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The document provides information about partnership operations and assignments involving division of profits and losses between partners. It includes three problems with multiple cases about how to allocate partnership profits, losses, salaries, bonuses, and interest payments based on capital contributions and partnership agreements. The assignments require calculating each partner's share and providing journal entries to close income accounts to partner capital accounts.

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Ailene Mendoza
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843 views2 pages

Assignment02 PDF

The document provides information about partnership operations and assignments involving division of profits and losses between partners. It includes three problems with multiple cases about how to allocate partnership profits, losses, salaries, bonuses, and interest payments based on capital contributions and partnership agreements. The assignments require calculating each partner's share and providing journal entries to close income accounts to partner capital accounts.

Uploaded by

Ailene Mendoza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Baliwag Polytechnic College

Dalubhasaan Kong Mahal


Institute of Business and Accountancy

ACT27A – Accounting for Special Transactions M. Manayao, CPA

Assignment 02 – Partnership Operations

Division of profits and losses


Problem 1
A, B and C’s partnership agreement stipulates the following:
 Annual salaries of P12,000 to A and P8,000 to C.
 10% bonus to A, based on profit after salaries but before deducting the bonus.
 10% interest on the following capital contributions: A, P100,000; B, P60,000; and C, P120,000.
 P/L ratio of [Link]

Case 1: Sufficient profit


The partnership earns profit of P100,000. Compute for the partners’ respective shares.

Case 2: Insufficient profit


The partnership earns profit of P10,000. Compute for the partners’ respective shares.

Case 3: Loss
The partnership incurs loss of P20,000. Compute for the partners’ respective shares.

Interest on weighted average capital


Problem 2
A and B’s partnership agreement stipulates the following:
 Monthly salary of P4,000 to A.
 20% bonus to A, based on profit after deductions for salary and bonus, but before deduction of interest.
 12% interest on B’s weighted average capital balance. B initially contributed P30,000. During the
period, B contributed additional P10,000 on July 1 and P6,000 on November 30, and withdrew P4,000
on October 1.
 Balance is shared equally

Case 1: Full year


The partnership earned profit of P90,000 before salaries, bonus and interest on capital, for the year ended
December 31, 20x1.

Required: Provide the journal entry to close the income summary account to the partners’ respective capital
accounts.

Case 2: Partial year


The partnership earned profit of P90,000 before salaries, bonus and interest on capital, for the eight months
ended December 31, 20x1.

ASSIGNMENT 02 – ACT27A | M. MANAYAO, CPA 1


Required: Provide the journal entry to close the income summary account to the partners’ respective capital
accounts.

Reconstruction of information
Problem 3
A and B’s partnership agreement stipulates the following:
 Annual salary of P20,000 to A.
 10% bonus to A, based on profit after salaries and bonus.
 Balance is shared on a 60:40 ratio.

Required: If B’s share in the partnership profit for the year is P32,000, how much is the partnership profit
before salary and bonus?

- End -

ASSIGNMENT 02 – ACT27A | M. MANAYAO, CPA 2

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