De La Salle Lipa

College of Business, Economics, Accountancy and

Management
Accountancy Department

Quiz: Partnership Operations

Strictly no erasures allowed.

Part I.

1. A, B, and C are partners with beginning capital balances of P400,000 each. During the year, A made a capital
withdrawal of P20,000 on March 1, and reinvested the said amount plus an additional P30,000 on August 1. B acts as
the managing partner and regularly withdraws salary allowance of P6,000 per month charged to his drawings
accounts. C received on May 1 cash of P40,000 of which half in charged to Loans to and from Partners. Compute for
the following:

A B C
Ending capital balance
Simple average capital
Weighted average

2. D, E and F operate a law firm and made a net income before tax of P3,000,000. They share profits at a ratio of 5:3:2.
Compute for:
Net income after tax
D E F
Withholding tax for each
partner
Profit share of each partner

3. G,H and J started their partnership operations on July 1, 200A with a total capitalization of P600,000. They agreed to
give J, an industrial partner, monthly salary allowance of P4,000, interest of 12% to partners capital with the balance
to be divided at the ratio of 4:3:3. Net Income before tax amounted to P2,000,000.
a. Salaries paid to J ___________

b. Complete the table:

Partnership is a General Professional Commercial Partnership
Partnership
Capital Contribution of
G
H
J
Net Income after tax
Interest on capital balance due to
G
H
J
Profit share of
G
H
J
 Withholding tax for
G
H
J
Partners’ Equity, 12/31/200A
G
H
J

Part II.
1. In its first year of operations, Alba and Company, a partnership, made a net income of P20,000 before providing
for salaries of P5,000 and P3,000 per annum for Alba and Bana, respectively, as stipulated in the partnership
agreement. Capital contributions are as follows:
Alba P30,000
Bana 20,000
Cada 10,000

Assuming that no profit and loss ratios are provided in the partnership agreement and that there has been no
change in the capital contributions during the year, how much profit share would Alba be entitled to receive?

2. Dexter and Joliver are partners agreeing to allow monthly salaries (P6,000 and P5,000 respectively), 6% interest
on the capital investment at the beginning of the year (P300,000 and P230,000 respectively) and on the remaining
balance, to be equally shared. The first year registered a net income of P100,000. Profit share of partners are:
Dexter: _________; Joliver: _________

3. The partnership agreement of Eve and Fred provides that interest at 10% per year is to be credited to each partner
on the basis of weighted-average capital balances. A summary of Fred’s capital account for the year ended
December 31, 200A is as follows:
Balance, Jan 1 P280,000
Additional investment July 1 80,000
Withdrawal, August 1 (30,000)
Balance, Dec 31 330,000

The amount of interest that should be credited to Fred’s capital account for 200A is_________.

4. A and B entered into a partnership as of March 1, 200A by investing P125,000 and P75,000, respectively. They
agreed that A, as the managing partner, was to receive a salary; P30,000 per year and a bonus computed at 10% of
the net profit after adjustment for the salary; the balance of the profit was to be distributed in the ratio of their
original capital balances. On December 31, 200A, account balances was as follows:

Cash P70,000 Accounts Payable P 60,000

Accounts Receivable 67,000 A, Capital 125,000
F&F 45,000 B, Capital 75,000
Sales returns 5,000 A, drawing (20,000)
Purchases 196,000 B, drawing (30,000)
Operating expenses 60,000 Sales 233,000

Inventories on December 31, 200A were as follows: supplies, P2,500, merchandise P73,000, prepaid insurance
was P950 while accrued expenses were P1,550. Depreciation rate was 20% per year.

The partners’ capital balances on December 31, 200A, after closing the net profit and drawing accounts, were:

A__________; B ___________
5. The partners, A and B, share profits 3:2. However, A is to receive a yearly bonus of 20% of the profits, in addition
to his profit share. The partnership made a net income for the year of P24,000 before the bonus. Assuming A’s
bonus is computed on profit after deducting said bonus, how much profit share will B receive?

6. Garcia and Henson formed a partnership on January 2, 200X and agreed to share profits 90%, 10%, respectively.
Garcia contributed capital off P25,000. Henson contributed no capital but has 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 beginning capital.
Henson is to be paid a salary of P1,000 a month.
Henson is to be received a bonus of 20% of income calculated before deducting his salary and interest on
both capital accounts.
Bonus, interest, and Henson’s salary are to be considered partnership expenses.

The partnership 200X income statement follows:

Revenues P96,450
Expenses (including salary, interest and bonus) 49,700
Net income P46,750

What is Henson’s 200X bonus? ___________

7. On January 1, 200X, A, B, C and D formed Bekha Trading Co., a partnership, with capital contributions as
follows: A, P50,000; B, P25,000; C, P25,000 and D, P20,000. The partnership contract provided that each partner
shall receive a 5% interest in contributed capital, and that A and B shall receive salaries of P5,000 and P3,000,
respectively. The contract also provided that C shall receive a minimum of P2,500 per annum, and D a minimum
of P6,000 per annum, which is inclusive of amounts representing interest and share of remaining profits. The
balance of the profits shall be distributed to A, B, C and D in a 3:3:2:2 ratio.

What amount must be earned by the partnership, before any charge for interest and salaries, so that A may receive
an aggregate of P12,500 including interest, salary and share of profits? ____________

8. A, B and C are partners and share profits and losses as follows: Salaries of P20,000 to A; P15,000 to B; and none
to C. If net income exceeds salaries, then a bonus is allocated to A. The bonus is 5% of net income after
deducting salaries and the bonus. Residual profits or residual losses are allocated 10% to A; 20% to B and 70% to
C. If net income before salaries and bonus is P70,000, how much is the share of A? _____________