1. Left and Right are partners.

Their capital accounts during 2020 were as follows:

Left, Capital Right, Capital

8/23 P6,000 1/1 P30,000 3/5 P9,000 1/1 P50,000
4/3 8,000 7/6 7,000
10/31 6,000 10/7 5,000

Partnership net income is P50,000 for the year. The partnership agreement provides for the division of net
income as follows:
• Each partner is credited 10 percent interest on his or her average capital.
• Because of prior work experience, left is entitled to an annual salary of P12,000 an Right is credited with
P8,000.
• Any remainder income or loss is to be allocated based on beginning capital.

How much of the partnership net income for 2020 should be assigned to Left and Right?
a. Left, P23,667; Right; P26,333
b. Left, P18,750; Right; P31,250
c. Left, P26,388; Right; P23,612
d. Left, P25,000; Right; P25,000

2. Hunt, Tob, Turman and Kelly own a publishing company that they operate as a partnership. The partnership
agreement includes the following:
• Hunt receives a salary of P20,000 and a bonus of 3% of income after all bonuses.
• Rob receives a salary of P10,000 and a bonus of 2% of income after all bonuses.
• All partners are to receive 10% interest on their average capital balances.
The average capital balances are Hunt, P50,000; Rob, P45,000; Turman, P20,000, and Kelly, P47,000. Any
remaining profits and losses are to be allocated equally among the partners. Determine how a profit of P105,000
would be allocated among the partners.
a. Hunt, P41,450; Rob; P29,950; Turman, P15,450; Kelly, P18,150
b. Hunt; P28,000; Rob, P16,500; Turman, P2,000; Kelly, P4,700
c. Hunt, P39,700; Rob, P29,200; Turman, P16,700; Kelly, P19,400
d. Cannot be determined

3. PP and QQ are partners operating a chain of retail stores. The partnership agreement provides for the
following:
PP QQ
Salaries……………………………………………………………. P10,000 P5,000
Interest on average capital balances……………………………….. 10% 10%
Bonus………………………………………………………………20% of net income None
before interest but
after bonus and salaries
remainder………………………………………………………..... 30% 70%

The income summary for year 2020 shows a credit balance of P51,000 before any deductions. Average capital
balances for PP and QQ are P50,000 and P75,000, respectively. The share of PP and QQ in the P51,000 net
income would be;
a. PP, P24,062.50; QQ, P26,937.50
b. PP, P26,541.50; QQ, P24,458.50
c. PP, P23,500; QQ, P27,500
d. PP, P26,250; QQ, P24,750
4. XX and YY formed a partnership on January 2, 2020 and agreed to share profits and loss in the ration of 90%
and 10%, respectively. XX contributed capital of P25,000, YY contributed no capital but has a specialized
expertise and manages the firm full time. There were no withdrawals during the year. The partnership agreement
provides for the following:

Capital accounts are to be credited annually with interest at 5% of the beginning capital.
YY is to be paid a salary of P1,000 a month.
YY is to receive a bonus of 20% of net income calculated before deducting his salary and interest on both capital
accounts.
Bonus interest, and YY’s salary are to be considered as partnership expenses.

The partnership’s income statement for 2020 follows:

Revenues………………………………………………………………….P96,450
Less: Expenses (including salary, interest, and bonus)…………………… 49,700
Net Income P46,750

What is YY’s 2020 bonus?

a. P11,688
b. 12,000
c. 15,000
d. 15,738

5. The Dino Company, a partnership, was formed on January 1, 2020, with four partners, DD, EE, FF and GG.
Capital contributions were as follows: DD, P50,000; EE, P25,000; FF, P25,000 and GG, P20,000. The
partnership agreement provides that partners shall receive 5% interest in the amounts of their capital
contributions. In addition, DD is to receive salary of P5,000 and EE a salary of P3,000. The agreement further
provides that FF shall receive a minimum of P2,500 per annum from the partnership and GG a minimum of
P6,000, per annum, both including amounts allowed as interest on capital and their respective shares of profits.
The balance of the profit is to be shared in the following proportions: DD, 30%; EE, 30%; FF, 20%, and GG,
20%. Calculate the amount that must be earned by the partnership during 2020, in order that DD may receive
an aggregate of P12,500 including interest, salary and share of profits.
a. 16,667
b. 30,000
c. 30,667
d. 32,333
The AA, BB, and CC Partnership was formed on January 2, 2015. The original cash investment were as follows:
AA…………………………………………………………………………………………………...96,000
BB……………………………………………………………………………………………………144,000
CC……………………………………………………………………………………………………216,000

According to the general partnership contract, the partners were to be remunerated as follows:
a. Salaries of P14,400 for AA, P12,000 for BB, and P13,600 for CC.
b. Interest at 12% on the average capital account balances during the year.
c. Remainder divided 40% to AA, 30% to BB, and 30% for CC.

Income before partners’ salaries for the year ended December 31, 2020, was P92,080. AA invested an additional
P24,000, in the partnership on July 1; CC withdrew P36,000 from the partnership on October 1; and as
authorized by the partnership contract, AA, BB, and CC each withdrew P750 monthly against their shares of
net income for the year.

1. The share of partner AA in the net income

a. 36,832
b. 35,232
c. 26,160
d. 11,760

2. The capital balance of partner CC on December 31, 2020

a. 217,540
b. 208,540
c. 200,224
d. 198,624

3. If the salaries to partners are to be recognized as operating expenses by the partnership, the share of partner
BB in the net income?
a. 36,832
b. 28,380
c. 16,380
d. 15,264

4. Using the same information in No. 3, the capital balance of partner CC on December 31, 2020?
a. P217,540
b. 208,540
c. 200,224
d. 198,624

DD and EE was organized and began operations on March 1, 2015. On that date, DD invested P150,000 and
EE invested land and building with current fair value of P80,000 and P100,000, respectively. EE also invested
P60,000 in the partnership on November 1, 2015 because of its shortage of cash. The partnership contract
includes the following remuneration plan:
DD EE
Annual salary………………………………………………….P18,000 P24,000
Annual interest on average capital account balances………… 10% 10%
Remainder……………………………………………………. 60% 40%

The annual salary was to be withdrawn by each partner in 12 monthly installments. During the fiscal year ended,
February 28, 2016, DD and EE had net sales of P500,000, cost of goods sold of P280,000, and total operating
expenses of P100,000 (excluding partners’ salaries and interest on average capital account balances). Each
partner made monthly cash drawings in accordance with partnership contract.

Determine:
1. The share of partner DD in the net income:
a. P58,800
b. 66,000
c. 72,000
d. 46,800

2. The capital balances of each partner on March 1, 2016 should be:

a. DD, P190,800; EE, P277,200
b. DD, P132,000; EE, P164,000
c. DD, P216,000; EE, P294,000
d. DD, P198,000; EE, P270,000

3. Assuming that the annual salary is to be recognized in operating expenses and total operating expenses
of P100,000 includes the partners’ salaries expense but excluding interest on partners’ average capital
balances. The share of partner DD in the net income:
a. P58,800
b. 66,000
c. 72,000
d. 46,800

4. Using the same information in No. 3, the capital balance of each partner on March 1, 2016:
a. DD, P190,800; EE, P277,200
b. DD, P132,000; EE, P164,000
c. DD, P216,000; EE, P294,000
d. DD, P198,000; EE, P270,000

FF and GG are partners in merchandising business. During 2020, they withdrew their salary allowance
of P80,000 and P120,000, respectively. Profits and losses are shared in the ratio of 3:2. The Income
Summary account has a credit balance of P240,000 before any income allocation. Their capital accounts
reflect the following:
FF GG
Beginning balance…………………………………………P100,000 P60,000
Additional investments…………………………………… 60,000 80,000
Withdrawals other than for salary allowances…………… (20,000) (30,000)
Ending capital…………………………………………… .P140,000 P110,000

Determine:
1. The share of partner FF in the net income:
a. P144,000
b. 104,000
c. 80,000
d. 24,000

2. The capital balance of each partner on December 31, 2015 after closing the Income Summary and
Withdrawals accounts.
a. FF, P164,000; GG, P126,000
b. FF, P244,000; GG, 246,000
c. FF, P140,000; GG, P110,000
d. FF, P164,000; GG, P246,000