The partnership agreement of X, Y, and Z stipulates the following: a. Partners Y and Z shall receive annual salaries of P23,000 and P12,000, respectively. b. A bonus of 15% of profit after salaries but before deduction of bonus shall be given to Partner X, the managing partner. c. Each partner shall receive 11% interest on average capital investments. d. Any remaining profit or loss shall be shared as follows: 30% to X, and 35% each to Y and Z. The average capital investments of the partners during the year are as follows: X – P125,000; Y – P78,000; and Z – P101,000. Case # 1: The partnership earns profit of P125,000. Case # 2: The partnership earns profit of P9,000. Case # 3: The partnership incurs a loss of P19,000. For items 1-3, refer to Case #1 1. How much is X's share in the profit/loss? a. P 40,168 b. P 40,169 c. P 60,170 d. P 60,171 2. How much is Y's share in the profit/loss? a. P 46,652 b. P 46,651 c. P 56,653 d. P 56,654 3. How much is Z's share in the profit/loss? a. P 38,182 b. P 38,181 c. P 48,183 d. P 48,184
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
The
a. Partners Y and Z shall receive annual salaries of P23,000 and P12,000, respectively.
b. A bonus of 15% of profit after salaries but before deduction of bonus shall be given to Partner X, the
managing partner.
c. Each partner shall receive 11% interest on average capital investments.
d. Any remaining profit or loss shall be shared as follows: 30% to X, and 35% each to Y and Z.
The average capital investments of the partners during the year are as follows: X – P125,000; Y – P78,000;
and Z – P101,000.
Case # 1: The partnership earns profit of P125,000.
Case # 2: The partnership earns profit of P9,000.
Case # 3: The partnership incurs a loss of P19,000.
For items 1-3, refer to Case #1
1. How much is X's share in the profit/loss?
a. P 40,168
b. P 40,169
c. P 60,170
d. P 60,171
2. How much is Y's share in the profit/loss?
a. P 46,652
b. P 46,651
c. P 56,653
d. P 56,654
3. How much is Z's share in the profit/loss?
a. P 38,182
b. P 38,181
c. P 48,183
d. P 48,184
For items 4-6, refer to Case #2
4. How much is X's share in the profit/loss?
a. P 5,083
b. P 5,084
c. (P 4,082)
d. P 4,082
5. How much is Y's share in the profit/loss?
a. P 10,776
b. P 20,777
c. P 20,778
d. P 10,779
6. How much is Z's share in the profit/loss?
a. P 2,305
b. P 2,306
c. P 3,307
d. P 3,308
For items 7-9, refer to Case #3
7. How much is X's share in the profit/loss?
a. (P 12,482)
b. P 976
c. (P7,494)
d. (P 19,000)
8. How much is Y's share in the profit/loss?
a. (P 12,482)
b. P 976
c. (P7,494)
(P 19,000)
9. How much is Z's share in the profit/loss?
a. (P 12,482)
b. P 976
c. (P7,494)
d. (P 19,000)
10. Under Case # 1, how much is the bonus given to X?
a. P 13,501
b. P 13,502
c. P 14,501
d. P 13,500
11. Under Case # 2, how much is the bonus given to X?
a. P 0
b. P 13,502
c. P 14,501
d. P 13,500
12. Under Case # 3, how much is the bonus given to X?
a. P 0
b. P 13,502
c. P 14,501
d. P 13,500
13. Under Case # 1, how much is X's interest on the average capital?
a. P 14, 750
b. P 13,750
c. P 13, 751
d. P 14, 752
14. Under Case # 2, how much is Y's interest on the average capital?
a. P 8,581
b. P 9,581
c. P 8,580
d. P 8,583
15. Under Case # 3, how much is Z's interest on the average capital?
a. P 12,110
b. P 11,111
c. P 13,111
d. P 11,110
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