QUIZ:

1. AAA, BBB and CCC are partners with average capital balances during 2008 of P120,000,
P60,000 and P40,000, respectively. Partners receive 10% interest on their average capital
balances. After deducting salaries or P30,000 to AAA and P20,000 to CCC, the residual
profit or loss is divided equally. In 2009 the partnership sustained a P33,000 loss before
interest and salaries to partners. By what amount should AAA’s account change?
a. P7,000 increase c. P35,000 decrease
b. P11,000 decrease d. P42,000 increase

2. The partnership agreement of AAA, BBB and CCC provides for the year-end allocation of
net income in the following order:
 First, AAA is to receive 10% of net income up to P100,000 and 20% over P100,000
 Second, BBB and CCC each are to receive 5% of the remaining income over P150,000
 The balance of income is to be allocated equally among the three partners

The partnership’s 2009 net income was P250,000 before any allocations to partners. What
amount should be allocated to AAA?
a. P101,000 c. P108,000
b. P103,000 d. P110,000

3. The Articles of Partnership of Adam and Eve the following provisions were stipulated:
 Annual salary of P60,000 each
 Bonus to Adam of 20% of the net income after partner’s salaries and bonus, the bonus being
treated as an expense.
 Balance to be divided equally.

The partnership reported a net income of P360,000 after partners’ salaries but before bonus. How
much is the share of Eve in the profit?
a. P 60,000
b. 90,000
c. 150,000
d. 210,000

4. Maxwell is trying to decide whether to accept a salary of P40,000 or salary of P25,000 plus a
bonus of 10% of net income. After salaries and bonus as a means of allocating profit among
partners. Salaries traceable to the other partners estimated to be P100,000. What amount of
income would be necessary so that Maxwell would consider choices to be equal?
a. P165,000
b. 290,000
c. 265,000
d. 305,000

5. Partner A first contributed P50,000 of capital into existing partnership on March 1, 2002. On
June 1, 2002, said partner contributed another P20,000. On September 1, 2002, he withdrew
 P15,000 from the partnership. Withdrawal in excess of P10,000 are charged to the partner’s
capital accounts. What is the annual weighted average capital balance of Partner A?
a. P 32,500
b. 51,667
c. 60,000
d. 48,333

6. Garcia and Henson formed a partnership on January 2, 2005 and agreed to share profits 90%
and 10%, respectively. Garcia contributed capital of P 25,000. Henson contributed no capital
but has a specialized expertise and manages the firm full time. There were no withdrawals
during the year. The partnership agreement provides for the following:

Capital accounts are to be credited annually with interest at 5% of beginning capital.

Henson is to be paid a salary of P1,000 a month.
Henson is to receive a bonus of 20% of income calculated before deducting his salary and
interest on both capital accounts.
Bonus, interest, and Henson’s salary are to be considered partnership expenses.
The partnership 2005 income statement as follows:

Revenues P 96,450
Expenses (including salary, interest, and bonus) 49,700
Net income P 46,750

What is Henson’s 2005 bonus?

a. P 11,688
b. P 12,000
c. P 15,000
d. P 15,738

7. A, a partner in the ABC Partnership, has a 30% participation in partnership profits and losses.
A’s capital account has a net decrease of P 60,000 during the calendar year 20x1. During
20x1, A withdrew P130,000 (charged against his capital account) and contributed property
valued at P 25,000 to the partnership. What was the net income of the ABC Partnership for
20x1?
a. P 150,000
b. P 233,333
c. P 350,000
d. P 550,000

8. Abe, Bert, and Carl are partners sharing profit on a 7:2:1 ratio. On January 1, 2005, Dave was
admitted into the partnership with 15% share in profits. The old partners continue to
participate in profits in their original ratios.

For the year 2005, the partnership showed a profits of P 15,000. However, it was discovered that
the following items were omitted in the firm’s book:
 2004 2005
Accrued expense P 1,050
Accrued income 875
Prepaid expenses P 1,400
Unearned income P 1,225

The share of partner Bert in the 2005 net profit is?

a. P 2,197.50
b. P 2,490.50
c. P 2,637.00
d. P 3,149.75

9. FF, GG and HH form a partnership and agree to maintain average investments of P2,500,000,
P1,250,000, and P1,250,000, respectively. Interest on the excess or deficiency in a capital
contribution is to be computed at 6% per annum. After the interest allowances, FF,GG, and
HH are to share any balance in the ratio of 5:3:2. Average amounts invested during the first
six months were as follows: FF, P3,000,000. GG, P1,375,000; and HH, P1,000,000. A loss
from operations of P62,500 was incurred for the first six months. How is this loss distributed
among the partners?

FF GG HH
a. P 21,875 P 18,375 P22,250
b. 12,500 10,000 49,500
c. 31,250 18,750 12,500
d. 18,375 21,875 22,250

10. Roy and Sam were organized and began operations on March 1, 20x1. On that date, Roy
invested P 150,000 and Sam invested computer equipment with current fair value of
P180,000. Because of shortage of cash on November 1, 20x1 Sam invested additional cash of
P60,000 in the partnership. The partnership contract includes the following remuneration
plan:

Roy Sam
Monthly salary (recognized as expense) P10,000 P20,000
Annual interest on beginning capital 12% 12%
Bonus on the net profit before salaries and
interest but after bonus 20% -
Balance equally

The salary was to be withdrawn by each partner in monthly installments. The partnership’s net
profit for 2005 is P120,000.

What are the capital balances of the partners on December 31, 20x1?

Roy Sam
a. P243,500 P266,500
b. P243,500 P266,500
c. P243,500 P266,500
d. P243,500 P266,500

“Do not be anxious about anything, but in everything by prayer and supplication
with thanksgiving let your requests be made known to God. And the peace of God,
which surpasses all understanding, will guard your hearts and your minds in
Christ Jesus.” (Philippians 4:6-7)

- END -
SOLUTIONS:
1. A

2. C

3. D
A E
60000 60000
Bonus after bonus and salaries 60000 360000 after sal
150000 150000 300000
270000 210000

4. B
40,000 = 25,000 + 10%NI
NI after salaries and bonus = 150,000
NI before salaries and bonus = 150,000 + 15,000 + 125,000 = 290,000

5. B

Mar. 1 50000 10/12 41,667

Jun. 1 20000 7/12 11,667
Sept. 1 -5000 4/12 (1,667)
51,667

6. C
46,750 + (1,000 x 12) + (25,000 x 5%) = 60,000 Profit after bonus ÷ 80% x 20% = P15,000

7. A
A's Capital
60,000
130,000 25,000
45,000 150,000
-

8. B
15,000 - 1,050 + 875 – 1,400 + 1,225 =14,650 x (20% x 85%) = 2,490.50

9. A
 F G H F G H (62,500)
50% 30% 20% Interest 15,000 3,750 (7,500) (11,250)
3,000,000 1,375,000 1,000,000 (36,875) (22,125) (14,750) (73,750)
2,500,000 1,250,000 1,250,000 (21,875) (18,375) (22,250) (62,500)
500,000 125,000 (250,000)
15,000 3,750 (7,500)

10. A
Capital R S
3/1/20x1 150,000 180,000 Profit after sal but before Int. and B 120,000
10/1/20x1 60,000 Salaries 300,000
Profit before sal, int. and B 420,000
B after B 70,000
Interest on BEG. Capital 15,000 18,000 Salaries 300,000
Salaries 100,000 200,000 Interest 33,000
Bonus 70,000 Profit after Sal., Int., and B 17,000
Equally 8,500 8,500
Drawings (100,000) (200,000)
243,500 266,500