Chapter 3: Partnership Operation Exercises

Give the journal entries to record the sharing of the partnership income under each of the following
independent cases:

1. Profit is divided 2:1 to Jose and Andres respectively.

Date Description P/R Debit Credit
Dec.31, 2020 Income Summary P 90,000
Jose, Capital P 60,000
Andres, Capital 30,000
Jose = 90,000x2/3=60,000
Andres = 9000x1/3= 30,000

2. Profit is divided in the ratio of capital balances at the beginning of the period.
Date Description P/R Debit Credit
Dec. 31,2020 Income Summary P 90,000
Jose, Capital P 52,500
Andres, Capital 37,500
Jose = 90,000x63/108= 52,500
Andres= 90,000x45/108= 37,500
3. Profit is divided in the ratio of average capital
Date Description P/R Debit Credit
Dec. 31,2020 Income Summary P 90,000
Jose, Capital P 60,000
Andres, Capital 30,000

Jose, Capital
Date Capital Balance No. of months unchanged Peso Months Ave. Capital
Jan. 1 P63,000 4 P 252,000
May 1 90,000 5 450,000
Oct. 1 72,000 3 216,000
12 P 918,000 P
76,500
 Andres, Capital
Date Capital Balance No. of months unchanged Peso Months Ave. Capital
Jan. 1 P45,000 3 P 135,000
Apr. 1 36,000 9 324,000
12 P 459,000 P
38,250
TOTAL 1,377,000 114,750
Profit Divided using Average Capital Balance:
Jose = 90,000x76500/114,750= P 60,000
Andres= 90,000x38,250/114,750= P 30,000
Profit Divided using Peso Months:
Jose = 90,000x918/1377= P 60,000
Andres = 90,000x459/1377= P 30,000
4. Interest of 8% is allowed on average capital and the balance of profit divided equally.
Date Description P/R Debit Credit
Dec. 31,2020 Income Summary P 9,180
Jose, Capital P 6,120
Andres, Capital 3,060

Jose=76500x8%= 6,120
Andres=38,250x8%=3,060
Remainder to be divided equally (90,000-9,180=80,820) = 80,820/2 = 40,410
Date Description P/R Debit Credit
Dec. 31,2020 Income Summary P 80,820
Jose, Capital P 40,410
Andres, Capital
40,410

Computation:
Jose Andres Total
Interest Allowance P 6,120 P 3,060 P 9,180
Remainder divided equally 40,410 40,410 80,820
Total 46,530 P 43,470 P90,000

5. Salaries of P 2,000 and P 19,000 are allowed to Jose and Andres, respectively, the balance of
profit is divided in the ratio of capital balances at the end of the period.
 a. Salaries of P 2,000 and P 19,000
Date Description P/R Debit Credit
Dec. 31,2020 Income Summary P 21,000
Jose, Capital P 2,000
Andres, Capital
19,000
b. Remainder profit divided in the ratio of capital balance at the end of the period. (90,000-
21,000 = 69,000)
Date Description P/R Debit Credit
Dec. 31,2020 Income Summary P 69,000
Jose, Capital P 46,000
Andres, Capital
23,000
Jose = 69,000x72/108=46,000
Andres = 69,000x36/108=23,000
Computation: Jose Andres Total
Salary Allowance P 2,000 P 19,000 P 21,000
Remainder divided in the ratio of 46,000 23,000 69,000
capital balance at the end of the period
Total 48,000 P 42,000 P90,000

6. Andres is allowed a bonus of 20% of profit after bonus, the balance of the profit divided in the
ratio of the average capital

B=20%x(90.000-B) a. Andres is allowed a bonus of 20% of profit after bonus

B=18,000-0.20B
B+0.20B = 18,000 Date Description P/R Debit Credit
1.20B = 18,000 Dec. 31 Income Summary P 15,000
B=18,000/1.20 Andres, Capital 15,000
B = 15,000

b. Remainder of profit divided in the ratio of the average capital (90,000-15,000=75000)

Date Description P/R Debit Credit
Dec. 31 Income Summary P 75,000
Jose, Capital P 50,000
Andres, Capital
25,000
Jose=75,000x76500/114,750= 50,000
Andres=75,000X38250/114,750=25,000

Kyles, Capital Account

Balance, January 1 P 280,000

Additional investment, June 30 80,000
 Withdrawal 30,000
Balance, December 31 P 330,000

Date Capital Balance Months Unchanged Peso Months Average Capital

Jan.1 P 280,000 6 1,680,000
June 30 360,000 1 360,000
July 31 330,000 5 1,650,000
12 3,690,000 307,500
1. The average capital of Kyle is P 307,500.
2. The amount of interest that should be credited to Kyle for the year 2020 is P 30,750.
Computation: 10%x307,500 =30,750

a. Malik is to receive bonus of 10% of profit for the first P 100,000, and 20% of profit in excess
of P 100,000;
 10%x100,000 = 10,000
 20%x (360,000-100000= 260,000) = 52,000
 Total bonus = 10,000+52,000 = 62,000
b. Second, Michael and Marco each will receive 5% of remaining profit after the above bonus
to Malik;
 Remaining profit: (360,000-62,000=298,000)
 Michael = 298,000x5%=14,900
 Marco = 298,000x5%=14,900
c. Balance of profit to be divided equally (360,000-91800=268,200/3=89,400)

Computation:
Malik Michael Marco Total
Bonus P 62,000
14,900 14,900 91,800
Remainder divided equally. 89,400 89,400 89,400 268,200
TOTAL P151,400 P 104,300 P 104,300 P 360,000

1. The bonus of Malik is P 62,000

[Link] share of Malik in the partnership profit is P 151,400.
[Link] share of Michael in the partnership profit is P 104,300.
[Link] share of Marco in the partnership profit is P 104,300.

Daquis Dionela Total

Salary 60,000 30,000 90,000
Interest 30,000 12,000 42,000
Remainder divided by ratio 117,000 78,000 195,000
TOTAL 207,000 120,000 327,000
1. The total partnership profit of 327,000.
 Carter Vince Wayne Total
Salaries 30,000 40,000 50,000 120,000
Interest 10,000 20,000 30,000 60,000
Bonus B
Remainder divided equally. 100,000
Total 300,000

B = 20% (120,000-B)
B = 24,000-0.20B
1.20 B = 24,000
B = 20,000