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Partnership Operations: Problem C

The document describes several partnership problems involving capital contributions, drawings, profits, interest calculations, and allocations between partners AA and BB. Problem C provides net income of P210,000 and asks how this would be allocated between partners under different bonus and interest stipulations. Problem D provides a net income of P120,000 and asks how this would be allocated and ending capital balances calculated based on original capital, interest rates, and profit allocation. Problem E provides capital movement details for AA and BB and asks their weighted average capital.

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Joeneil Damalerio
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195 views3 pages

Partnership Operations: Problem C

The document describes several partnership problems involving capital contributions, drawings, profits, interest calculations, and allocations between partners AA and BB. Problem C provides net income of P210,000 and asks how this would be allocated between partners under different bonus and interest stipulations. Problem D provides a net income of P120,000 and asks how this would be allocated and ending capital balances calculated based on original capital, interest rates, and profit allocation. Problem E provides capital movement details for AA and BB and asks their weighted average capital.

Uploaded by

Joeneil Damalerio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PARTNERSHIP OPERATIONS

PROBLEM C:
AA and BB formed a partnership on April 1, 2021, with initial capital contributions amounting to
P100,000 and P150,000, respectively. The partners agreed to the following stipulations in their
partnership agreement:
(1) Annual salaries allowed to partners, P60,000 for AA and P36,000 for BB.
(2) AA is entitled to a bonus of 15% of net income after salaries and bonus but before
interest on capital investment.
(3) Original partner's capital balance shall be allowed interest of 10%.
(4) Remaining profits are to be allowed 40% to AA and 60% to BB.

On December 31, 2021, the partnership reported net income of P210,000.

Requirements:
1. How much is the net income allocated to AA and BB, respectively?
111,000; 99000
2. Assuming that no stipulation was made as to the allocation of remaining profit
after considering salaries, interests and bonus, how much is the net income
allocated to AA and BB, respectively?
111,000; 99000
3. Assuming that the bonus is based on net income after salaries and interest but
before bonus, how much is the net income allocated to AA and BB, respectively?
110,932.5; 99,067.5
PROBLEM D:
On January 1, 2021, AA and BB decided to form a partnership. At the end of the year, the
partnership made net income of P120,000. The capital accounts of the partnership show the
following transactions:
AA, Capital BB, Capital
Dr. Cr. Dr. Cr.
January 1 P40,000 P25,000
April 1 P5,000
June 1 10,000
August 1 10,000
September 1 P3,000
October 1 5,000 1,000
December 1 4,000 5,000

Requirements:
1. Assuming that an interest of 20% is given on the original capital and the balance
of the profits is allocated equally, how much is the net income allocated to each
partner? 61,500;58,500
2. Assuming that an interest of 20% is given on the original capital and the balance
of the profits is allocated equally, how much is the ending capital of each partner?
115,500;94,500
3. Assuming that an interest of 20% is given on the average capital and the balance
of the profits is allocated equally, how much is the net income allocated to each
partner? 61,200;58,800
PROBLEM E:
AA and BB are partners that had the following capital movements during 2021:
AA BB
January 1 capital balances P100,000 P120,000
Temporary drawings (P1,500 at the start of every month) 18,000 18,000
Permanent withdrawals
June 1 12,000
May 1 15,000
Additional investments
July 1 40,000
October 1 50,000

Note: Temporary drawings are deductions against the share in profit or loss Requirements:
1. How much is the weighted average capital for AA and BB?
113,000; 122,500

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