54 Chapter Requirement! Compute for your respective shares in the loss. Prepare working papers / solutions like a person with a sound mind, not like a crazy animal. PROBLEM & FOR CLASSROOM DISCUSSION Division of profits and losses 1. A, B and C's partnership agreement stipulates the following: Annual salaries of P12,000 to A and P8,000 to C . . 10% bonus to A, based on profit after salaries but before deducting the bonus. 10% interest on the following capital contributions: A P100,000; B, P60,000; and C, P120,000. P/L, ratio of 40:30:30. Case 1: Sufficient profit The partnership earns profit of P100,000. Compute for the partners' respective shares. Case 2: Insufficient profit The partnership eams profit of P10,000. Compute for the partners' respective shares. Case 3r Loss The partnership incurs loss of P20,000. Compute for, the partners' respective shares. Interest on Weighted average capital 2. A and B's partnership agreement stipulates the following: Monthly salary of P4,000 to A. 20% bonus to A, based on profit after deductions for salary and bonus, but before deduction for interest. 12% interest on B's weighted average capital balance. B initially contributed P30,000. During the period, B Partnership Operations contributed additional 10000 on July 1 and P6,000 on Nov. 30, and withdrew P4,000 on Oct. 1. Balance is shared equally. Case 1: Full year The partnership eamed profit of P90,000, before salaries, bonus and interest on capital, for the year ended Dec. 31, 20x1. Requirement: Provide the journal entry to close the income summary account to the partners' respective capital accounts. Case 2: Partial year The partnership eamed profit of P90,000, before salaries, bonus and interest on capital, for the eight months ended Dec. 31, 20x1. Requirement: Provide the journal entry to close the income summary to the partners' respective capital accounts. Reconstruction of information 3. A and B's partnership agreement stipulates the following: Annual salary of 20,000 to A. 10% bonus to A, based on profit after salaries and bonus. Balance is shared on a 60:40 ratio. Requirement: If B's share in the partnership profit for the year is P32,000, how much is the partnership profit before salary and bonus?