Partnership Partners hip Operations Operation s
21
CHAPTER 2 MULTIPLE CHOICE ANSWERS AND SOLUTIONS 2-1:
d
Jordan
Pippen
Annual salary P200,000 Balance, equally ( 20, 20 ,000 00 0)
P120,000
P80,000
( 10,000)
( 10,000)
Total P180,000
P110,000
P 70,000
JJ
KK
LL
Bonus (.20 X P90,000) P 18,000 Interest JJ (.15 X P100,000) KK (.15 X P200,000) LL (.15 X P300,000) 90,000 Balance, equally ( 18,0 18,000 00))
P18,000
–
P15,000
– P 30,000
–) –) P45,000)
( 6,000)
( 6,000)
( 6,000)
P27,000
2-3:
Total profit share P 90,000 a
2-4:
a
Total
2-2:
a
Total
Total Interest Allan - .10 X (P40,000 + 60,000 /2) Michael - .10 X (P60,000 + 70,000/2) P 11,500 Balance, equally __28,000 Total
P 24,000
–
P39,000
Allan
Michael
P 5,000
) P 6,500)
_14,000
_14,000
P 19,000
P20,500 P 28
,000 2-5:
a
Fred
Greg
Henry
P12,000
P 6,000
P 4,000
Total
Interest (.10 of average capital) P 22,000 Salaries
30,000
20,000
50,000 Balance, equally (105,000)
( 35,000)
( 35,000 )
Total
P 7,000
( P29,000 )
( 35,000) (P11,000 ) (P 3
3,000) 2-6:
b Average Capital
Date
Capital Balance
January 1 July 1 August 1
140,000 180,000 165,000
Months Unchanged
Peso Months
6 1 5
P 840,000 180,000 __825,000
12
P1,845,000
Average ca capital - P1,845,000/12
=
P153,750
Interest
=
P 15,375
(P153,750 X 10%)
22
2-7:
Chapter 2
c
Date
January 1 April 1 June 1 September 1
Capital Balance
Months Unchanged
P16,000 17,600 19,200 15,200
Average Capital(P201,600/12) Capital(P201,600/12) = 2-8:
2-9:
2-10:
Peso Months
3 2 3 4
P 48,000 35,200 57,600 __60,800
12
P201,600
P16,800
a Net profit before bonus bonus Net profit after bonus (P24,000/120%) (P24,000/120%)
P 24,000 __20,000
Bonus to RJ Balance (P24,000-P4,000)X3/5
4,000 __12,000
Total profit share
P 16,000
a
LT
AM
Total
Interest Salaries Balance, 3:2
P3,200 15,000 (11,580)
P 3,600 7,500 ( 7,720)
P 6,800 22,500 ( 19,300)
Total
P 6,620
P 3,380
P 10,000
b Ne Net incom come aft after salary, ry, interes erestt and bonus Add Add back back:: Sal Salar ary y (P10 (P10,0 ,000 00 X 12) 12) Interest (P250,000 X .05)
P467,500 P120 P120,0 ,000 00 __12,500
_132,500
2-11:
Net income after bonus (80%) (80%) Net income before bonus (P600,000/80%) (P600,000/80%)
P600,000 _750,000
Paul's bonus
P150,000
b
CC
DD
EE
Salary
Total
P 14,000 P 14,
000 Balance 28,000 Additional profit to DD ______–
P14,000
P 8,400
( 1,500)
__2,100
Total
P12,500
P10,500
Net income Fees Earned Expenses
P90,000 _48,000
Net Income
P42,000
5,600 (
600)
P 19,000 P 42
,000
Partnership Partners hip Operations Operation s
2-12:
23
c
Interest
LL
MM
NN Total
P 2,000
P 1,250
8,500
–
–
9,500
5,700
3,800
_____–
__7,050
_____–
P20,000
P14,000
P 4,550 P 38,
P 750 P 4,
000 Annual Salary 8,500 Additional profit to give LL, P20,000 19,000* Additional profit to give MM, P14,000 __7,050 Total
550 *(P9,500/50%) = P19,000 2-13:
a
RR
Excess (Deficiency) RR (P80,000 - P95,000) SS (P50,000 - P40,000) P 5,000 Balance 4:3:1 __95,000 Total P100,000
Net Income
(200,000 - 100,000) =
SS
TT
Total
P15,000 –
– (P10,000)
_47,500
_35,625
_11,875
P62,500
P25,625
P11,875
P100,000
–) –)
2-14:
2-15:
b AA - 100,000 X 10% 150,000 X 20% P 40,000 Remainder, 210,000 BB (60,000 X .05) CC (60,000 X .05) 6,000 Balance, equally _204,000 Total P250,000 a
AA P 10,000 30,000
__68,000
_68,000
_68,000
P108,000
P71,000
P71,000
P 16,800
c Total profit share of Pedro Less: Sa Salary to Pedro Interest
BJ
CJ
Total
P4,000 P1,000
–
–
12,000
_6,800
__3,400
P7,800
P19,400
P200,000 P 50,000 __20,000
__70,000
Share in the balance (40%)
P130,000
Net profit after salary and interest (130,000/40%) (130,000/40%) Add: To T otal Salaries Total Interest
P325,000 P150,000 __70,000
Total Partnership Income
_220,000 P545,000 Chapter 2
24
2-17:
Total ) )
) P 3,000
Bonus to CJ Net profit before bonus P44,000 Net profit after bonus (P44,000/110%)P40,000 – – P4,000 Interest to BJ – 1,000 Salaries P 10,000 22,000 Balance, 4:4:2 __6,800 _17,000
2-16:
CC
P 3,000
AJ
Total P44,000
BB
c Net income before extraordinary extraordinary gain and bonus (69,600-12,000) (69,600-12,000) Net income after bonus (57,600/120%) (57,600/120%)
P 57,600 _48,000
Bonus to RR
P 9,600
Distribution of Net Income: JJ
Bonus Balance, equally
– P 24,000
RR
P 9,600 24,000
Total
P 9,600 48,000
2-18:
2-19:
Net profit before extraordinary extraordinary gain Extraordinary gain
P 24,000 __4,800
P 33,600 __7,200
P 57,600 _12,000
Total a
P 28,800
P 40,800
P 69,600
Mel
Jay
Total
Interest Annual Salary Remainder 60:40
P 20,000 36,000 __60,000
P 12,000 – _40,000
P 32,000 36,000 _100,000
Total
P116,000
P 52,000
P168,000
DV
JE
FR
P 15,000
P 3, 3,750
(P 7,500)
( 36,875)
( 22,125)
( 14,750)
(P 21,875 )
(P 18,375 )
a
Interest on excess (Deficiency) P 11,250 Remainder 5:3:2 ( 73,750 73, 750)) Total
Total
(P 22,250 ) (P 6
2,500) 2-20:
c Correction of 1998 profit: Net income per books Understatement of depreciation Overstatement of inventory, December 31
P 19,500 ( 2,100) ( 11,400)
Adjusted net income
P 6,000 Pete
Rico Total
Distribution of net income per book: Equally
P 9,750
P 9,750 P 19,
Distribution of adjusted net income Equally
( 3,000 )
( 3, 3,000) ( 6, 6,
P 6,750
P 6,750
500
000) Required Decrease P 13,500 2-21:
a
Tiger
Salaries P164,000 Interest 54,000 Bonus (P360,000-P54,000)X.25 76,500 Remainder, 30:70 __65,500 Total P360,000 Partnership Partners hip Operations Operation s
Woods To Total
P 64,000
P100,000
24,000
30,000
76,500
–
__19,650
__45,850
P184,150
P175,850 25
2-22:
a
Clotty
2-23:
Cotto
Total
Salaries Commission Interest Bonus, schedule 1 Remainder, 60:40
P 20,000 – 32,000 30,000 __35,640
– P 25,000 33,600 – _23,760
P 20,000 25,000 65,600 30,000 __59,400
Total Schedule 1 Net income before salary, commission, commission, interest and bonus Less: salaries
P117,640
P 82,360
P200,000
P200,000 __20,000
Net income before bonus Net income after bonus (P180,000/120%) (P180,000/120%)
P180,000 _150,000
Bonus a
P 30,000 Mike
Tyson
Capital balance, beginning P1,000,000 Additional investment 300,000 Capital withdrawal
P600,000
P400,000
100,000
200,000
-200,000
( 100,000)
Capital ba balance be before pr profit an and lo loss di distribution P1,000,000
P500,000
P500,000
P200,000
P300,000 P 50
__60,000
__40,000
Total
P260,000
P340,000 P 60
Total P1,600,000 Drawings
P760,000
P840,000
( 200,000 )
( 300,000) ( 5
P560,000
P540,000
Total
__-
300,000
Net income: Salary 0,000 Balance, 3:2 __100,000 0,000
00,000) Capital balance, end P1,100,000 2-24:
d Average Capital - King: King:
Date
Capital Balance
January 1 April 1
P40,000 55,000
Months Unchanged
3 9
Peso Months
P120,000 _495,000
12
P615,000
Months Unchanged
Peso Months
Average Average capital capital – P615,000/12 P615,000/12 = P51,250 P51,250 Average Capital - Queen: Queen: Date
Capital Balance
January 1 April 1
P100,000 130,000
7 5
P700,000 __650,000
12
P1,350,000
Average capital - P1,350,000 / 12 =P112,500 = P112,500 26 2-24: Continued
Chapter 2
Distribution of Net Income - Schedule 1 King
Queen
Total
Interest Bonus, Schedule 2 Salaries Residual, 50:50
P 5,125 12,725 25,000 ( 2,050)
P11,250 – 30,000 _(2,050)
P16,375 12,725 55,000 _(4,100)
Total
P40,800
P39,200
P80,000
Schedule 2
Net income before allocation allocation Less: Interest
P80,000 _16,375
Net income before bonus Net income after bonus (P63,625/125%) (P63,625/125%)
P63,625 _50,900
Bonus
P12,725
Capital Balance December 31:
2-25:
King
Queen
Total
Capital balance, January 1 Additional investment Capital balance before profit and loss distribution Net income (Schedule 2) Drawings (P400 X 52)
P40,000 _15,000
P100,000 __30,000
P140,000 __45,000
P55,000 40,800 ( 20,800)
P130,000 39,000 ( 20,800 )
P185,000 80,000 ( 41,600)
Capital balance, December 31
P75,000
P148,400
P223,400
d Total receipts (P1,500,000 + P1,625,000) Expenses
P3,125,000 ( 1,080,000)
Net income
P2,045,000
Distribution to Partners Red – P1,500,000/P3,125,000 P1,500,000/P3,125,000 X P2,045,000 = Blue – P1,62 ,625,000/P3,12 ,125,000 X P2,04 ,045,00 ,000 =
P 981,600 (1) _1,06 ,063,400
P2,045,000 Capital balance of Blue Dec. 31 Capital Balance, Jan. 1 Additional investment Capital balance before profit and loss distribution Profit share Drawings Capital balance, Dec. 31
P 374,000 ___22,000 P 396,000 1,063,400 ( 750,000 ) P 709,400 (2)
Partnership Partners hip Operations Operation s
2-26:
27
a
Ray
Sam
P150,000
P180,000
_______
__60,000
150,000
240,00 ,000
15,000
20,000
51,000
34,000
66,000
54,000
Total 510,000 Salaries _42,000
216,000
294,000
_18,000
_24,000
Total 552,000 Drawings (42,000)
234,000
318,000
(18,000 )
(24,000)
Total
Capital balances, March 1 P330,000 Additional investment, Nov. 1 __60,000 Capital ba balances be before sa salaries, pr profit an and Dr Drawings 390,000 Profit share: Interest 35,000 Balance, 60:40 85,000 Total 120,000
Capital balances, Feb. 28 P510,000 2-27:
P216,000
P294,000
Susan
Tanny
P150,000
P30,000
a
Total
Capital balances, 1/1 P180,000 Additional investment, 4/1
8,000
8,000 Capital withdrawals, 7/1 _(6,000) _(6,000) Balances before profit distribution 182,000 Profit distribution: distribution: Interest 27,450 Bonus (20% x P30,000) 6,000 Balance, equally (3,450)
_______
(6,000)
158,000
24,000
23,400
4,050 6,000
Total
(1,725)
(1,725)
21,675
_8,325
179,675
32,325
(12,000)
(12,000)
30,000 Total 212,000 Drawings (24,000) (24,000) Capital balances, 12/31
P167,675
P20,325
P188,000
28 2-28:
Chapt Cha pter er 2 a
Sin
Capital balances, beg. 1st year P300,000 Loss distribution, 1st year: Salaries 30,000 Interest 30,000 Balance, 5:3:2 (80,000) Total
P110,000
Tan
P80,000
20,000
Uy Total
P110,000
10,000
11,000
8,000
11,000
(40,000)
(16,000)
(24,000)
( 9,000)
( 8,000)
( 3,000)
101,000
72,000
107,000
(20,000) Total 280,000
Drawings (30,000) Capital balances, beg. 2nd year 250,000 Profit distribution, 2nd year: Salaries 30,000 Interest 25,000 Balance, 5:3:2 (15,000) Total
(10,000)
(10,000)
(10,000)
91,000
62,000
97,000
20,000
10,000
9,100
6,200
9,700
( 7,500)
( 4,500)
( 3,000)
21,600
_1,700
16,700
112,600
63,700
113,700
_(10,000)
(10,000)
_(10,000)
P102,600
P53,700
P103,700
40,000 Total 290,000 Drawings _(30,000) _(30,000) Capital balances, end of 2nd year P260,000 2-29:
c
Jay
Capital balances, 1/1/06 P90,000 Additional investment, 2006 Capital withdrawal, 2006 _(9,000)
Loi Total
P30,000
P30,000
_(5,000)
_(4,000)
5,000 5,000 ______
Capital balances 86,000 Profit distribution, 2006: Interest Salary Balance, equally __3,000
25,000
26,000
3,000 7,000 _1,000
3,000 _1,000
3,000 9,000 7,000 _1,000
Capital balances, 1/1/07 105,000 Additional investment, 2007 Capital withdrawal, 2002 (11,000)
36,000
30,000
39,000
5,000 ______
_(3,000)
Capital balances 99,000 Profit distribution, 2007: Interest 10,500 Salary Balance, equally __4,500
41,000
27,000
31,000
3,600
3,000
3,900
7,000 _1,500
_1,500
_1,500
Capital balances, 1/1/08 121,000 Additional investment, 2008 Capital withdrawal, 2008 _(6,000)
53,100
31,500
36,400
______
_(4,000)
53,100
27,500
Capital balances
P30,000
Kay
35,000
5,000 _(8,000)
7,000
6,000 6,000 _(2,000) 40,400
121,000 Profit distribution, 2008: Interest 12,100 Salary Balance, equally ___9,900
5,310
3,150
3,640
7,000 __3,300
__3,300
__3,300
Capital balances, 12/31/08 per books P150,000 Understatement of depreciation (6,000) (6,000)
P68,710
P33,950
P47,340
Adjusted capital balances, 12/31/08 P144,000
P66,710
(2,000)
7,000
(2,000)
(2,000)
P31,950
P45,340
Partnership Partners hip Operations Operation s
2-30:
29
a
Ken
Len
Mon
Total
Capital balances, 1/1/07 P300,000 Additional investment, 2007 40,000 Capital withdrawal, 2007 ( 20,0 20 ,000 00)) Balances 320,000 Profit distribution, 2007 (Schedule 1) Salary 60,000 Balance, beg. Capital ratio 60,000 Capital balances, 1/1/08 440,000 Capital withdrawal, 2008 ( 60,0 60 ,000 00)) Balances 380,000 Profit distribution, 2008: Salary 60,000 Balance, beg. capital ratio __60,000 Capital balances, 12/31/08 P500,000
Schedule 1 – Computation of net profit:
P100,000
P100,000
P100,000
40,000 ( 20,000)
_______
_______
80,000
140,000
100,000
60,000 20,000
20,000
20,000
100,000
160,000
180,000
( 20,000)
( 40,000 )
_______
80,000
120,000
180,000
60,000 __13,636
__21,818
__24,546
P 93,636
P141,818
P264,546
Total capital, 2008 (P647,500 – P147,500) Total capital, 2007 (P300,000 + P40,000 – P80,000)
P500,000 _260,000
Total profit for 2 years
P240,000
Net profit per year (P240,000 / 2) 2-31:
d
Capital balance, 1/1/08 Additional investment Withdrawals Withdrawa ls Cap. Cap. bal. bal. befor beforee P/L dist. dist. NP: Salary (16,500 x 12) Interest on EC (15%) Bala Balanc ncee 25:3 25:30: 0:45 45 Total Capital balance 12/31/08 2-32:
P120,000
_ Nardo _ P280,000 96,000 376,000 376,00 0 42,000 ( 19,8 19,875 75 ) 22,125 P398,125
__Orly P300,000 60,000 ( 90,000 ) 270,00 270 ,000 0 198,000 45,000 ( 23,8 23,850 50 ) 219,150 P 489,150
d Sam capital, beginning Additional investment (Land) Drawings Capital balance before net profit (loss) Capital balance, end Profit share (40%) Net profit (P50,000 ÷ 40%)
__Pedro_ P170,000 ( 72,000 ) 98,00 98,000 0 25,500 ( 35,7 35,775 75 ) ( 10,275 ) P 87,725
P120,000 60,000 ( 80,000 ) 100,000 150,000 50,000 P125,000
30
2-33:
_Total_ P750,000 156,000 (162,000) 744,00 744 ,000 0 198,000 112,500 (79, (79,50 500 0) 23 2 31,000 P975,000
Chapter 2
a
__ Joe__ P 80,000
Capital balance, 1/2/07 Net loss- 2007: Annual salary 96,000 10% 10% inter nteres estt on beg. eg. cap capital ital 8,000 ,000 Bal. Bal. beg beg. cap cap. ratio atio:: 8:4 8:4 ( 108, 108,00 000) 0) Total ( 4,000) Capital balance 76,000 Drawings ( 4,000) Capital balance, 12/31/07 72,000 Net profit- 2008: Annual salary 96,000 10% interest on BC 7,200 Bonus to Joe–NPBB – P 22000 NPAB (22000/110%)20000 (22000/110%)20000 2,000 Balance equally ( 67,300) Total 37,900 Total 109,900 Drawings ( 4,000) Capital balance, 12/31/08
105,900
__Tom__ P 40,000
__Total__ P120,000
48,000 4,00 4,000 0 ( 54,0 54,000 00)) ( 2,000) 38,000 ( 4,000) 34,000
144,000 12,0 12,000 00 ( 162, 162,0 000) 00) ( 6,000) 114,000 ( 8,000) 106,000
48,000 3,400
144,000 10,600
( 67,300) ( 15,900) 18,100 ( 4,000)
2,000 ( 134,600) 22,000 128,000 ( 8,000)
14,100
120,000
2-34:
2-35:
a Decrease in capital Drawings Contribution Profit share Net income (45,000 ÷ 30)
P 60,000 ( 130,000) 25,000 45,000 P150,000
b 2009: Original profit allocation Salaries Balance of profit Total
Cris P 80,000 100,000 P180,000
Paul P 60,000 100,000 P160,000
Bryan P 60,000 100,000 P160,000
Total P200,000 300,000 P500,000
Revised profit allocation Salaries Interest on capital (Sch. A) Balance of profit Total
P 80,000 7,500 91,200 P178,799
P 60,000 13,200 91,200 P164,400
P 60,000 5,700 91,200 P156,900
P200,000 26,400 273,600 P500,000
Difference in total
P
P (4,400)
P
P
1,300
3,100
Partnership Partners hip Operations Operation s
0
31
2-35: Continued
2010 Original profit allocation: Salaries Balance of profit Total
Cris P 80,000 70,000 P150,000
Paul P 60,000 70,000 P130,000
Bryan P 60,000 70,000 P130,000
Total P200,000 210,000 P410,000
Revised allocation: Salaries Interest on capital (Sch. B) Balance of profit Total
P 80,000 3,944 66,700 P150,644
P 60,000 2,428 P 66,700 P129,128
P 60,000 3,528 P 66,700 P130,228
P200,000 9,900 P200,000 P410,000
Difference in totals Total of differences
P P
P 872 P (3,528)
(644) 656
P P
(228) 2,872
P P
0 0
Therefore Paul capital should be increased by P3,528 Schedule A: Revised Computation of Interest on Average Capital
Partner
Date
Capital Balance
Fraction of Year Unchanged
Average Capital
Cris
January 1 March 31 September 30
P180,000 30,000 10,000
3/12 6/12 3/12
P45,000 15,000 2,500 P62,500
Paul
January 1 March 31 September 30
P250,000 80,000 30,000
3/12 6/12 3/12
P62,500 40,000 7,500 P110,000
Bryan
January 1 September 30
P60,000 10,000
9/12 3/12
P45,000 2,500 P47,500
Interest at 12%: Cris Cris:: Paul: Bryan:
P62, P62,50 500 0 x 12% 12% = P110,000 x 12%= P47,500 x 12% =
P7,5 P7,500 00 P13,200 P5,700
32
Chapter Chap ter 2
2-35: Continued
Schedule B: Revised Computation Computation of Interest on Average Average Capital
Partner Cris
Date January 1 March 31
Capital Balance P188,700 18,700
Fraction of Year Unchanged 1/12 11/12
Average Capital P15,725 17,142 P32,867
Paul
January 1 March 31
P194,400 4,400
1/12 11/12
P16,200 4,033 P20,233
Bryan
January 1 September 30
Interest at 12%:
P166,900 16,900
1/12 11/12
P13,908 15,492 P29,400
Cris Cris:: Paul: Bryan:
2-36:
P32, P32,86 867 7 x 12% 12% = P20,233 x 12%= P29,400 x 12% =
P3,9 P3,944 44 P2,428 P3,528
a
Gabriel P35,000 12,000 11,467 11,280 P69,747
Salaries Bonus (Sch. A) Interest on capital (Sch. B) Remainder of profit Total
Harry P40,000
5,333 16,920 P62,253
Cumulative Total P 75,000 87,000 103,800 132,000
Schedule A: Computation of Bonus to Gabriel Bonus = 10% (net income – Bonus) 110% Bonus = 10% (net income) 110% Bonus = P13,200 Bonus = P12,000 Schedule B: Calculation of average capital balances: Partner Gabriel
Date January 1 April 1 November 1 November 1
Capital Balance Balance P120,000 140,000 170,000 160,000
Fraction 3/12 5 12 2/12 2/12
Average Capital Capital P 30,000 58,333 28,333 26,667 P143,333
Partnership Operations Operations 2-36: Continued: Partner Harry
33
Date January 1 November 1
Interest therefore: Gabriel: P143,333 x 8% = Harry: P66,667 x 8% =
2-37:
Capital Balance Balance 60,000 100,000
Fraction 10/12 2/12
Average Capital Capital P50,000 16,667 P66,667
P11,467 P5,333
a Adjustments to Income: Income:
Amortization of business name Prepaid expenses, 2009 Accrued expenses, 2009 Fees billed in 2010 Inventory overstatement Accrued expenses, 2010
2009 P(5,000) 3,000 (2,000) 8,400
2010 P (5,000) (3,000) 2,000 (8,400) 4,000 (8,600)
Accrued income, 2010 Adjustments to income
P 4,400
(3,000) P(22,000)
Computations of Adjusted Capital Balances:
Unadjusted balances, December 31, 2010 Bonus to Cory on change in 2009 income (Sch. 1) Allocation of remaining adjustments to 2009 income Bonus to Cory on change in 2010 income (Sch. 2) Allocation of remaining adjustments to 2010 income Correction of capital withdrawal Adjusted capital capital balances, December December 31, 2010
Cory P25,000 400 1,200 (2,000) (7,000) (5,000) P12,600
Dory P30,000
Eva P28,000
1,200
1,600
(7,000)
(6,000)
P24,200)
P23,600
Schedule 1: Bonus = 10% (1 - Bonus) Bonus = 10% (P4,400 – Bonus) 110% Bonus = P440 Bonus = P400 Schedule 2: Bonus = 10% )1 – Bonus) Bonus = 10% (P22,000 – Bonus) 110% Bonus = (P2,200) Bonus = (P2,000)
34
2-38:
Chapter Chap ter 2
b Old Partners Capital Balances before Admission of New Partner:
Capital balances, March 1, 2009 2009 net loss: Salaries (10 months) Interest on beginning capital balances Balance, beginning capital ratio Total Total Drawings Capital balances, 1/1/2010 2010 net profit: Salaries Interest on beginning capital balances Balance, equally Total Total Drawings Capital balances, 12/31/010
Alma P480,000
Betty P240,000
Total P720,000
480,000 48,000 (552,000) (24,000) 456,000 (24,000) 432,000
240,000 24,000 (276,000) (12,000) 228,000 (24,000) 204,000
720,000 72,000 (828,000) (36,000) 684,000 (48,000) 636,000
576,000 43,200 (397,800) 221,400 653,400 (24,000) P629,400
288,000 20,400 (397,800) (89,400) 114,600 (24,000) P90,600
864,000 63,600 (795,600) 132,000 768,000 (48,000) P720,000
Contributed capital of new partner Cora Agreed capital of Cora (P720,000 + P400,000) x 40% Bonu Bonuss fro from m Alma Alma and and Bet Betty ty,, orig origin inal al capi capita tall rat ratio io(r (red educ uctio tion n fro from m cap capita ital) l)
P400,000 448,000 P 48,0 48,000 00
Therefore entry a is correct.
Partnership Operations Operations
35
SOLUTIONS TO PROBLEMS Problem 2 – 1
1.
Castro Diaz
: :
(P26,000/P42,500) x (P16,500/P42,500) x
P23,800 P23,800
= =
P14,560 __9,240 P23,800
2.
Castro Diaz
: :
(P31,250/P50,000) x (P18,750/P50,000) x
P23,800 P23,800
= =
P14,875 __8,925 P23,800
Computation of Average Capitals: Castro: Date
1/1..................................... 4/10................................... 5/1.....................................
Capital Balances
P26,000 29,000 36,000
Months Unchanged
3 1 3
Peso Months
P 78,000 29,000 108,000
8/1.....................................
Average capital = P375,000 Diaz:
÷
32,000
12 months =
_160,000
12
P375,000
P31,250
Capital Date Balances 1/1..................................... P16,500 6/1..................................... 21,500 9/1..................................... 19,500
Months Unchanged 5 3 4
Peso Months P 82,500 64,500 __78,000
12
P225,000
Average capital = P225,000 – 12 months =
P18,750
Castro
3.
5
Diaz
Interest........................................................ Salaries........................................................ Balance, Balance, equally.... equally.................. ...................................... ........................
P 7, 7,500 36,000 ( 24,100 24,100)
P4,500 24,000 (24,100)
P12,000 60,000 ( 48,200)
Total............................................................
P19,400
P 4,400
P23,800
Castro
Diaz
4.
Total
Bonus (a).................................................... Interest (b)................................................... Balance, 3:2................................................
P 4,760 1,100 _10,764
P
– – _7,176
P 4,760 1,100 _17,940
Total............................................................
P16,624
P7,176
P23,800
36
Chapter 2
Computations: a. Net Net prof profit it befo before re bonu bonus.. s..... ...... ...... ...... ...... ...... ....... ........ ........ ........ ........ ....... ....... ...... Net profit after bonus (P23,800 ÷ 125%)..... ........ ...... ...... ...... ...... .....
P23, P23,80 800 0 _19, _19,04 040 0
Bonus Bonus..... .......... .......... .......... .......... .......... ......... ......... .......... .......... .......... ............. ................. ............. ....
P 4,760 4,760
b.
5.
Total
Castro Diaz
Average capital of Castro [(P26,000 + P32,000) ÷ 2]... 2]....... ........ ....... ....... ........ ........ ...... Average of Diaz [(P16,500 + P18,500) ÷ 2].......... 2]............. ...... ...... ...... ...... ...... ...... ...... ....... ....... ...
P29, P29,00 000 0 _18, _18,00 000 0
Castro's Castro's excess............ excess........................... ....................................................... ............................................................ .................... Multiply Multiply by..................... by................................... .......................................................... ......................................................... .............
P11,000 P11,000 ___10% ___10%
Interest... Interest.................. ............................. ............................. ...................................................... .................................................... .............
P 1,100 1,100
: :
(P3,000/P5,000) x P23,800 (P2,000/P5,000) x P23,800
= =
P14,280 __9,520 P23,800
Problem 2 – 2
a.
Average Capital: Robin: Date
Balances
Jan. 1 Feb. 28 Apr. 30 Sept. 30
P135,000 95,000 175,000 195,000
Ave. Capital (P1,920,000 Hood:
÷
Balances
Jan. 1 Mar. 31 June 30 Aug. 31 Oct. 31
P140,000 200,000 150,000 220,000 200,000
Ave. Capital (P2,160,000
÷
Peso Months
2 2 5 3
P270,000 190,000 875,000 __585,000
12
P1,920,000
12) = P160,000
Date
Profit Distribution Distribution : Robin : P160,000 Hood : P180,000
Months Unchanged
Months Unchanged
Peso Months
3 3 2 2 2
P420,000 600,000 300,000 440,000 __400,000
12
P2,160,000
12) = P180,000
P340 P340,0 ,000 00 x P510 P510,0 ,000= 00= P340,0 ,000 00 x P51 P510, 0,00 000 0= ÷ P340 ÷
P240 P240,0 ,000 00 _270 _270,0 ,000 00 P510,000
Partnership Partners hip Operations Operation s
37
Robin
Hood
Total
Interest on ave. ca capital............................. ...... ...... ...... ...... ... Salaries................................................................ Bonus (P510,000 – 30,600 – 160,000) x 25%). . . . Balance, equally.... ....... ...... ........ .......... .......... ...... .... .... .... .... .... .... .... .... .... .... .... ....
P 14,400 60,000 78,850 _119,77 ,775
P 16,200 100,000 – _119,77 ,775
P 30,600 160,000 79,850 _239,550
Totals.... .......... .......... .......... ...... ........ .......... .......... ...... ........ .......... .......... .......... ...... .... .... .... ....
P274,02 ,025
P235,97 ,975
P510,000
Robin
Hood
Totals
249,000
P 6, 6 ,000 249,000
P 12,000 498,000
255,000
255,000
510,000
Robin
Hood
Total
Salarie ries.... ....... .......... ...... ........ .......... .......... ...... ........ .......... .......... ...... .... .... .... .... .... .... .... .... Bonus (see computations below)......................... Balance, equally.... ....... ...... ........ .......... .......... ...... .... .... .... .... .... .... .... .... .... .... .... ....
P 80,0 80,00 00 62,000 _124,00 ,000
P120,00 ,000 _124,00 ,000
P200,000 62,000 _248,000
Totals.... .......... .......... .......... ...... ........ .......... .......... ...... ........ .......... .......... .......... ...... .... .... .... ....
P266,00 ,000
P244,00 ,000
P510,000
b.
c.
Interest: Robi Robin n (P19 (P195, 5,00 000 0 – P135 P135,0 ,000 00)) 10%. 10%... ..... ...... ...... ..... Hood (P200,000 – P140,000) 10%.............. Balance, equally.................................................. Totals............................................................. ....... ..... d.
P 6,00 6,000 0
Bonus Computations Computations : Net income before salaries and and bonus....... bonus.... ......... ............. ............ .......... ............. ............. ......... ......... ....... Less Less Salar Salarie ies. s.... ...... ...... ...... ...... ...... ....... ........ ........ ........ ........ ........ ........ ....... ...... ...... ....... ........ ........ ....... ...... ....... ........ ........ ........ ......
P510,000 200, 200,00 000 0
Net income before bonus......... .......... ..... .......... ......... ............. ............. ......... .......... ............ ............ .......... ......... .... Net income after bonus (P310,000 (P310,000 ÷ 125% 125%). )... .... .... .... ..... ...... ...... ...... ..... .... .... ..... ...... ...... ...... ...... ..... ..
310,000 _248 _248,0 ,000 00
Bonus. Bonus..... ......... .......... .......... .......... .......... .......... .......... ............ ............... ................ .............. ............... .............. ........... ............... ............. ....
P 62,000 62,000
Problem 2 – 3 a.
De Villa
De Vera
Total
P 30 30,000
– P 20,000 31,200 9,818 __44,18 ,182
P 30 30,000 20,000 64,000 19,636 __88,364
Total... l..... .... ........ .......... ...... ........ .......... .......... .......... ...... ........ .......... ...... .... .... .... .... .... .... .... .... P116,80 ,800 P105,20 ,200 Bonus Computations Computations : Income Income befor beforee salary salary,, commis commissio sions, ns, inter interest est & bon bonus........ us............ ............. ................. ........ Sala Salary ry and and commi commiss ssio ion n (P30, (P30,00 000 0 + P20,0 P20,000 00).. )...... ........ ........ ........ ....... ...... ....... ........ ........ ........ ...... .. Intere Interest. st...... .......... ......... ......... .......... .......... ........... ............... ................. ................ .............. ............... .............. ........... ............... ............. ....
P222,000 P222,0 P222,000 00 ( 50,00 50,000) 0) ( 64,000 64,000)
Inco Income me befo before re bonu bonus.. s..... ...... ...... ...... ...... ...... ...... ....... ........ ........ ....... ...... ...... ....... ........ ........ ....... ...... ....... ........ ........ ........ ...... Income after bonus (P108,000 ÷ 110 110%)... %)..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....
108, 108,00 000 0 _98,1 98,18 82
Bonu Bonus. s.... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ....... ........ ........ ......... ........ ...... ....... ........ ........ ....... ...... ....... ........ ........ ........ ...... ..
P 9,81 9,818 8
Salaries................................................................ Commission (2% x P1,000,000).......................... Interest of 8% on average capital......................... Bonus (s (see co computations be below)......................... Balance, equally.... ....... ...... ........ .......... .......... ...... .... .... .... .... .... .... .... .... .... .... .... ....
b.
32,800 9,818 __44,18 ,182
Income Summary................................................. De Villa, capital.......................................... De Vera, capital..........................................
P 222,000 116,800 105,200
38
Chapter Chap ter 2
Problem 2 – 4
East
North
West
Total
Salaries............................................... Bonus (see computation below).......... Interest (see computation below)..... ... Balance, 3:3:4.....................................
P15,000 3,760 2,800 __3,180
P20,000
P18,000
4,000 __3,180
4,800 __4,240
P53,000 3,760 11,600 _10,600
Total .....................................................
P24,740
P27,180
P27,040
P78,960
Bonus computations computations : Net income before bonus...... ... ............. ...... ........... ......... ............. ............. .......... ......... ............. .............. .......... ....... .. Net income after bonus (P78,960 (P78,960 ÷ 105% 105%). )... ..... ..... .... .... .... .... ..... ...... ...... ...... ..... .... .... .... ..... ...... ...... ...... ...
P78,960 _75, _75,20 200 0
a.
b.
Bonus. Bonus..... ......... .......... .......... .......... .......... .............. ............... .......... ............. ................ ........... ........... ................ ............. ........... ............... ........ Interest computations: computations: East East (10% (10% x P28, P28,00 000) 0).... ........... ............ ........ ...... ...... ....... ........ ........ ....... ...... ...... ....... ........ ........ ....... ...... ...... ....... ........ ........ .... North (10% x P40,000)......... ............ .... ............. .......... ......... ............. .............. ......... .......... .............. ............. ......... ...... West West (10% (10% x P48, P48,00 000) 0).... ........ ......... ........ ...... ...... ...... ....... ........ ........ ....... ...... ...... ....... ........ ........ ....... ...... ...... ....... ........ ....... ...
P 2,800 2,800 4,000 __4, __4,80 800 0
Total Total..... .......... .......... .......... .......... .......... ......... ......... ............ ............ .............. ................ ........... ........... ................ ............. ........... ............... ........
P11,60 P11,600 0
East
North
West
P 3,760 3,760
Total
Interest (see computations below). . . . . . Salaries............................................... Bonus (see computations below)..... . . . Balance, equally............. ...... ...... ...... ...... ...... ....... ....
P 3, 3,133 24,000
Total .. ................................................... Interest computations computations : Average capitals: East: Date
1/1 5/1 9/1
( 6, 6,056)
P 3,633 21,000 4,280 ( 6, 6,055)
P 5,200 25,000 ( 6, 6,055)
P11,966 70,000 4,280 ( 18,166)
P 21 21,077
P 22 22,858
P 24 24,145
P 68 68,080
Balances
Months Unchanged
Pesos Months
P30,000 36,000 28,000
4 4 4
P120,000 144,000 _112,000
12
P376,000
Average capital (P376,000
÷
12) 12) ...... ......... ...... ...... ....... ........ ....... ....... ........ ........ ....... ...
North:
P 31,33 31,333 3
Date
Balances
Months Unchanged
1/1 3/1 7/1 9/1
P40,000 31,000 36,000 40,000
2 4 2 4
P80,000 124,000 72,000 _160,000
12
P436,000
Average capital (P436,000
÷
12).. 12)..... ...... ...... ...... ....... ........ ........ ........ ........ ........ ........ ....
Pesos Months
P 36,33 36,333 3
Partnership Partners hip Operations Operation s
39
West: Date
Balances
1/1 4/1 6/1 8/1
P50,000 57,000 60,000 48,000
Months Unchanged
Pesos Months
3 2 2 5
P150,000 114,000 120,000 _240,000
12
P624,000
Ave. capital (P624,000 ÷ 12). 12)... .... .... .... .... ..... ..... ..... ...... ...... ...... ...... ...... .....
P 52,0 52,000 00
Interest Computations Computations : East East (10% (10% x P31, P31,33 333) 3).... .......... .......... ....... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ... North (10% x P36,333).................... P36,333).......... .................... .................... .................... ................ ........ West West (10% (10% x P52,0 P52,000 00).. )...... ........ ....... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...
P 3,13 3,133 3 3,633 __5, __5,20 200 0
Total Total... ... ......... .............. .......... .......... ............ .............. ........... ......... .......... ......... ......... .......... .......... .......... ........... ......
P 11,96 11,966 6
Bonus Computations Computations : Net income............ income....... ......... ......... .......... ............ ................. .................... .................... ................... ............ ... Less Less Sala Salary ry... ....... ........ ........ ........ ........ ....... ....... ....... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...
P 68,000 _21, _21,00 000 0
Net income before bonus.......... bonus..... ............... .................... .................... .................... .............. ....
47,080
Net income after bonus (P47,080 (P47,080 ÷ 110% 110%). )... .... .... .... .... .... .... .... .... .... .... .... .... ..
_42,8 42,80 00
Bonus Bonus to North. North.......... ...................... ................. ........ ......... .......... .......... .......... .......... ......... ......... ......... .... * To Total
P 4,280 4,280
East
West
Total
Bonus (see comp. below).................... Salaries .......................................... Interest on beginning capital............... Remainder, 8:7:5............... ...... ...... ...... ...... ...... .....
8,990 P21,000 P 18,000 – 3,000 4,000 5,000 _13,180 _11,532.50 __8,237.50
P 8,990 39,000 12,000 _32,950
Total.... l...... .... .... ........ ...... ........ .......... ...... .... .... .... .... .... .... .... .... .... .... ....
P37,18 ,180 P33,532.50 .50 P22,227.50 .50
P92,940
Bonus Computations Computations : Net income before salaries & bonus...... bonus.......... ......... .............. .............. .......... ........... .............. ............. ......... ...... Less Less Salari Salaries es (P21,0 (P21,000 00 + P18,00 P18,000). 0)........ ................ .............. .......... ............. ............... ........... ............ .............. ......
P92,940 _39,00 _39 ,000 0
Net income before bonus...... ... ............. ...... ........... ......... ............. ............. .......... ......... ............. .............. .......... ....... .. Net income after bonus (P53,940 (P53,940 ÷ 120% 120%). )... ..... ..... .... .... .... .... ..... ...... ...... ...... ..... .... .... .... ..... ...... ...... ...... ...
P53,940 _44, _44,95 950 0
Bonus Bonus to West... West....... ........ ......... ........... .............. ............ ........... ................ .............. ............ ................ ............. ......... .............. ........... ..
P 8,99 8,990 0
c.
North
P
Problem 2 – 5 a.
Schedule of Income Distribution: Distribution: Maria
Clara
Rita
Total
Salaries. .. .. ............................................. Interest (see computation on p. 30)..... Balance, eq equally.................................
P12,000 7,200 __3,133
P10,000 9,600 __3,133
P 8,000 13,800 __3,134
P30,000 30,600 __9,410
Total .. ....... ...........................................
P22,333
P22,733
P24,934
40
P70,000 Chapter 2
Problem 2-5: Continued Continued
Interest on Average Capital: Capital: Maria: P80 P80,000 ,000 x 8% 8% x 6 mo mon nths... hs..... .... .... .... .... .... .... .... .... .... .. P100,000 x 5% x 6 months.. s........... ...... ...... ...... .... Clara: P120,000 x 8%....................................... Rita: P180 P180,0 ,000 00 x 8% x 9 Mo Mos. s... . .... ...... .... .... .... ..... ...... ...... ..... P150,000 x 8% x 3 Mos... ............ ...... ...... ...... ....
P 3,2 3,20 00 __4,000
9,600 P10, P10,80 800 0 __3,000
Total ............................................ ..................... b.
P 7,200
_13,800 P30,600
Statement of Partners Capital : Maria
Clara
Rita
Total
Balances, Jan. 1................. ...... ...... ...... ....... ...... .... Additional Investment........................ Capital Withdrawal............................. Net Income...................... Income............ ................ ........... .......... ........ ... Draw Drawin ings gs ...... ......... ...... ...... ...... ....... ........ ........ ....... ....... ........ ......
P 80,000 20,000 – 22,333 ( 10,0 10,000 00)
P120,000 – – 22,733 ( 10,000)
P180,000 – ( 30,000) 24,934 ( 10,000)
P380,000 20,000 ( 30,000) 70,000 ( 30,000)
Balance, Dec. 31................................ ....
P112,333
P132,733
P164,934
P410,000
Problem 2 – 6
1.
Allo Alloca cati tion on of net net los losss for for 2011 2011::
Alvin
2.
Benny
Celia
Salary to Alvin................................... Interests on average capital: Alvin (P (P120,000 x 10 10%).... ...... .... .... .... .. Benny (P200,000 x 10%)........... Celia (P220,000 x 10%)............. Bala Balanc nce, e, 30:3 30:30: 0:40 40... ...... ...... ...... ...... ...... ....... ........ ........ ......
P 20,000
(29, (29,40 400) 0)
_(29 _(29,4 ,400 00)
22,000 _(39 _(39,2 ,200 00)
54,000 _(98 _(98,0 ,000 00)
Tota Total......... l............ ...... ...... ...... ...... ...... ....... ........ ........ ........ ........ ....... ...
P 2,60 2,600 0
P( 9,40 9,400 0)
P(17 P( 17,2 ,200 00 )
P(24 P( 24,,000 00 0)
P20,000
12,000 20,000
Stat Statem emen entt of Part Partne ners rshi hip p Cap Capit ital al Year Ended December 31, 2011
Alvin
Benny
Capitals, January 1, 2011................. ...... ... Additional investments....................... Capital wit withdrawals................... ....... ...... .....
P120,000
P180,000 60,000 ________
Balances. ........................................... Net loss (see above)........................ above)................. ........... ....
120,000 __2,600
Balances. ........................................... Drawings. ..........................................
122,600 _(16,000)
Capitals, De December 31 31, 20 2011..............
_______
P106,600
Celia
Total
P220,000 40,000 _(20,000)
P520,000 100,000 _(20,000)
240,000 __(9,400)
240,000 _(17,200)
600,000 _(24,000)
230,600 _______
222,800 _______
576,000 _(16,000)
P230,600
P222,800
P560,000
Partnership Operations Operations.................... ...................................... .................. Problem 2-6: Continued Continued
3.
Total
41
Correcting en entry:
Celia capital........................................ 2,400 Alvin capital............................... 2,200 Benny capital............................. 200 To correct capital accounts for error in loss allocation computed as follows: Alvin
Benny
Correct loss allocation........................ Actual loss allocation.........................
P2,600 __(400)
P(9,400) __9,600
P(17,200) __14,800
Adju Adjust stme ment nt.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....
P2,2 P2,200 00
P
P ( 2,40 ,400)
200 200
Celia
Problem 2 – 7
Dino
Nelson
Oscar
Total
P45,000 _15,000
P45,000 _15,000
P45,000 __6,000
P135,000 __36,000
Balances. .................................................... 60,000 Net income (Loss) - 2009, 2009, equally......... equally..... ....... ..... .. (1,800) Withdrawals, 2009...................... ...... ...... ...... ...... ...... .... (17,000)
60,000 ( 1,800) ( 7,000)
51,000 ( 1,800) ( 3,2 3,200)
171,000 ( 5,400) ( 27, 27,200)
Capital balances, 1/2/09.............................. Additional investment, 2009.......................
Capital ba b alances, 12/31/09.......................... Additional in investment, 20 2010.......................
41,200 _____–
51,200 _____–
46,000 __6,000
138,400 ___6,000
Balances. .................................................... 41,200 Net income - 2010, 40: 30: 30................ 30.......... ........... ..... 10,800 Withdrawals, 2010...................... ...... ...... ...... ...... ...... .... (17,000)
51,200 8,100 ( 7,000)
52,000 8,100 ( 3,2 3,200)
144,400 27,000 ( 27, 27,200)
Capital Balances, 12/31/010........................ 35,000 Additional in investment, 20 2011....................... ______–
52,300 ______–
56,900 ___6,000
144,200 ___6,000
Balances. .................................................... 35,000 Net income, 2011 (schedule 1)............... 1)......... ........... ..... 56,365 With Withdr draw awal als, s, 2011. 011... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... (19,0 19,000 00))
52,300 42,272 ( 9,00 9,000 0)
62,900 20,363 ( 3,20 3,200 0)
150,200 120,000 ( 31,2 31,200 00)
Capital ba balances, 12 12/31/011........................
P72,365
P86,572
P80,063
P239,000
Dino
Nelson
Oscar
Total
Annual salaries................................... P48,000 Bonus (see computations below)..... . . . – Interest................................................ 3,600 Balance, eq equally................................. _* 4,765
P24,000 10,909 3,600 __4,763
P12,000 – 3,600 __4,763
P84,000 10,909 10,800 __14,291
Totals..................................................
P43,272
P20,363
P120,000
Bonus computations: computations: Net income before bonus...... ... ............... ...... .............. .............. .............. ......... ............ .............. ........... ......... .... Net income after bonus (P120,000 (P120,000 ÷ 110%) 10%).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..
P120,000 _109 _109,0 ,09 91
Bonu Bonuss to to Nels Nelson on... ...... ...... ...... ...... ...... ....... ........ ....... ...... ...... ...... ....... ....... ...... ...... ....... ........ ........ ....... ...... ...... ....... ........ ........ ....
P 10,9 10,909 09
Schedule 1:
P56,365
* To Total 42 2
Chapte Cha pter r Problem 2 – 8 Red, White & Blue Partnership Statement of Partners' Capital For Year Ended December 31, 2011
Balances, beginning of year Add: 20% of fees billed to personal clients Green's share of fees (Exhibit A) Remaining net income (Exhibit A) Subtotals Less: Withdrawals Uncollectible accounts identified with clients of each partner Excess rent charged to Blue Total deductions Balances, end of year
Red
White
Blue
Green
Total
40,200 8,800
20,200 4,800
40,600 4,400
_22,800
_22,800
_11,400
_71,800
_47,800
_56,400
__3,200
179,200
10,400
8,800
11,600
5,000
35,800
2,400
9 00
P101,000 18,000 3,200 3,200 ______ _57,000
1,800
3,300 1,800
P12,800
P 9,700
P13,400
P 5,000 P 40,900
P59,000
P38,100
P43,000
P (1,800) P138,300
Red, White & Blue Partnership Exhibit A – Computation and Division of Net income For Year Ended December 31, 2011
Total revenue from fees Expenses, excluding depreciation and doubtful accounts expense Less: Excess rent charged to N ($300 x 6)
P120,000 P38,700 __1,800
Subtotal Add: Depreciation, computed as follows: $26,000 x 0.10 $10,000 x 0.10 x 1/2
36,900 2,600 ____500
Total expenses, excluding doubtful accounts expense Add: Doubtful accounts expense ($3,000 x 0.60) Total expenses
P40,000 __1,800 41,800
Net income for year ended Dec. 31
P 78,200
Division of net income: Fees billed to personal clients: Red P44,000 x 20% White P24,000 x 2% Blue, P22,000 x 20% Green's share of fees: Gross fees from new clients after April 1, Year 1 Less: Allocated expenses ($40,000 x $24,000/ $120,000)
P 8,800 48,000 4,400
P18,000
24,000 __8,000
Net income from new clients Green's share (P16,000 x 20%) Total divided pursuant to special agreement
P16,000 P 3,200 __21,200
Balance, divided in income-sharing ratio as follows: To Red, 40% To White, 40% To Blue, 20%
P22,800 22,800 _11,400
P 57,000
Total
P57,000
Partnership Operations Operations
43
Problem 2 – 9 Allan, Eman and Gino Partnership Statement of Profit Distribution Year Ended December 31, 2011
Allan
Eman
Interest Commission (P16,120 – P5,000) x 10% Balance, equally
P 4,000 – __5,926
P 750 1,112 _5,925
P 250 P 5,000 1,112 2,224 _5,925 _1 _ 17,776
Total Adjustments (50% of P25,000 to Allan)
P 9,926 __2,574
P7,787 (1,287)
P7,287 P25,000 (1,287) _____–
Total
P12,500
P6,500
P6,000 P25,000
Problem 2 – 10
Gino
Total
Gary, Sonny, and Letty Partnership Statement of Partners' Capital Accounts Year Ended December 31, 2011
Gary
Sonny
Letty
Total
Capital balances, 1/1/08 Additional investments
P210,000 ___9,100
P180,000 _______
P 90,000P480,000 _______ __9,100
Total Profit distribution: distribution: Salaries Interest Bonus to Gary and Sonny (Schedule 1) Balance, equally
_219,100
_180,000
_90,000 489,100
13,680 25,920 – __(9,720)
11,520 21,600 – _(9,720)
35,840 58,320 – _(9,720) (29,160)
Total
__29,880
_23,400
_11,720 _65,000
Total Drawings _(48,000)
248,980 _(21,000)
203,400 (18,000)
101,720 554,100 __(9,000 )
Capital balances, 12/31/08
P227,980
P185,400
10,640 10,800
P 92,720P506,100
Schedule 1: Computation of the bonus.
Net profit before interest, interest, salaries and bonus Less: Salaries Interest Net profit (loss) before bonus bonus
P 65,000 P35,840 _58,320
__94,160 P(29,160)
Therefore no bonus is to be given to Gary and Sonny. 44 Chapter 2
Problem 2 – 11 a. Entries to record the formation of the partnership and the events that occurred during 2008:
Cash Inventory Land Equipment Mortgage payable
1,100,000 800,000 1,300,000 1,000,000 500,000
Installment note payable Kobe, capital (P600,000 + P800,000 + P1,000,000 – P200,000) Lebron, capital (P500,000 + P1,300,000 - P500,000) (1)
Inventory Cash
200,000 2,200,000 1,300,000 300,000 240,000
Accounts payable (2)
(3)
(4)
(5)
(6)
(7)
(8)
60,000
Mortgage payable Interest expense Cash
50,000 20,000
Installment note payable Interest expense Cash
35,000 20,000
Accounts receivable Cash Sales
70,000
55,000 210,000 1,340,000 1,550,000
Selling and general expenses Cash Accrued expenses payable
340,000
Depreciation expense Accumulated depreciation
60,000
Ko K obe, drawing Lebron, drawing Cash Sales
278,000 62,000
60,000 104,000 104,000 208,000 1,550,000
Income summary (9)
Cost of goods sold Inventory P900,000 = P800,000 + P300,000 – P200,000
1,550,000 900,000 900,000
Partnership Operations Operations
45
Problem 2-11: Continued Continued
Income summary Cost of good sold Selling and general expenses Depreciation expense Interest expense
1,340,000 900,000 340,000 60,000 40,000
Income summary Kobe, capital Lebron, capital
210,000
Kobe, capital Lebron, capital Kobe, drawing Lebron, drawing
104,000 104,000
105,000 105,000
104,000 104,000
Schedule to allocate partnership net income for 2008:
Profit percentage Beginning capital balance P3,500,000 Net income (P1,550,000 revenue revenue - P 1,340,000 expenses) Interest on beginning capital balances (3%) (105, (1 05,000 000 )
Kobe 60% P2,200,000
Lebron 40% P1,300,000
Total 100%
210,000 66,000
39,000 P105,000
Salaries (240, (2 40,000 000 ) P(135,000) Residual deficit (135, (1 35,000 000 ) Total b.
120,000
120,000
(81,000)
(54,000)
P105,000
P105,000
-0-
Kobe-Lebron Partnership Statement of Comprehensive Income For the Year Ended December 31, 2011
Sales P1,550,000 Less: Cost of goods sold: Inventory, January 1 Purchases Goods available for sale Less: Inventory, December 31 (900, (9 00,000 000 ) Gross profit Less: Selling and general expenses Depreciation expenses Operating income Nonoperating expenseexpense- interest Net income
P800,000 300,000 P1,100,000 (200,000) P650,000 340,000 60,000
400,000 P250,000 (40,000) P210,000
46 2
Chapte Cha pter r
c.
Kobe-Lebron Partnership Statement of Financial Position At December 31, 2011
Assets Cash Accounts receivable Inventory
P1,589,000 210,000 200,000
Land Equipment (net) Total assets
1,300,000 940,000 P4,239,000 Liabilities and Capital
Liabilities: Accounts payable Accrued expenses payable Installment note payable Mortgage payable Total liabilities Capital: Kobe, capital Lebron, capital Total capital Total liabilities and capital
P60,000 62,000 165,000 450,000 P737,000 P2,201,000 1,301,000 3,502,000 P4239,000
