Partnership Operations and Dissolution

L and M agrees that 10% interest per annum is to be credited to each of them as partners on the basis of average capital balances. A summary of M’s capital account for the year December 31, 2019 follows:

Balance,January1 280,000

Additionalinvestment,July1 80,000

Withdrawal,August1 (30,000)

The amount of interest that should be credited to M’s capital is?

• 30,500

• 33,000

• 30,750

• 34,500

Apple and Berry are partners agreeing to allow monthly salaries of P6,000 and P5,000 respectively. 6% interest on capital investment at the beginning of the year of P300,000 and P230,000 respectively and the balance are divided equally. The first year profit is P100,000. The partner’s share should be:

• Apple 58,100 ; Berry 41,900

• Apple 56,600 ; Berry 43,400

• Apple 54,500 ; Berry 45,500

• Apple 50,000 ; Berry 50,000

Kings, SMB and Mongolia are partners with average capital balances during the year of P120,000; P60,000 and P40,000 respectively. Partners receive 10% interest in their average capital balances. After deducting salaries of P30,000 to Kings and P20,000 to SMB, the residual profit or loss is divided equally. The partnership sustained a P33,000 loss before interest and salaries to partners. By what amount should Kings capital account change?

• P77,000 increase

• P35,000 decrease

• P11,000 decrease

• P7,000 increase

A 1:3:2 ratio is the same as

• 10%;30%;20%

• 1/10;3/10;2/10

• 1/6;1/2;1/3

• 20%;50%;30%

Statement 1: Salaries, interest and bonuses allowed to partners as distribution of partnership profits are treated as partnership expenses.

Statement 2: If the partnership agreement specifies a method for sharing profits, but not losses, then losses are shared in the same proportion as profits

• True; True

• True, False

• False; True

• False; False

The Love Tours Partnership earned P500,000 this year. The partners have equal capital balances, and share profits and losses 1:3. The partners will show share in partnership profit of:

• P250,000 each

• P250,000 and P750,000 respectively

• P125,000 and P375,000 respectively

• P500,000 each

Vlu and Verry are partners who share profits equally and losses 2:1 ratio. Vlu and Verry have beginning capital balances of P400,000 and P500,000 respectively, and made no withdrawals during a period of two years. After a profitable operations on the first year with a profit of P400,000 and an unprofitable operations on the second year with a loss of P240,000, the capital balances of Vlu and Verry will be:

• Vlu 480,000; Verry 580,000

• Vlu 390,000; Verry 570,000

• Vlu 440,000; Verry 620,000

• Vlu 670,000; Verry 770,000

Wing and Hub share profits and losses in the ratio 1:2. Wing receives a monthly salary of P150,000. If Wing ‘s capital balance is P2,500,000 at the beginning of the year and P2,000,000 at the end of the year, and annual partnership profit is P1,200,000 then Wing withdrew:

• P500,000

• P1,300,000

• P2,700,000

• P3,200,000

Leo, Trace and Syre are partners. They provide Boyoyong needs on parties. The partnership’s profits and losses are allocated in proportion to the partner’s capital contributions. If the partners have capital contributions of P300,000, P300,000 and P500,000 respectively, what is each partner’s share in profit of P1,100,000?

• P300,000 ; P200,000; P600,000 respectively

• P300,000; P300,000; P500,000 respectively

• P300,000; P500,000; P1,100,000 respectively

• P366,667; P366,667; P366,667 respectively

Statement 1: Bonus is an incentive given to the partners which is usually a percentage of net income.

Statement 2: Original capital are capital contributions of the partners at the commencement of the partnership.

• True; True

• True; False

• False; True

• False; False