PRELIM – QUIZ (PARTNERSHIP FORMATION AND OPERATION)

1. Zero –Under the bonus method, assets are no revalued, instead, adjustments are made to
partnership capital accounts; consequently, unidentifiable assets are not recognized.

2. P484,000.00

Bonus = 0.10 (Profit after Allowances + Salaries + Interest)

44,000.00 = 0.10 (300,000.00 + Salaries + 40,000.00)
44,000.00 = 30,000.00 + 0.10 Salaries + 4,000.00
44,000.00 = 34,000.00 + 0.10 Salaries
10,000.00 = 0.10 Salaries
100,000.00 = Salaries

Profit After Allowances P300,000.00

Add: Salaries 100,000.00
Interest 40,000.00
Bonus 44,000.00
Profit Before Allowances P484,000.00

3. P18,750.00

Bonus = 0.10 (Profit After Allowances + 25,000.00 + Interest)

23,500.00 = 0.10 (200,000.00 + 25,000.00 + Interest)
23,500.00 = 20,000.00 + 2,500.00 + 0.10 Interest
1,000.00 = 0.10 Interest
10,000.00 = Interest

Amount Weighted Average

01/01 Beginning Balance P90,000.00 12/12 P90,000.00
05/01 Addtl Investment 18,750.00 8/12 12,500.00
10/01 Withdrawal (10,000.00) 3/12 (2,500.00)
12/31 Addtl Investment P30,000.00 0/12 -
Total 100,000.00
Interest Rate 10%
Interest P10,000.00

4. P258,500.00

Profit After Allowances P200,000.00

Add: Salaries 25,000.00
Interest 10,000.00
Bonus 23,500.00
Profit Before Allowances P258,500.00
5. P110,000.00
Salaries + 0.50 Profit After Allowances = Bonus + 0.50 Profit After Allowances
Salaries + 0.50 Profit After Allowances = 0.10 (Profit Before Allowances – Salaries) + 0.50 Profit After Allowances
10,000.00 + 0.50 PA = 0.10 (PB – 10,000.00) + 0.50PA
10,000.00 + 0.50PA + 0.10 PB – 1,000.00 + 0.50 PA
11,000.00 = 0.10 PB
110,000.00 = PB

Partner A Partner B 110,000.00

Salaries 10,000.00 - (10,000.00)
Bonus - 10,000.00 (10,000.00)
Remaining 45,000.00 45,000.00 90,000.00
Distribution 55,000.00 55,000.00 110,000.00

6. P83,000.00
Bonus = 0.10 (Profit Before Allowances – Salaries – Interest)
5,000.00 = 0.10 (Profit Before Allowances – 25,000.00 – 8,000.00)
5,000.00 = 0.10 Profit Before Allowances – 2,500.00 – 800.00
5,000.00 = 0.10 Profit Before Allowances – 3,300.00
8,300.00 = 0.10 Profit Before Allowances
83,000.00 = Profit Before Allowances
7. P47,000.00

Partner A Partner B P83,000.00

Salaries P15,000.00 P10,000.00 (25,000.00)
Interest - 8,000.00 (8,000.00)
Bonus 5,000.00 - (5,000.00)
Remaining 27,000.00 18,000.00 45,000.00
Distribution P47,000.00 P36,000.00 P83,000.00

8. P121,625.00
Amount Weighted Average
01/01 Beg, Capital P70,000.00 12/12 P70,000.00
05/01 Addtl Investment 20,625.00 8/12 13,750.00
10/01 Withdrawal (15,000.00) 3/12 (3,750.00)
12/31 Addtl Investment P10,000.00 0/12 -
Total 80,000.00
Interest Rate 10%
Interest P8,000.00
 Beginning Capital – B P70,000.00
Add: Additional Investments 30,625.00
Income Distribution 36,000.00
Less: Withdrawal (15,000.00)
Ending Capital – B P121,625.00

9. P100,000.00

2022 2023
Accrued Expenses (P12,000.00) P12,000.00
- (8,000.00)
Accrued Income 3,000.00 (3,000.00)
- 9,000.00
Prepaid Expenses 5,000.00 (5,000.00)
- 11,000.00
Unearned Income (23,000.00) 23,000.00
- (8,000.00)
Total Adjustments (P27,000.00) 31,000.00
Unadjusted Income 69,000.00
Adjusted Income P100,000.00

Under Accounting for Partnership, adjustments of income for the prior periods must be adjusted
by revising the profit distribution on the year such errors exist.

10. P26,000.00

A Capital:
Income Distribution (P4,000.00)
Investment 9,000.00
Withdrawal (15,000.00)
Net Decrease (P10,000.00)

Partner A Partner B P2,000.00

Salaries - 8,000.00 (8,000.00)
Interest - 2,000.00 (2,000.00)
Bonus - - -
Remaining (4,000.00) (4,000.00) (8,000.00)
(4,000.00) 6,000.00 P2,000.00

Interest P2,000.00
Divide by: Interest Rate 10%
Beginning Capital -Partner B 20,000.00
Add: Share in Profit -Partner B 6,000.00
Ending Capital -Partner B P26,000.00