Tota!
"Alocation of Net ncome
P 25,000 P 25.00O
Salory (10 months) I440 40
Bonus 4,860 12.960
Balance: 125:75
8,100
P 34.540 P 4,860 P 39,400

P233.000
Sales 5,000
Less: Sales returns....
P228.000
Net Saies
Less: Cost of goods 'sold: -0
Inventory, March 1 196.000
Add: Purchasas...
P196.000
Cost of goods avgilable for sale 123.000
Less: Inventory, December 31 73.000
P105.000
Gross profit
Less: Operoting Expenses (P60,000- P2,500- P950 65,600
+ PI,550+ (20% x P45,000 x 10/121]
P 39,400
Net Income

'Bonus 10% (NI -Salaries]

8=.10 (P39,400 -(P30,000 x10/12))
B=.10 (P14,400)
B= Pl,440

45. (d)
bons tom he new pomer,
The bonus method impled that the old parmer. ether received a
CC, the new pantner invested on
or they paid a bonus to the neW portner. In this case, Accorgingy. the excess
amount in excesS of the omount credited to CC's copiia account.
treated as an odstent
should be treated as a bonus to AA and B8. Ths bonus shouo be
using AA ond B8's clc
to the old partners' copital occounts and shouid be aocoted by
profit and loss ratio.
 Chapter
70

oovontoge when
46. (b) a geater
Ff wal have the bonus ond oso
tot- there sC
Whether there isa orofit
profit, FF wil obtoin a 205
oro os
bonus on profis
hand
before
will receve ony
08 o the t0tthethe
profit olfer
on ihe other
profit ofter the bonus.exomole us trates ths
bonus. The foliowing Protit

40% 603
P&Lrotio 200
200
800
20% Bonus 320 480
Share in profit 480 L,000
Tota! distribution 520
since FF hos o
sMoller percentoge shore in the
seen.
con eoy be
case ofo oss
Ioss.

47. (d) (P650 000 - PS20 000) x .40

assigns his or her interest in the
48. (d) not oissoived when a portner does not in itself
ossignment
A portnership is
Dortnership to o third poty becouse such on change
entitles the assgnee to receve
among potners. Such assignment ony and in potoe
the re[ations
interest partner's interest in future portnership profits partner. howe
the ossgning The ossgnee ooes not
becomeO
oSsets in the event of iguiOohon. share n manogement ot the partnershio
tO
ond aoes not obtain the nght the only change equred on the
potne
asiOnee does not become o potner, e
asSgnor poriner to he ossgnee
boors s for transter of the captol nterest o the the 35 Entertainment Comoony
assignment by BeIy to Yess of his S03 interest in
recorded ore foows

70.000
Betty. copitol (Pi40.000 x 50% 70.000
Yessir, capita
Betht
The amount of the copitol hove based s equo fo fhe recorded omount of
copito at the time of the ossignment, ond it s incependent of the consideration
received by Betty for her 50% interest. the recorded omont of Betty's is P70.000
then the omount of the ronsfer entry is P70.000. regardles of whether Yessir poys
Betty P70. 000 or some other amount. Therelore. the.copita of the portnership after
the ossignment of interest remoins the some ot P400.000.

49. (b)
No googw btobe recognized in cases of adnission of new patner (refer to NO. S53 for tther
discussion) therefore. book voiue method is used.

The copital balances after odmission ae os tollows:

KK: P252.000 x 80% = P201,600
P126.000 x 80% = 100.800
MM: P 42.000 x 80% 33,600 (b)