Explanation and Solution

1. The partnership agreement of Paul, Simon and Peter provides for the division of net

income as follows:

Simon, who manages the partnership is to receive an annual salary of P120,000.

Each partner is to be allowed interest at 10% on ending capital.

Balance is to be divided 40:25:35.

During 2008, Paul invested an additional P90,000 in the partnership. Simon made an

additional investment of P75,000 and withdrew P110,000 and Peter withdrew P60,000.

No other investments or withdrawals were made during 2008. On January 1, 2008, the

capital balances were Paul, P300,000; Simon, P410,000; and Peter, P220,000. Total capital at year-end was P600,000. Compute the capital balance of each partner at yearend:

a. (P176,000) P948,125 (P172,125) respectively.

b. 214,000 410,250 24,250 respectively

c. 214,000 398,125 ( 12,125) respectively

d. 390,000 375,000 ( 165,000) respectively

2.Villena, a partner in the Dulay, Villena& Co., has a 30% participation in partnership profits and losses. Villena's capital account has a net decrease of P120,000 during the calendar year 2011. During 2011, Villena withdraw P260,000 (charged against his capital account) and contributed property valued at P50,000 to the partnership. What was the profit of Dulay, Villena& Co., for the year 2011?

o1,100,000

o466,667

o700,000

o300,000

3.Jong and Kajong are partners who share profits and losses in the ratio of 60%; 40% respectively. Jong's salary is P120,000 and P60,000 for Kajong. The partners are also paid interest on their average capital balances. In 2010, Jong received P60,000 of interest and Kajong, P24,000. The profit and loss allocation is determined after deductions for salary and interest payments. If Kajong's share in the residual income (income after deducting salaries and interest) was P120,000 in 2010, what was the total partnership income?

o384,000

o564,000

o690,000

o774,000

4.Sig and Fred agreed to share the partnership's profit as follows: To Sig: P15,000 salary per month, 5% bonus after salary and bonus. To Fred: The remaining balance. What is the amount of Fred's share from the partnership's income of P411,000?

o385,000

o220,000

o219,000

o200,000