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    Partnership Operation Quiz 2

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    cabbigatcrisanta04
    The partnership had total income of $282,000 for the year. B's share of the residual income was $60,000. Given B receives 40% of profits based on the 60:40 profit sharing ratio, the total partnership income must have been $282,000. The partnership had income of $70,000, costs of $40,000 and expenses of $12,000, resulting in net income of $18,000. A's share of the adjusted net income for the second year was $21,900. The partnership income for the second year was $25,000, including $4,000 of income related to the first year. A's salary was $18,000

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    Partnership Operation Quiz 2

    Uploaded by

    cabbigatcrisanta04
    26 views2 pages
    The partnership had total income of $282,000 for the year. B's share of the residual income was $60,000. Given B receives 40% of profits based on the 60:40 profit sharing ratio, the total partnership income must have been $282,000. The partnership had income of $70,000, costs of $40,000 and expenses of $12,000, resulting in net income of $18,000. A's share of the adjusted net income for the second year was $21,900. The partnership income for the second year was $25,000, including $4,000 of income related to the first year. A's salary was $18,000

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    The partnership had total income of $282,000 for the year. B's share of the residual income was $60,000. Given B receives 40% of profits based on the 60:40 profit sharing ratio, the total partnership income must have been $282,000. The partnership had income of $70,000, costs of $40,000 and expenses of $12,000, resulting in net income of $18,000. A's share of the adjusted net income for the second year was $21,900. The partnership income for the second year was $25,000, including $4,000 of income related to the first year. A's salary was $18,000

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    26 views2 pages

    Partnership Operation Quiz 2

    Uploaded by

    cabbigatcrisanta04
    The partnership had total income of $282,000 for the year. B's share of the residual income was $60,000. Given B receives 40% of profits based on the 60:40 profit sharing ratio, the total partnership income must have been $282,000. The partnership had income of $70,000, costs of $40,000 and expenses of $12,000, resulting in net income of $18,000. A's share of the adjusted net income for the second year was $21,900. The partnership income for the second year was $25,000, including $4,000 of income related to the first year. A's salary was $18,000

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    11. A and B are partners sharing profits and losses in the ratio of 60:40 respectively.

    A’s salary is P60,000 and P30,000


    for B. The partners also receives interest on their average capital balances. During the year, A received P30,000 of
    interest and P12,000 for B. the profit and loss allocation is determined after deductions for the salary and interest
    payments. If B share in the residual income was P60,000, what was the total partnership income during the year?
    a. 387,000
    b. 345,000
    c. 282,000
    d. 192,000

    Answer: A B Total
    Salary 60,000.00 30,000.00 90,000.00
    Interest 30,000.00 12,000.00 42,000.00
    Balance: 60:40 60,000.00 150,000.00
    Total Net Income 282,000.00 C.

    This is equal to 40% (from 60:40 P/L) thus, you need to divide this with

    21. The partnership has the following account balances:


    Sales 70,000.00
    Cost of goods sold 40,000.00
    Operating expenses 10,000.00
    Salary allocations to partners 13,000.00
    Interest paid to banks 2,000.00
    Partners Withdrawals 8,000.00
    How much is the partnership net income/(loss)?
    a. 20,000
    b. 18,000
    c. 5,000
    d. (3,000)
    Answer:
    Sales 70,000.00
    Cost of goods sold - 40,000.00
    operating expenses - 10,000.00
    Interest paid to banks - 2,000.00
    Net income 18,000.00 B.
    Note: Salary allocations to partners are not expenses but rather allocation of net income.
    Further, partners withdrawal are not expenses but considered as returned of their capital.
    Thus, the following are not deducted in the computation of your net income:
    Salary allocations to partners 13,000.00
    Partners withdrawals 8,000.00

    31. A and B created a partnership. The partnership agreement provided that A receive a salary of P10,000 and B
    P5,000 to recognize their relative time spent in operating the store. Remaining profits and losses were divided
    60:40 to A and B respectively. Income during the first year of operations of P13,000 was allocated P8,800 to A and
    P4,200 to B.
    During the second year of operation, the partnership agreement was changed to reflect the fact that B could no
    longer devote any time to the store’s operations. The new agreement allows A salary of P18,000, and the
    remaining profits and losses are divided equally. The partnership income for the second year of operation is
    P25,000 which included P4,000 income related to the first year’s income.
    How much is the share of A on the adjusted net income of year 2?
    a. 21,900
    b. 19,500
    c. 17,100
    d. 0
    Answer:
    A B Total
    Salary 18,000.00 - 18,000.00
    Balance: equally 1,500.00 1,500.00 3,000.00
    Total 2nd year NI 19,500.00 B. 1,500.00 21,000.00
    Adjustments:
    Income for 1st Year 2,400.00 1,600.00 4,000.00
    Total Capital Adjustments 21,900.00 3,100.00 25,000.00
    Note:
    Since the question is only asking for the share of A on the adjusted net income of year 2, the
    answer will be based on the correct net income of year 2 only. If the question will ask for
    the total capital adjustments, the answer will be P21,900.00. It will include A's share in the prior
    period error. Error of the previous year will be adjusted based on the partners' old P/L ratio when
    the error was incurred.

    4 Partner A contributed P50,000 of capital into an existing partnership on March 1, 2020. On June 1, 2020, the
    1.
    partner contributed another P20,000. On September 1, 2020, the partner withdrew P15,000 from the
    partnership. Withdrawals in excess of P10,000 are charged to the partner’s capital account (P10,000 and below
    withdrawals are recorded as drawings of the partners against their share in the partnership income.) How much is
    the annual weighted-average capital balance?
    A. 62,000
    B. 60,000
    C. 51,667
    D. 48,333
    Answer:
    Outstanding # of
    Date Amount months Average Capital
    Mar-01 50,000.00 10/12 41,666.67
    Jun-01 20,000.00 7/12 11,666.67
    Sep-01 - 5,000.00 4/12 - 1,666.67
    Weighted Average Capital 51,666.67 C.
    Note: Since there is an agreement that withdrawal in excess of P10,000 are charged to partner's
    capital account, only the excess of P5,000 will be included in the computation of the weighted
    average capital.

    5 A, B, C, and D form a partnership contributing P50,000, P25,000, P25,000 and P20,000 respectively. The
    1.
    partnership contract provided that each of the partner shall receive a 5% interest on contributed capital, and that
    A and B shall receive salaries of P5,000 and P3,000, respectively. The contract also provided that C shall receive a
    minimum of P2,500 per annum, and D a minimum of P4,000 per annum, which is inclusive in the amounts
    representing interest and share in the remaining profits. The balance of the profits shall be distributed to A, B, C
    and D in a 3:3:2:2 ratio.
    What amount must be earned by the partnership, before any charge for interest and salaries so that A may
    receive an aggregate of P12,500 including interest, salary and share of profits?
    a. 16,667
    b. 30,000
    c. 30,667
    d. 32,333
    Answer: A B C D Total
    Interest 2,500.00 1,250.00 1,250.00 1,000.00 6,000.00
    Salary 5,000.00 3,000.00 8,000.00
    Balance: 3:3:2:2 5,000.00 5,000.00 3,333.33 3,333.33 16,666.67
    Total 12,500.00 9,250.00 4,583.33 4,333.33 30,666.67
    C.
    Minimum Agreed share 2,000.00 4,000.00
    Note: Since the partners with agreed minimum share in Net Income received their minimum share, no additional income is required.
    if in case, any of the partner did not meet the minimum share, the difference will be added to the initial computed amount of P30,666.67.

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