9502 - Partnership Operation
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School
New Era University**We aren't endorsed by this school
Course
BSA 11
Subject
Accounting
Date
Dec 18, 2024
Pages
3
Uploaded by zelwynsanpedro
9502 CPA REVIEW SCHOOL OF THE PHILIPPINES M a n i l a ADVANCED FINANCIAL ACCOUNTING GERMAN/VALIX PARTNERSHIP OPERATIONS Part I: Theory of Accounts1.In the absence of agreement as to distribution of profit, how shall the partnership profit be distributed to the partners? A.The industrial partner shall receive a share equivalent to the least share of a capitalist partner while the capitalist partners shall share based on capital contribution ratio. B.The industrial partner shall receive a just and equitable share and the remainder shall be distributed to the capitalist partners on the basis of capital contribution ratio. C.The profit shall be distributed on the basis of loss contribution ratio which may have been agreed upon by the partners. D.The profit shall be distributed equally to all partners including the industrial partner. 2.In the absence of agreement as to distribution of loss, how shall the partnership loss be distributed to the partners? A.The loss shall be distributed equally to all partners including the industrial partner. B.The industrial partner shall be exempted from partnership loss while the capitalist partners shall share equally. C.The industrial partner shall be exempted from partnership loss while the capitalist partners shall be distributed on the basis of capital contribution ratio. D.The industrial partner shall be exempted from partnership loss because it shall be distributed to the capitalist partners only in accordance with profit agreement ratio. 3.Which of the following is not an expense of a partnership? I. Salary of employees of the partnership II. Salaries to partners of a partnership III. Interest on loan from partners to the partnership IV. Interest on partners’ capital account balances V. Bonus given to employees VI. Bonus allocation to partners as indicated in the P/L Sharing Agreement A.I, III, and V only B.I, IV, and V only C.II, IV, and VI only D.All of the items indicated 4.Generally, this allowance for profit allocation is given only if there is a profit A.Interest allowance B.Salary allowance C.Bonus allowance D.All of the above 5.Which of the following will decrease the capital balance of a partner? A.Share in partnership profit B.Drawing made by a partner C.Advances made by a partner to the partnership D.Receipt of share in revaluation surplus from a partnership property, plant and equipment
9502 Page 2 Part II: Problem SolvingProblem 1. On February 1, 2024, A and B formed a partnership. A contributed P2,000,000 cash and his services to the partnership, while B contributed her equipment and her services to the partnership. The equipment was originally bought at the beginning of the previous year for P1,400,000 and had an estimated useful life of 10 years with no salvage value. The equipment has been independently evaluated by an appraiser at P1,300,000. The equipment still has an attached loan of P100,000, which will be assumed by the partnership. It is also agreed that B will serve as a managing partner who is responsible for handling the day-to-day operations of the partnership. The following profit and loss sharing terms are agreed upon by the partners: Monthly salary for industrial partners amounting to P5,000 each. 12% interest based on original capital balance of capitalist partners. 20% bonus for the managing partner based on net income after interests, salaries and bonus. Remainder is to be shared in the ratio 60:40 for A and B, respectively. During 2024, the partnership operations resulted to a net income of P1,110,000, and the partners withdrew 10% of their original capital contributions. 1.How much is the share of B in the net income of the partnership during 2024? A.523,960 B.511,000 C.446,200 D.403,000 2.How much is the capital balance of A at the end of the calendar year 2024? A.2,599,000 B.2,399,000 C.2,362,727 D.2,339,100 Problem 2.During 2024, partners A and B had the following movements in their capital balances: 2024 A, Capital B, Capital Debit Credit Debit Credit Jan 1, bal. P110,000 100,000 Apr 1 40,000 50,000 Jul 1 70,000 50,000 Oct 1 40,000 20,000 Dec 1 60,000 18,000 Dec 31 10,000 10,000 The partners withdrew their allowed P10,000 at the end of the year in anticipation of their share in the net income of the partnership. The following are the partnership’s profit and loss sharing agreement: 10% interest based on average capital balances Quarterly salaries of P5,000 and P10,000 for A and B, respectively Bonus to A amounting to 20% of net income after interests and salaries. Remainder is to be shared equally between the partners. 1.Assuming the partnership operations resulted to a net income of P200,000, how much is the share of A in the net income of the partnership? A.76,360 B.87,700 C.99,040 D.108,112
9502 Page 3 2.Assuming the partnership operations resulted to a net loss of P120,000, how much is the share of B in the net loss of the partnership? A.72,300 B.60,000 C.47,700 D.27,040 3.Assuming the partnership operations resulted to a net income of P50,000, how much is the capital balance of B at the end of the year? A.199,300 B.192,960 C.189,300 D.183,200 Problem 3. A and B are partners who agreed on the following profit-sharing arrangement: A B Annual salaries P261,000 P259,000 Interest on average balances 10% 5% Bonus (based on NI after salaries and interest) 10% - Remainder 25% 75% During the year ended December 31, 2024, the partnership generated a profit of P570,000 before any deductions. A’s and B’s average capital balances for the year are P600,000 and P400,000 respectively. Income is distributed only as far as it is available/ to the extent of earnings only.How much is the share of B in the net income of the partnership? A.271,500 B.265,500 C.256,500 D.249,500 Problem 4. A, B, and C formed a partnership on January 1, 2024 by contributing cash of P750,000, P650,000, and P600,000, respectively. The profit or loss agreement of the partners is as follows: P200,000, P150,000, P50,000 annual salary for A, B, and C, respectively 10% interest on beginning capital balance of the partners Bonus to A based on 20% net income after interests and salaries. Remainder is to be divided in the ratio 25:35:40 for A, B, and C, respectively. During 2024, A, B, and C made additional investments of P300,000, P400,000 and P200,000, respectively. At the end of 2024, A, B, and C made drawings of P150,000, P50,000, and P100,000 respectively. At the end of 2024, the capital balance of C is reported at P950,000.1.How much is the net income of the partnership during 2024? A.950,000 B.1,037,500 C.1,140,000 D.1,187,500 2.How much is the capital balance of A at the end of the year? A.1,500,000 B.1,490,500 C.1,452,500 D.1,350,000 END