Accoun ng for Special Transac ons 1: Partnership Opera on
A. Theories of Accounts
1. Which of the following transac ons shall not affect the capital balance of a partner?
a. Share of a partner in the partnership loss
b. Receipt of a bonus by a partner from another partner based on the agreement
c. Advances made by the partnership to a partner
d. Addi onal investment by a partner to the partnership
2. In the absence of agreement as to distribu on of profit, how shall the partnership profit have distributed to the
partners?
a. The industrial partner shall receive a share equivalent to the least share of a capitalist partner while the
capitalist partner shall share based on capital contribu on.
b. The industrial partner shall receive a just and equitable share and the remainder shall distributed to the
capitalist partners on the basis of capital contribu on ra o.
c. The profit shall be distributed on the basis of loss contribu on ra o which may have been agreed by the
partners.
d. The profit shall be distributed equally to all partners including the industrial partner.
3. In the absence of the agreement as to distribu on of loss, how shall partnership loss be distributed to the
partners?
a. The loss shall be distributed equally to all partners including the industrial partner.
b. The industrial partner shall be exempted from partnership loss while capitalist partner shall share equally.
c. The industrial partner shall be exempted from the partnership loss while the capitalist partners shall be
distributed on the basis of capital contribu on ra o.
d. The industrial partner shall be exempted from the partnership loss while the capitalist partners shall be
distributed on the basis of profit ra o.
4. Which of the following will decrease the capital balance of a partner?
a. Share in partnership profit c. Drawings made by a partner
b. Receipt of share in revalua on surplus from PPE d. Advances made by partner to the partnership
5. If there is an agreement for the division of profits but none for losses, it is concluded that:
a. Losses should be divided using original capital c. Losses should be divided in the same way as
ra o profit
b. Losses should be divided using ave. capital ra o d. Losses should be divided equally
B. Problem Solving
1. Salaries, interest and division of Profit and Loss
A, B and C partnership agreement s pulates the following:
Annual salaries of P12,000 to A and P8,000 to B.
10% interest based on the beginning capital contribu on of the partners.
o A beginning capital – P100,000
o B beginning capital – P60,000
o C beginning capital – P120,000
Profit ra o of 40%:30%:30% respec vely:
Case 1: (Profit) The partnership earns profit of P200,000. Compute the partners respec ve shares.
Case 2: (Insufficient profit) The partnership earns profit of P100,000. Compute the partners respec ve shares.
Case 3: (Net loss) The partnership incurs loss of P10,000. Compute the partners respec ve shares.
2. Interest on Weighted average capital
A and B’s partnership agreement s pulates the following:
o Annual salary of P48,000 to A
o B receives a 12% interest based on B’s weighted capital balance. B ini ally contributed P30,000. During the
period, B contributed addi onal P10,000 on July 1 and P6,000 on November 30, and withdrew P4,000 on
October 1.
Accoun ng for Special Transac ons 1: Partnership Opera on
o The balance is shared equally.
Case 1: (Full year) The partnership earned profit of P90,000 during the year ended December 31, 2022. Compute the
share allocated to A and B during the year and provide the journal entry.
Case 2: (Par al year) The partnership earned profit of P90,000, for the eight (8) months of opera on during the year
ended December 31, 2022. Compute the share allocated to A and B during the year and provide the journal entry.
3. Computa on of Bonus
Dawn and Drew started on their partnership business on January 1, 2022. During the first year of opera on, the net
income of the business is amounted to P1,008,000. Dawn was appointed as the managing partner. During the year.
The ar cle of Co-Partnership agreed on the alloca on of net income as follows:
o Bonus of 20% to Dawn
o Annual salary of 96,000, and P144,000 to Dawn and Drew, respec vely.
o Interest based on average capital balance, amoun ng to Dawn – P28,800 and Drew – 19,200.
o Remaining balance in the net income be allocated to Dawn and Drew in the ra o of 2:1.
Compute the Bonus assuming:
1. Bonus is based on net income before bonus, salaries, and interest.
2. Bonus is based on net income a er bonus but before salaries, and interest.
3. Bonus is based on net income a er bonus, and salaries, but before interest.
4. Bonus is based on net income a er bonus, salaries, and interest.
5. Bonus is based on net income a er salaries, but before bonus, and interest.
6. Bonus is based on net income a er interest, but before bonus and salaries.
4. Mul ple bases of alloca on:
On January 1, 2018, partners Earth and Shakers formed Earthquake Partnership with partner Earth contribu ng
P500,000 and Shakers contribu ng P300,000. Partnership realized a profit of P200,000 for the year ended 2018.
Below is the summary of addi onal investments and withdrawals of the partners during the year.
Partner Earth Addi onal Investments Withdrawal
February 1 60,000
March 31 30,000
July 1 50,000
November 1 15,000
Partner Shaker Addi onal Investments Withdrawal
May 1 50,000
August 1 35,000
December 1 30,000
Profit is distributed to the partners according to the following provisions:
A. Annual salary to Earth, managing partner in the amount of P50,000.
B. Interest of 10% each based on weighted average capital balance.
C. Bonus to Earth of 5% of net income before bonus.
D. Balance is 4:6 respec vely.
Requirements: Compute the following
1. The profit distributed to each partners.
2. The ending capital of each partners.
5. Partnership capital account
Hellen and Monvi’s Partnership began its opera ons on March 1, 2022. Hellen invested P100,000 cash while Monvi
invested equipment with book value of P300,000 and fair value of P180,000. Hellen invested addi onal cash of
P20,000 on August 31, 2022. The partnership s pulates the following.
Monthly salaries of P2,000 and P10,000 to Hellen and Monvi, respec vely, recognized as expenses.
20% bonus to Monvi, based on profit before deduc ng salaries, and interest but a er deduc ng the bonus.
12% annual interest based on beginning capital of Hellen,
Accoun ng for Special Transac ons 1: Partnership Opera on
Balance allocated equally.
Addi onal informa on:
The partners received their monthly salaries at each month end.
The partners earned profit of P210,000 before deduc ons for bonus and interest.
Compute the following.
1. Salaries allocated to Hellen and Monvi.
2. Bonus allocated to Monvi.
3. Total net profit shares allocated to both partners.
4. The ending capital balance to both partners.
