Problem 1
ABC and DEF organized the AD Partnership on January 1, 2024. The
following entries were made in their capital accounts during 2024.
ABC, Capital:
Jan. 1: Credit = P250,000
May 1: Debit = P50,000
Oct. 1: Credit = P100,000
DEF, Capital:
Jan. 1: Credit = P300,000
Mar. 1: Credit = P60,000
July 1: Debit = P30,000
Sept. 1: Credit = P40,000
Required:
A. If the partnership profit for the year 2024 computed before salaries or
interest is P180,000, determine its division between the partners under each
of the following independent profit-sharing agreements:
1. An interest of 8% is allowed on average capital investments. The
remainder of the profit is divided equally.
2. A salary of P90,000 is to be credited to ABC, 5% interest is allowed on
each partner's ending capital balance, and the remainder of the profit is
in the ratio of 2:3.
3. Salaries are allowed for ABC and DEF of P100,000 and P120,000,
respectively; the remaining profit or resulting loss is divided based on
the average capital balance.
B. Assume that the partnership incurs a loss of P95,000. Determine the
distribution of the loss under the assumption (3) above.
Problem 2
JLM and KPR organized the JK Partnership on January 1, 2024. The
following entries were made in their capital accounts during 2024.
JLM, Capital:
Jan. 1: Credit = P400,000
April 1: Credit = P80,000
Oct. 1: Debit = P120,000
KPR, Capital:
Jan. 1: Credit = P500,000
June 1: Debit = P50,000
Aug. 1: Credit = P100,000
Nov. 1: Debit = P40,000
Required:
A. If the partnership profit for the year 2024 computed before salaries or
interest is P250,000, determine its division between the partners under each
of the following independent profit-sharing agreements:
1. An interest of 7% is allowed on average capital investments. The
remainder of the profit is divided based on the ratio of 3:4.
2. A salary of P110,000 is to be credited to JLM, 8% interest is allowed on
each partner's ending capital balance, and the remainder of the profit is
divided equally.
3. Salaries are allowed for JLM and KPR of P150,000 and P140,000,
respectively; the remaining profit or resulting loss is divided based on
the average capital balance.
B. Assume that the partnership incurs a loss of P120,000. Determine the
distribution of the loss under the assumption (2) above.
Problem 3
SND and TGY organized the ST Partnership on January 1, 2024. The
following entries were made in their capital accounts during 2024.
SND, Capital:
Jan. 1: Credit = P600,000
Feb. 1: Credit = P150,000
Sept. 1: Debit = P70,000
TGY, Capital:
Jan. 1: Credit = P750,000
April 1: Debit = P100,000
Aug. 1: Credit = P80,000
Nov. 1: Debit = P60,000
Required:
A. If the partnership profit for the year 2024 computed before salaries or
interest is P350,000, determine its division between the partners under each
of the following independent profit-sharing agreements:
1. An interest of 10% is allowed on average capital investments. The
remainder of the profit is divided based on the ratio of 4:1.
2. A salary of P180,000 is to be credited to TGY, 7% interest is allowed
on each partner's ending capital balance, and the remainder of the profit
is divided equally.
3. Salaries are allowed for SND and TGY of P200,000 and P220,000,
respectively; the remaining profit or resulting loss is divided based on
the average capital balance.
B. Assume that the partnership incurs a loss of P150,000. Determine the
distribution of the loss under the assumption (1) above.