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Chapter 12
Partnership Operations

PROBLEM 1: TRUE OR FALSE

1. FALSE – in proportion to what they may have
contributed, but the industrial partner shall not be
liable for the losses
2. FALSE – capitalist
3. FALSE - ₱5
4. TRUE
5. TRUE
6. TRUE
7. FALSE – {50 + [(100 – 50 – 30) x 50%]} = 60
8. FALSE {30 + [(-100 – 50 – 30) x 50%]} = -60
9. FALSE (360 – 160) x 20% = 40
10. TRUE – [(160 x 12/12) + (100 x 6/12) – (40 x 3/12)] x
10% = 20

PROBLEM 2: FOR CLASSROOM DISCUSSION

1. Solution:
Requirement (a):
A B Total
1,000,00
Amount being allocated 0
Allocation:
100, 100,00
1. Salary of A 000 - 0
2. Bonus (1M – 100K) x
10% 90,000 - 90,000
3. Allocation of remaining profit
(1M profit – 100K – 90K)
= 810K
(810K x 50%); (810K x 405, 405,0 810,00
50%) 000 00 0
595, 405,0 1,000,0
As allocated 000 00 00

Requirement (b):
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Closin Income summary 1,000,0

g A, Capital 00 595,0
entry
B, Capital 00
405,0
00

2. Solution:

Requirement (a):
A B Total
Amount being allocated (80,000)
Allocation:
100,0 100,00
1. Salary of A 00 - 0
2. Bonus - - -
3. Allocation of remaining loss
(– 80K – 100K) = -180K
(-180K x 50%); (-180K x (90,0 (90,00 (180,00
50%) 00) 0) 0)
10,0 (90,0
As allocated 00 00) (80,000)

Requirement (b):
Closing B, Capital 90,00
entry Income summary 0 80,00
A, Capital 0
10,00
0

3. Solution:

Mos.
outstandi Weight
ng ÷ ed
Balances
Total averag
mos. in a e
yr.
500,00
Beg. balance 500,000 12/12
0
Apr. 1 investment 100,000 9/12 75,000
July 31 withdrawal (200,000) 5/12 (83,333
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)
133,33
Sept. 1 investment 400,000 4/12
3
Dec. 1 investment 300,000 1/12 25,000
Weighted average capital 650,00
balance 0
Multiply by: Interest rate 12%
Interest on weighted average capital 78,00
balance 0

A B Total
1,000,00
Amount being allocated 0
Allocation:
100,0 100,00
1. Salary of A 00 - 0
2. Bonus (1M – 100K) x
10% 90,000 - 90,000
3. Interest on capital 78,000 78,000
3. Allocation of remaining loss
(1M – 100K – 90K – 78K)
= 732K
(732K x 50%); (732K x 366,00 366,0 732,00
50%) 0 00 0
556, 444, 1,000,0
As allocated 000 000 00

PROBLEM 3: COMPUTATIONS
1. Solution:

Requirement (a):
A B Total
1,200,00
Amount being allocated 0
Allocation:
80,0 100,00
1. Salaries 00 20,000 0
2. Bonus (1.2M – 100K) x 110,00 110,00
10% 0 - 0
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3. Allocation of remaining profit

(1.2M profit – 100K – 110K)
= 990K 693, 297,0 990,00
(990K x 70%); (990K x 30%) 000 00 0
883, 317, 1,200,0
As allocated 000 000 00

Requirement (b):
Closin Income summary 1,200,0
g A, Capital 00 883,0
entry
B, Capital 00
317,0
00

2. Solution:

Requirement (a):
A B Total
Amount being allocated (60,000)
Allocation:
80,00 100,00
1. Salaries 0 20,000 0
2. Bonus - - -
3. Allocation of remaining loss
(– 60K – 100K) = -160K
(-160K x 70%); (-160K x (112,0 (48,0 (160,0
30%) 00) 00) 00)
(32,0 (28,0 (60,000
As allocated 00) 00) )

Requirement (b):
Closing A, Capital 32,00
entry B, Capital 0
Income summary 28,00 60,00
0 0
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3. Solution:

Mos.
outstandi Weight
ng ÷ ed
Balances
Total averag
mos. in a e
yr.
400,00
Beg. balance 400,000 12/12
0
200,00
Apr. 30 investment 300,000 8/12
0
116,66
May 31 investment 200,000 7/12
7
(41,667
Aug. 1 investment (100,000) 5/12
)
Dec. 1 investment 300,000 1/12 25,000
Weighted average capital 700,00
balance 0
Multiply by: Interest rate 10%
Interest on weighted average capital 70,00
balance 0

A B Total
1,200,00
Amount being allocated 0
Allocation:
100,0 120,00
1. Salaries 00 20,000 0
2. Bonus (1.2M – 120K) x 108,00
10% 108,000 - 0
3. Interest on capital 70,000 70,000
3. Allocation of remaining loss
(1.2M – 120K – 108K – 70K)
= 902K 451,00 451,0 902,00
(902K x 50%); (902K x 50%) 0 00 0
659, 541, 1,200,0
As allocated 000 000 00
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PROBLEM 4: MULTIPLE CHOICE

1. C
2. B
Solution:

A B Total

100,00
Amount being allocated 0
Allocation:

120,00
1. Salaries 80,000 40,000 0
2. Allocation of remaining loss
(100K profit – 120K salaries)
= -20K (10,00 (10,00 (20,000
(-20 x 50%); (-20K x 50%) 0) 0) )
100,00
As allocated 70,000 30,000 0

3. A
Solution:
A B Total
Amount being allocated (20,000)
Allocation:
10,00
1. Salaries 0 40,000 50,000
2. Bonus - - -
3. Allocation of remaining loss
(– 20K – 50K) = -70K
(-70K x 60%); (-70K x (42,0 (28,0 (70,000
40%) 00) 00) )
As allocated (32, 12,00 (20,000
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000) 0 )

4. A
Solution:
A B Total
Amount being allocated 200,000
Allocation:
10,00
1. Salaries 0 40,000 50,000
2. Bonus (200K – 50K) x
10% 15,000 - 15,000
3. Interest on capital (60K x 12%) 7,200 7,200
3. Allocation of remaining loss
(.2M – 50K – 15K – 7.2K) =
127.8K
(127.8K x 60%); (127.8K x 76,6 127,80
40%) 80 51,120 0
101,
As allocated 680 98,320 200,000

5. A
Solution:
A B Total
500,0
Amount being allocated
00
Allocation:
1. Bonus to A
First 200K: (200K x 2%) 4,000 4,000
Over 200K: [(500K - 200K) x 15,0 15,00
5%] 00 0
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2. Bonus to B
(500K - 4K - 15K – 200K) x 2,81 2,81
1% 0 0
3. Allocation of remaining
profit
(500K - 4K - 15K - 2.810K) 239,09 239,0 478,1
÷2 5 95 90
258,0 241,9 500,0
As allocated
95 05 00

6. C
Solution:
A B(40 C(20 Tota
(40%) %) %) l
Amount being 500,00
allocated 0
Allocation:
100,0 120,0
1. Salaries 00 20,000 00
30,00 30,00
2. Interest on capital (300K x
10%) 0 0
3. Allocation of remaining loss
(500K – 120K – 30K) = 140, 140,00 70,00 350,0
350K 000 0 0 00
240, 160,00 100,0 200,0
As allocated 000 0 00 00

Answer: 240,000 – 160,000 = 80,000 difference

7. D
Solution:
Profit before salaries = 100,000 + 80,000 + 40,000 =
220,000
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A B Total

220,00
Amount being allocated 0
Allocation:

120,00
1. Salaries 80,000 40,000 0
2. Allocation of remaining profit
(220K profit – 120K salaries)
= 100K 100,00
(100K x 50%); (100K x 50%) 50,000 50,000 0
130,00 220,00
As allocated 0 90,000 0

8. A
Solution:
Annual salaries:
 A: (10,000 x 12 months) = 120,000
 B: (4,000 x 12 months) = 48,000

Profit before salaries = 360,000 + 120,000 + 48,000 =

528,000

A B Total

528,00
Amount being allocated 0
Allocation:

120,00 168,00
1. Salaries 0 48,000 0
2. Allocation of remaining profit
(528K profit – 168K salaries)
= 360K 180,00 180,00 360,00
(360K x 50%); (360K x 50%) 0 0 0

300,0 228,00 528,00

As allocated 00 0 0
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9. B
Solution:

Step 1:
A, Capital
- beg.
Withdrawa 60,00 10,00
ls 0 0 Additional investment
? Share in profit
50,00
end. 0

Step 2:

A, Capital
- beg.
Withdrawa 60,00 10,00
ls 0 0 Additional investment
100,0 Share in profit
00 (squeeze)
50,00
end. 0

Step 3: 100,000 ÷ 50% = 200,000

10. C
Solution:

Step 1:
A B Total
Amount being allocated ?
Allocation:
100, 100,00
1. Salary of A 000 0
2. Bonus 90,000 90,000
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3. Allocation of remaining profit

? ? ?
595,
As allocated 000 ? ?

Step 2:
A B Total
Amount being allocated ?
Allocation:
100, 100,00
1. Salary of A 000 0
2. Bonus 90,000 90,000
3. Allocation of remaining profit
405,00
0(a) ? ?
595,
As allocated 000 ? ?

(a)
595,000 – 100,000 – 90,000 = 405,000

Step 3:
A B Total
Amount being allocated ?
Allocation:
100, 100,00
1. Salary of A 000 0
2. Bonus 90,000 90,000
3. Allocation of remaining profit
405,00 405,00 810,000
0 0(c) (b)

595, 405,00
As allocated 000 0(d) ?

(b)
405,000 ÷ 50% = 810,000
(c)
810,000 x 50% = 405,000
(d)
equal to (c)

PROBLEM 5: CLASSROOM ACTIVITY

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The students grade themselves and then submit the

results to the teacher for recording.