Subject: Special Transactions
Answers:
Partnership Operations
- D 2.C 3. C 4.A 5. D 6. C 7.B
Problem 3: TIMOTHY and RYAN formed a partnership on March 1, 2018 and agreed to share profit 80% and 20%. respectively- TIMOTHY invested cash of P150,000. RYAN invested no assets but has a specialized expertise and manages the rm full time. There were no other investments nor withdrawals during the year. The partnership contract provides for the following: Capital accounts are to be credited annually with interest at 10% of original capital contribution. I RYAN is to be paid a monthly salary of P3.000. I RYAN is to receive a bonus of 20% of prot before deducting interest on capital, salary, and the bonus. I Bonus, interestI and salary are to be considered as expenses of the partnership. The 2018 condensed income statement for the partnership includes the following: Revenues P 550,000 Expenses (including salary. interest, and 1375,0001 bonus) Net income 175,000 5. How much is the bonus given to RYAN in 2018? A. 22,083 8. 35.000 C. 36250 D. 54,375 6. How much net income was realized by the partnership for the year 2018? A. 175,000 B. 253,750 C. 271,8?5 D. 252.000 7. How much is RYAN's prot share for 2018? A. 35.000 B. 119.375 C. 100.000 0. 101.250 W Problem 1: Cassie. a partner in the CSI Partnership, has a 25% participation in partnership prots and losses. Cassie's capital account had a net increase of P30,000 during 2018. Cassie permanently withdrew P50.000 and contributed a property with a carrying value of P100.000, with a fair value of P90.000. and an agreed value of P972500. to the partnership during 2018. 1. What is the net income or loss of the CSI Partnership for the year ended 2018? A. 40,000 net income B. 40,000 net loss 0. 70.000 net income D. 70,000 net loss Problem 2: B, G, and C put up a partnership on April 1. 2017. The following capital balances were taken from the books on December 31. 2017. before closing net income: B, Capital P84,000 G. Capital 1 14.000 C, Capital 92.000 During the year, B permanently withdrew P10.000 cash while 0 invested a property with a fair value of P22.000. The partners agreed to distribute profits for the rst year as follows: Annual salary of P30.000 to G and P25.000 to 0. Allow a 5% interest to each partner on their capital at the inception of the partnership. Allow a 20% bonus to B based on net income after salaries. interests, and bonus. Any remaining undistributed prot or loss will be distributed in the following manner: > In the ratio 2:3:5, if under-allocated > Equally, it over-allocated Case 1: The net income of the partnership is P100, 000 during the year 2017. 2. How much is the bonus given to B? A. 7.475 B. 7.979 C. 8.054 0. 7,375 3. How much is the share of each partner in the 2017 net income? B G c A. 19,650 39,413 40,937 B. 19,108 38,744 42,148 0. 19,633 38,856 41,511 D. 18,950 39,253 41.787 Case 2: The net income of the partnership is P45, 000 during the year 201' 7'. 4. How much is the share of each partner in the 2017 net income? B G C A. 1,300 24,550 19,150 B- 1.317 24,817 18,866 0. 775 24,400 19,825 D. 2.190 24,773 18,037 Problem 2: B, G, and C put up a partnership on April 1, 2017. The following capital balances were taken from the books on December 31, 2017, before closing net income: B, Capital P84,000 G. Capital 114.000 C, Capital 92.000 During the year. B permanently withdrew P10.000 cash while C invested a property with a fair value of P22.000. The partners agreed to distribute prots for the rst year as follows: Annual salary of P30.000 to G and P25.000 to C. Allow a 5% interest to each partner on their capital at the inception of the partnership. Allow a 20% bonus to B based on net income after salaries, interests, and bonus. Any remaining undistributed prot or loss will be distributed in the following manner: > In the ratio 2:3:5. il under-allocated b Equally, if over-allocated Case 1': The net income of the partnership is P100, 000 during the year 2017. 2. How much is the bonus given to B? A. 7.475 B. 7.979 C. 8,054 D. 7.375 3. How much is the share of each partner in the 2017 net income? B G C A. 19.650 39.413 40,937 B. 19,108 38,744 42,148 0. 19,633 38,856 41,511 D. 18,950 39,263 41 ,787 Case 2: The net income of the partnership is P4500!) during the year 2017. 4. How much is the share of each partner in the 2017 net income? B G C A. 1,300 24,550 19,150 E. 1.317 24,817 18,866 C. 775 24,400 19,825 D. 2.190 24,773 18,037
