Problem #9
Rules for the Distribution of Profits or Losses
In January 2018, Nick Marasigan and Dems Asacta agreed to produce and sell chocolate candies.
Marasigan contributed
P2400000 in cash to the business. Asacta contributed the building and equipment, valued at P2200000
and P1400000,
respectively. The partnership had profits of P840000 during 2018 but was less successful during 2019,
when profit was
only P400000.
Required:
1. Prepare the journal entry to record the investment of both partners in the partnership.
2. Determine the share of profit for each partner in 2018 and 2019 under each of the following
conditions:
a. The partners agreed to share profit equally.
b. The partners failed to agree on a profit-sharing arrangement.
c. The partners agreed to share profit according to the ratio of their original investment.
d. The partners agreed to share profits by allowing interest of 10% on their original investments and
dividing
the remainder equally.
e. The partners agreed to share profits by allowing salaries of P400000 for Marasigan and P280000 for
Asacta,
and dividing the remainder equally.
f. The partners agreed to share profits by paying salaries of P400000 to Marasigan and P280000 to
Asacta,
allowing interest of 9% on their original investment, and dividing the remainder equally.
*Marasigan
Cash
240000
Marasigan, Capital 240000
*Asacta
Building 2200000
2012:P840000
Marasigan Asacta total
capital contribution 2400000.00 3600000.00 6000000.00
A.profit1:1 420000.00 420000.00 840000.00
b.profit4:6 336000.00 504000.00 840000.00
Equipment 1400000
c.profit4:6 336000.00 504000.00 840000.00
d.interest
Asacta, 10%
Capital 240000.00
3600000 360000.00 600000.00
Remainder1:1 0000.00
12 120000.00 240000.00
Total profit 360000.00 2012:P400000
480000.00 840000.00
e.salaries Marasigan
400000.00 Asacta
280000.00 total
680000.00
capital contribution
Remainder 1:1 2400000.00
80000.00 3600000.00
80000.00 6000000.00
160000.00
A.profit1:1
Total profit 200000.00
480000.00 200000.00
360000.00 400000.00
840000.00
f.salaries
b.profit4:6 400000.00
160000.00 280000.00
240000.00 680000.00
400000.00
Interest9%
c.profit4:6 216000.00
160000.00 324000.00
240000.00 540000.00
400000.00
Remainder
d.interest 10% 1:1 240000.00 - 360000.00 - 600000.00 -
Remainder1:1 190000.00- 190000.00 - 380000.00 -
Total profit 426000.00
100000.00 41440000.00
100000.00 84000000.00
200000.00
Total profit 140000.00 260000.00 400000.00
e.salaries 400000.00 280000.00 680000.00
Remainder 1:1 - - -
140000.00 80000.00 160000.00
Total profit 260000.00 140000.00 400000.00
f.salaries 400000.00 280000.00 680000.00
Interest9% 216000.00 324000.00 540000.00
Remainder 1:1 - - -
410000.00 410000.00 820000.00
Total profit 426000.00 41440000.00 84000000.00
Problem #2
Admission by Purchase of Interest or Investment of Assets
Castro and Falceso are partners who share profits and losses in a ratio of 2:3, respectively, and have the
following capital balances on Sept. 30, 2020: Castro, Capital, P100,000 Cr. and Falceso, Capital, P150,000
Cr. The partners agreed to admit Garachico to the partnership. Required: Calculate the capital balances
of each partner after the admission of Garachico, assuming that bonuses are recorded when appropriate
for each of the following assumptions:
1. Garachicho paid Castro P50,000 for 40% of his interest.
2. Garachico invested P50,000 for a one-sixth interest in the partnership.
3. Garachico invested P50,000 for a 25% interest in the partnership.
4. Garachico invested P50,000 for a 15% interest in the partnership.
1 Garachicho paid Castro P50,000 for 40% of his interest.
Amount P&L
Castro, Capital 60,000.00 24%
Falceso, Capital 150,000.00 60%
Garachico, Capital 40,000.00 16%
Total 250,000.00
Castro, Capital 40,000.00
Garachico, Capital 40,000.00
2 TContributedC Interest TAgreedC Difference
Old 250,000.00 250,000.00 - New 50,000.00 50,000.00 - Total 300,000.00 300,000.00 –
Cash 50,000.00
Garachico, Capital 50,000.00
Amount P&L
Castro, Capital 100,000.00 1/3
Falceso, Capital 150,000.00 1/2
Garachico, Capital 50,000.00 1/6
Total 300,000.00
3 TContributedC Interest TAgreedC Difference
Old 250,000.00 75% 225,000.00 - 25,000.00
New 50,000.00 25% 75,000.00 25,000.00
Total 300,000.00 300,000.00 -
Cash 50,000.00
Castro, capital 10,000.00
Falceso, capital 15,000.00
Garachico, capital 75,000.00
P&L
Castro, Capital 90,000.00 30%
Falceso, Capital 135,000.00 45%
Garachico, Capital 75,000.00 25%
Total 300,000.00
4 TContributedC Interest TAgreedC Difference
Old 250,000.00 85% 255,000.00 5,000.00
New 50,000.00 15% 45,000.00 - 5,000.00
Total 300,000.00 300,000.00 –
Cash 50,000.00
Garachico, capital 45,000.00
castro, capital 2,000.00
Falceso, capital 3,000.00
P&L
Castro, Capital 102,000.00 34% 40 34%
Falceso, Capital 153,000.00 51% 60
Garachico, Capital 45,000.00 15%
Total 300,000.00
Amount P&L
Castro, Capital 100,000.00 2 40%
Falceso, Capital 150,000.00 3 60%
Total 250,000.0
Problem #17
Formation and Operations of a Partnership
Dondoyano and Dellosa entered into a partnership on Mar. 1, 2012 by investing P125,000 and P75,000,
respectively. They agreed that Dondoyano, as managing partner, is to receive a salary of P30,000 per
year and a bonus computed at 10% of the profit after salaries; the balance of the profit is to be
distributed in the ratio of their original capital contributions. On Dec. 1, 2012, the account balances were
as follows:
Cash
P 70,000
Accounts Receivable
67,000
45,000
Furniture and Fixtures
Sales Returns
5,000
Purchases
196,000
Operating Expenses.
Accounts Payable
60,000
60,000
Sales
233,000
Dondoyano, Capital
125,000
75,000
Dellosa, Capital
20,000
Dondoyano, Drawing
30,000
Dellosa, Drawing
Inventories on Dec. 31, 2012 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.
Required:
1. Prepare the statement of comprehensive income and distribute the profits2
2. Compute for the partners' ending capital balances.
a.
Budget(A) as calculated above) Actual(B) (A-B)
Units 118500 118500
Variable Costs
Indirect Material 5925 5910 15
Indirect Labor 14220 11880 -25
Utilities 11850 11880 30
Maintenance 8295 8275 20
Total Variable Costs© 40290 40260 30
Fixed Costs
Salaries 45000 450000 -
Depreciation 16800 16800 -
Property Taxes 3000 3000 -
Insurance 1200 1200 -
Janitorial 1500 1500 -
Total Fixed Costs(D) 67500 67500
Total Overhead(C+D) 107790 107760 30
b.
Budget(A) Actual( B) (A-B)
Controllable Costs
Indirect Material 5925 5910 15
Indirect Labor 14220 14195 25
Utilities 11850 11850 -30
Maintenance 8295 8275 20
Total Costs 40290 40260 30
