Professional Documents
Culture Documents
Problem I
1. Beginning Capital.
Income summary
X, drawing.
Y, drawing.
345,600
144,000
201,600
P 360,000
504,000
P 864,000
P 144,000
201,600
P 345,600
2. Ending Capital.
Income summary
X, drawing.
Y, drawing.
345,600
153,600
192,000
P 432,000
540,000
P 972,000
P 153,600
192,000
P 345,600
4,320
4,320
X:
1/1/x4:
4/1/x4:
Capital
balance
P360,000
432,000
x
x
No. of Mos.
Unchanged
3
9
12
Average
Y:
1/1/x4:
3/1/x4:
11/1/x4:
Average
Total
Capital
balance
P504,000
468,000
540,000
x
X
x
No. of Mos.
Unchanged
2
8
2
12
P 4,320
P1,080,000
3,888,000
P4,968,000
P 414,000
P 1,008,000
3,744,000
1,080,000
P5,832,000
P 486,000
P 900,000
P
P 113,760
P 113,760
Y
4,320
227,520
P 231,840
Total
4,320
341,280
P345,600
345,600
113,760
231,840
Problem II
1. A bonus of 20% of net income before the bonus is deducted, the bonus would be computed
as follows:
Let B
B
B
B
= Bonus
= 20% of Net income
= 20% of P504,000
= P100,800
2. A bonus of 20% of net income after deduction of the bonus, the bonus would be computed
as follows:
Let B
B
B
B
1.20 B
B
= Bonus
= 20% of Net income after Bonus
= 20% (P504,000 B)
= P100,800 - .20B
= P100,800
= P84,000
Problem III
1. Bonus is based on net income before bonus, salaries and interest
The schedule showing the allocation of net income is presented as follows:
Bonus.
Salaries
Interest.
Balance (2;1).
Total
2.
A
P 100,800
48,000
14,400
172,800
P336,000
B
P 72,000
9,600
86,400
P168,000
Total
P 100,800
120,000
24,000
259,200
P504,000
Bonus is based on net income after bonus but before salaries and interest
The schedule showing the allocation of net income is presented as follows:
Bonus.
Salaries
Interest.
Balance (2;1).
Total
A
P 84,000
48,000
14,400
184,000
P330,400
B
P 72,000
9,600
92,000
P173,600
Total
P 84,000
120,000
24,000
276,000
P504,000
3. Bonus is based on net income after bonus and salaries but before interest:
Let B
B
B
B
B
B
1.20 B
B
Proof:
Net income before bonus, salaries and interests
Less: Bonus
Salaries0
Net income after bonus, salaries before interests
Multiplied by: Bonus rate.
Bonus
P504,000
64,000
120,000
P320,000
20%
P 64,000
A
P 64,000
48,000
14,400
197,333
P323,733
B
P 72,000
9,600
98,667
P180,267
Total
P 64,000
120,000
24,000
296,000
P504,000
Proof:
Net income before bonus, salaries and interests
Less: Bonus
Salaries
Interest..
Net income after bonus, salaries before interests
Multiplied by: Bonus rate.
Bonus
P504,000
60,000
120,000
24,000
P300,000
20%
P 60,000
A
P 60,000
48,000
14,400
200,000
P322,400
B
P 72,000
9,600
100,000
P181,600
Total
P 60,000
120,000
24,000
300,000
P504,000
5. Bonus is based on net income after salaries but before bonus and interest:
Let B
B
B
B
B
B
= Bonus;
= 20% (P504,000 T)
= P100,800 - .20T
Let T
T
T
= Income tax
= 35% (P504,000)
= P176,400
Proof:
Net income before bonus and income tax
Less: Bonus
Net income before bonus after income tax..
Less: Income tax
Net income after bonus and income tax
P504,000
65,520
P438,480
_176,400
P262,080
8. Bonus is based on net income, that is, after bonus and income tax:
Let B
B
B
Let T
T
T
= Income tax
= 35% (P504,000)
= P176,400
P504,000
176,400
P327,600
____ 20%
P 65,520
Proof:
Net income before bonus and income tax
Less: Bonus
Net income before income tax..
Less: Income tax (35% x P504,000)
Net income after bonus and income tax
P504,000
54,600
P449,400
176,400
P273,000
P273,000
____ 20%
P 54,600
Problem IV
B = Bonus to Rodgers
B = 0.20(Net Income - interest - salary - bonus)
B = 0.20(P168,000 - [0.08(P150,000)] - P60,000 B)
B = 0.20(P96,000 - B)
B = P19,200 - 0.20B
1.20B = P19,200
B = P16,000
Problem V
Interest (8%)
Salary
James
P4,400 (below)
13,000
Keller
P5,600
15,000
Rivers
P7,200
20,000
Totals
P17,200
48,000
(10,560)
P10,040
(17,600)
P9,600
(36,200)
P30,000
P240,000
420,000
P660,000
12
P 55,000
x
8%
_P 4,400
Beginning balances
Additional contribution
Income (above)
Drawings (P1,000/month)
Ending capital balances
James
P 48,000
12,000
10,060
(12,000)
P58,360
Keller
P70,000
0
10,040
(12,000)
P68,040
Rivers
P90,000
0
9,600
(12,000)
P87,600
Totals
P208,000
12,000
30,000
(36,000)
P214,000
P
P 80,000
21,600
9,800
___53,160
P 164,560
Q
P 100,000
43,200
16,800
__35,440
P195,440
Total
P180,000
64,800
26,600
___88,600
P 360,000
P
P 80,000
14,400
9,800
_(4,900)
P 99,300
Q
P 100,000
28,800
16,800
__(4,900)
P 140,700
Total
P 180,000
43,200
26,600
__(9,800)
P240,000
P
P 80,000
0
9,800
(123,300)
(P33,500)
Q
P 100,000
0
16,800
(123,300)
(P 6,500)
Total
P 180,000
0
26,600
(246,600)
(P 40,000)
Problem VI
1: Net income is P360,000
Salaries
Bonus on net income
Interest on average capital balances
Remainder is P 88,600 (positive)
Totals
2. Net income is P240,000
Salaries
Bonus on net income
Interest on average capital balances
Remainder is P 9,800 (negative)
Totals
3. Net loss is P40,000
Salaries
Bonus (no distribution)
Interest on average capital balances
Remainder is P 246,600 (negative)
Totals
Problem VII:
1 and 2.
Total to allocate:
As Bonus (Note A below)
As Salaries
As Interest (Note B below)
Subtotal:
Residual Profit-sharing
Final Allocations:
Note A (Bonus):
Bonus = .20(Net Income
1.2Bonus = .20(P150,000)
1.2Bonus = 30,000
Bonus = P25,000
Total
P150,000
(25,000)
(72,000)
(10,720)
P 42,280
(42,280)
P
0
Bonus)
Carey
Drew
P25,000
36,000
6,560
P67,560
21,140
P88,700
P36,000
4,160
P40,160
21,140
P61,300
Note B (Interest):
Carey:
Drew:
Capital
Amount
P100,000
(12,000)
88,000
(12,000)
76,000
(12,000)
P 64,000
Fraction
of Year
1/12
Interest
Rate
0.08
= Subtotal
P 667
6/12
0.08
3,520
3/12
0.08
1,520
2/12
1.0000
0.08
853
P6,560
Capital
Amount
P70,000
(12,000)
58,000
(12,000)
46,000
(12,000)
P34,000
Fraction
of Year
1/12
Interest
Rate
0.08
= Subtotal
P 467
6/12
0.08
2,320
3/12
0.08
920
2/12
1.0000
0.08
453
P4,160
Problem VIII
1. It should be noted that the order of priority is of no significance when it comes to allocation
of net income. Unless in cases, when there is a resulting residual loss, wherein the residual loss
should be allocated based on their agreement. In this case, there is no such agreement, so
the allocation would still be to satisfy completely all provisions of the profit and loss
agreement and use the profit and loss ratios to absorb any deficiency or additional loss cause
by such action.
Olsen
Katch
Total
Interest
P 2,000
P 2,400
P 4,400
Bonus
10,000
10,000
Salaries
48,000
36,000
84,000
Remainder (6:4)
__8,040
__5,360
_13,400
P58,040
P26,960
P85,000
Weighted Average Calculation:
Olsen:
1/1 to 4/1
4/1 to 10/1
10/1 to 12/31
Total
Average
Capital
Balance
20,000
25,000
30,000
Gross
# of Months
3
6
3
Capital
60,000
150,000
90,000
300,000
25,000
Katch:
Capital
Balance
40,000
30,000
20,000
30,000
1/1 to 3/1
3/1 to 9/1
9/1 to 11/1
11/1 to 12/31
Total
Average
2.
Olsen
P48,000
Salaries
Bonus
Interest*
Remainder
Final Profit:
2,000
39,960
P89,960
Gross
# of Months
2
6
2
2
Katch
P36,000
10,000
2,400
26,640
P75,040
Capital
80,000
180,000
40,000
60,000
360,000
30,000
Total
P 84,000
10,000
4,400
66,600
P165,000
1/1 to 6/1
6/1 to 10/1
10/1
to
12/31
1/1 to 3/1
3/1 to 9/1
9/1 to 11/1
11/1
to
12/1
Matt
Cap Bal # months
35,000
5
45,000
4
50,000
3
Gross Cap
175,000
180,000
150,000
Total
Average
505,000
42,083
Jeff
Cap Bal # months
25,000
2
35,000
6
25,000
2
20,000
1
Gross Cap
50,000
210,000
50,000
20,000
12/1
12/31
to
1.
28,000
28,000
Total
Average
358,000
29,833
Salary
Bonus
Interest
Subtotal
Remainder
Total
Matt
P N/A
N/A
4,208
P 4,208
29,404
P33,612
Jeff
P N/A
N/A
2,983
P 2,983
29,405
P32,388
Total
P
0
0
7,191
P 7,191
58,809
P66,000
Salary
Bonus
Interest
Subtotal
Remainder
Total
Matt
P
0
N/A
5,000
P 5,000
29,520
P34,520
Jeff
P 9,000
N/A
2,800
P11,800
19,680
P31,480
Total
P 9,000
0
7,800
P16,800
49,200
P66,000
Salary
Bonus
Interest
Subtotal
Remainder
Total
Matt
P10,000
N/A
N/A
P10,000
23,992
P33,992
Jeff
P15,000
N/A
N/A
P15,000
17,008
P32,008
Total
P25,000
0
0
P25,000
41,000
P66,000
Salary
Bonus*
Interest
Subtotal
Remainder
Total
Matt
P20,000
6,000
4,208
P30,208
(1,096)
P29,112
Jeff
P35,000
N/A
2,983
P37,983
(1,095)
P36,888
Total
P55,000
6,000
7,191
P68,191
(2,191)
P66,000
AA
14,400
12,960
( 1,200)
26,160
BB
12,000
17,280
( 900)
28,380
CC
13,600
24,840
( 900)
37,540
Total
40,000
55,080
( 3,000)
92,080
AA
96,000
BB
144,000
CC
216,000
Total
456,000
2.
3.
4.
Problem XI
(Withdrawals)
Net Income
Personal Withdrawals
Capital, December 31, 2010
24,000
26,160
( 9,000)
137,160
(36,000)
37,540
( 9,000)
208,540
(12,000)
92,080
(27,000)
509,080
AA
BB
CC
Interest-12% of Ave. Cap.
12,960
17,280
24,840
Balance/Remainder (4:3:3)
( 1,200)
( 900)
( 900)
Share in Net Income
11,760
16,380
23,940
*Net income before partners salaries and interestsP 92,080
Less: Operating expenses (including salaries).. 40,000
Net Income after partners salaries but before interestsP 52,080
Total
55,080
( 3,000)
52,080*
28,380
( 9,000)
163,380
14,400
12,000
13,600
AA
96,000
24,000
11,760
14,400
( 9,000)
137,160
BB
144,000
16,380
12,000
( 9,000)
163,380
CC
216,000
( 36,000)
23,940
13,600
( 9,000)
208,540
Problem XII
Total
42,000
35,000
__43,000
120,000*
DD
150,000
58,800
(18,000)
190,800
EE
180,000
60,000
61,200
(24,000)
277,200
Total
330,000
60,000
1240,000
( 42,000)
468,000
DD
P 15,000
51,000
P 66,000
EE
P20,000
34,000
P54,000
Total
P 35,000
85,000
P 120,000
DD
P 150,000
EE
P 180,000
60,000
66,000
18,000
( 18,000)
P 216,000
54,000
24,000
( 24,000)
P 294,000
Problem XIII
1. Distribution of income for 20x4:
Interest
Compensation
Subtotals
Allocation of remainder
Totals
Norr
P 12,000
__10,000
P 22,000
__14,640
P 36,640
Caylor
P 9,600
__14,000
P 23,600
__9,760
P 33,360
Total
P 21,600
__24,000
P 45,600
__24,400
P 70,000
Norr
P 100,000
36,640
_(12,000)
P 124,640
Caylor
P 80,000
33,360
_(12,000)
P 101,360
Norr
P 14,957
__8,000
P 22,957
__13,872
P 9,085
Caylor
P 12,163
__12,000
P 24,163
__9,248
P 14,915
Total
P 27,120
__240,000
P 47,120
_(23,120)
P 24,000
Norr
P 124,640
9,085
_(12,000)
P 121,725
Caylor
P 101,360
14,915
_(12,000)
P 104,275
Problem XIV
1.
The interest factor was probably inserted to reward Page for contributing P50,000 more to the
partnership than Childers. The salary allowance gives an additional P15,000 to Childers in recognition
of the full-time (rather than part-time) employment. The 40:60 split of the remaining income was
probably negotiated by the partners based on other factors such as business experience, reputation,
etc.
2.
The drawings show the assets removed by a partner during a period of time. A salary allowance is
added to each partner's capital for the year (usually in recognition of work done) and is a component
of net income allocation. The two numbers are often designed to be equal but agreement is not
necessary. For example, a salary allowance might be high to recognize work contributed by one
partner. The allowance increases the appropriate capital balance. The partner might, though, remove
little or no money so that the partnership could maintain its liquidity.
3.
5,000
5,000
13,000
11,000
Revenues ........................................................................................90,000
Expenses (adjusted by first entry) ...............................................
Income Summary ........................................................................
(To close revenue and expense accounts for 2008.)
Income Summary ...............................................................................
Page, Capital ..............................................................................
Childers, Capital ..........................................................................
4.
59,000
31,000
31,000
(To close net income to partners' capitalsee allocation plan shown below.)
Allocation of Income
Page
Interest (10% of beginning balance)
P 8,000
Salary allowances
5,000
Remaining income (loss):
P31,000
(11,000)
(25,000)
P (5,000)
(2,000) (40%)
P11,000
13,000
11,000
11,000
20,000
Childers
P 3,000
20,000
(3,000) (60%)
P20,000
P4,400
P6,600
Cash
...............................................................................................
Smith, Capital (20% of total capital) ...........................................
Page, Capital ..............................................................................
Childers, Capital ..........................................................................
43,000
45,000
50,000
(96,000)
31,000
P 30,000
2. b
Salaries
A
2,000
B
25,000
10M
45,000
32,000
4,400
6,600
Bonus
Interest (20% x average capital)
Balance - equally
10M
8,000
8,000
8,500
44,500
0
10,000
8,500
8,000
18,000
1,700
8,800
The net income of P80,000 is allocated to Blue and Green in the following
manner:
Blue
Green
Net Income
P 80,000
Salary allowances
P 55,000
P45,000
(100,000)
Remainder
P (20,000)
Allocation of the negative
remainder in the
60:40 ratio
(12,000)
(8,000)
20,000
Allocation of net income
P 43,000
P37,000
P
-0-
4. b
Salary
Interest: 10% x average capital
Balance: equally
X: P100,000 x 6 = P600,000
P160,000 x 6 = 960,000
XX
60,000
YY
48,000
5,000
5,000
ZZ
36,000
7,500
5,000
Total
144,000
48,750
15,000
207,750
P1,560,000 / 12 = P 130,000
5. d - ASSIGNMENT OF INCOME
Interest10% of
beginning capital ..........................
Salary ..................................................
Allocation of remaining income
(P6,000 divided on a 3:3:4 basis) .......... 1,800
Totals ........................................
STATEMENT OF CAPITAL
Beginning capital .................................
Net income (above) .............................
Drawings (given) ...................................
Ending capital .......................................
150,000
207,500
P 487,500 x 10% = P48,750
ARTHUR
BAXTER
CARTWRIGHT
P 6,000
20,000
P 8,000
P10,000
20,000
1,800
P 7,800
2,400
P29,800
6,000
P12,400
ARTHUR
P60,000
7,800
(5,000)
P62,800
BAXTER
P80,000
29,800
(5,000)
P104,800
CARTWRIGHT
P100,000
12,400
(5,000)
P107,400
TOTAL
P24,000
P50,000
TOTAL
P240,000
50,000
(15,000)
P275,000
WINSTON
Interest10% of
beginning capital ..........................
P11,000
Salary .................................................. 20,000
-0Allocation of remaining loss
(P80,000 divided on a 5:2:3 basis) ......... (40,000) (16,000)
Totals ........................................
P(9,000)
STATEMENT OF CAPITALYEAR ONE
Beginning capital .................................
Net loss (above) ....................................
Drawings (given) ...................................
Ending capital ................................
WINSTON
P110,000
(9,000)
(10,000)
P 91,000
DURHAM
SALEM
TOTAL
P 8,000
10,000
P11,000
30,000
P30,000
(24,000)
P (8,000)
(80,000)
P (3,000)
P (20,000)
DURHAM
P80,000
(8,000)
(10,000)
P62,000
SALEM
P110,000
(3,000)
(10,000)
P 97,000
TOTAL
P300,000
(20,000)
(30,000)
P250,000
WINSTON
Interest10% of
beginning capital ..........................
P 9,100
Salary .................................................. 20,000
-0Allocation of remaining loss
(P15,000 divided on a 5:2:3 basis) ........ (7,500) (3,000)
Totals ........................................
P21,600
STATEMENT OF CAPITALYEAR TWO
Beginning capital (above) ...................
Net income (above) .............................
Drawings (given) ...................................
Ending capital ................................
WINSTON
P 91,000
21,600
(10,000)
P102,600
DURHAM
SALEM
TOTAL
P 6,200
10,000
P 9,700
30,000
P25,000
(4,500)
P3,200
(15,000)
P15,200
P40,000
DURHAM
P62,000
3,200
(10,000)
P55,200
SALEM
P 97,000
15,200
(10,000)
P102,200
TOTAL
P250,000
40,000
(30,000)
P260,000
25,000
(130,000)
45,000 / 30% = P 150,000
(60,000)
9. a
________
H
4,000
20,000
_________
Total
22,000
50,000
(105,000)
(33,000)
E
20,000
F
25,000
14,100
34,100
_4,700
29,700
Total
70,000
13,000
47,000
130,000
C
100,000
29,000
(12,000)
117,000
W
150,000
63,000
(12,000)
20,100
N
200,000
58,000
(12,000)
24,600
Total
450,000
150,000
(36,000)
564,000
C
10,000
19,000
29,000
W
15,000
10,000
38,000
63,000
N
20,000
38,000
58,000
Total
45,000
10,000
95,000
150,000
Capital, 1/1/x5
Net income
Withdrawals personal
Capital, 12/31/x5
117,000
34,420
(12,000)
139,420
201,000
75,540
(12,000)
264,540
246,000
70,040
(12,000)
304,040
564,000
180,000
(36,000)
708,000
117,000
34,420
(12,000)
139,420
201,000
75,540
(12,000)
264,540
246,000
70,040
(12,000)
304,040
564,000
180,000
(36,000)
708,000
F
12,000
30,000
(35,000)
7,000
G
6,000
11. a
Capital, 1/1/x4
Net Income 20x4
Withdrawal personal
Capital, 12/31/x4
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
c - refer to No.11
d - refer to No.11
d - refer to No.11
e - refer to No.11
b - refer to No.11
b - refer to No.11
d - refer to No.11
a - refer to No.11
e - refer to No.11
c - refer to No.11
c - refer to No.11
23. b
Capital, 1/1/YearI
Net income (loss)
Withdrawals personal
Capital, 12/31/ Year I
Y
143,000
(11,700)
(13,000)
118,300
E
104,000
(10,400)
(13,000)
80,600
I
143,000
(3,900)
(13,000)
126,100
Total
390,000
(26,000)
(39,000)
325,000
26,000
14,300
(52,000)
(11,700)
10,400
(20,800)
(10,400)
13,000
14,300
(31,200)
(3,900)
3,900
3,900
(10,400)
(2,600)
Capital, 1/1/Year2
Net income (loss)
Withdrawals personal
Capital, 12/31/ Year 2
118,300
28,080
(13,000)
133,380
80,600
76,700
(13,000)
144,300
126,100
19,760
(13,000)
132,860
325,000
52,000
(3,900)
338,000
8,060
(3,900)
76,700
13,000
12,610
(5,850)
19,750
3,900
32,500
(19,500)
52,000
26,000
11,830
(9,750)
28,080
A
30,000
3,600
5,000
4,625
P 43,225
B
P 45,000
6,500
Total
P 75,000
3,600
11,500
18,500
P 108,600
Total
Salaries
Bonus (refer to Note)
Interest on average capital (15%)
Balance (2:1)
Total
P 40,000
P 45,000
6,000
(32,000)
P 14,000
9,000
(16,000)
P 38,000
P 85,000
0
15,000
(48,000)
P 52,000
Note:
1. The basis of the bonus is negative, so theres no bonus at all.
2. It should be noted that the order of priority is of no significance when it comes to
allocation of net income. When there is a resulting residual loss, wherein the residual
loss should be allocated based on their agreement. In this case, there is no such
agreement, so the allocation would still be to satisfy completely all provisions of the
profit and loss agreement and use the profit and loss ratios to absorb any deficiency
or additional loss caused by such action.
37. d
Salaries
Bonus*
3:4:3
Total
A
P 40,000
B
P 40,000
__3,000
P 43,000
4,000
C
P 1,000
_3,000
P 4,000
Total
P 80,000
1,000
10,000
P 91,000
A
P 41,600
B
P 38,400
2,000
(16,500)
P 27,100
3,500
Total
P 80,000
0
5,500
(49,500)
P 52,000
Note:
1. The basis of the bonus is negative, so theres no bonus at all.
2. It should be noted that the order of priority is of no significance when it comes to
allocation of net income. When there is a resulting residual loss, wherein the residual
loss should be allocated based on their agreement. In this case, there is no such
agreement, so the allocation would still be to satisfy completely all provisions of the
profit and loss agreement and use the profit and loss ratios to absorb any deficiency
or additional loss caused by such action.
39. b
2/1/20x4: P20,000 x 4 = P 80,000
6/1/20x4: P40,000 x 3 = 120,000
9/1/20x4: P30,000 x 4 = 120,000
P 320,000 / 12 months = P26,667
Note: Annual is 12 months.
40. a
Salaries
Interest on average capital (10%)
Remainder (equally)
Total
Tuba
P 25,000
6,000
(5,000)
P 26,000
Drum
P 20,000
9,000
(5,000)
P 24,000
Total
P 45,000
15,000
(10,000)
P 50,000
Salaries
Interest on average capital (10%)
Remainder (equally)
Total
Tuba
P 25,000
6,000
(5,000)
P 26,000
Drum
P 20,000
9,000
(5,000)
P 24,000
Total
P 45,000
15,000
(10,000)
P 50,000
41. a
Note: It should be noted that the order of priority is of no significance when it comes to
allocation of net income. When there is a resulting residual loss, wherein the residual loss
should be allocated based on their agreement. In this case, there is no such agreement, so
the allocation would still be to satisfy completely all provisions of the profit and loss
agreement and use the profit and loss ratios to absorb any deficiency or additional loss
caused by such action.
42. c
Salaries
Bonus*
Remainder (3:4:3)
Total
J
P 50,000
16,000
(6,000)
P 60,000
P
P 60,000
8,000
(8,000)
P 60,000
B
P 30,000
16,000
(6,000)
P 40,000
Total
P140,000
40,000
(20,000)
P160,000
*since problem is silent it should be based on net income before any deductions.
43. c
Salaries
Bonus (10% of average capital)
Remainder (4:4:2)
Total
A
P 30,000
5,000
_ 24,000
P 59,000
P
P 10,000
3,000
__24,000
P 37,000
B
P 40,000
2,000
_12,000
P 54,000
Total
P 80,000
10,000
60,000
P150,000
Salaries
Bonus (10% of average capital)
Remainder (4:4:2)
Total
A
P 30,000
5,000
(16,000)
P 19,000
P
P 10,000
3,000
(16,000)
(P3,000)
B
P 40,000
2,000
( 8,000)
P 34,000
Total
P 80,000
10,000
(40,000)
P 50,000
44. c
P 400,000
_____35%
P 140,000
P 400,000
_____35%
P 140,000
_100,000
P 40,000
The bonus is given to the new partner, therefore, the capital of Donald would be
reduced by P24,000(P40,000 x 3/5), Thus, the capital of Donald after admission is P176,000
(P200,000 P24,000)
47. a refer to No. 45.
Hanes = P84,000 (P100,000 - P40,000 x 2/5)
48. e refer to No. 45
49. d
P60,000, salary = P25,000, salary + [.20 (NI B)]
P60,000 = P25,000 + P35,000, bonus
Therefore, bonus would be P35,000
B = .20 (NI B)
P35,000 = . 20 (NI P35,000)
P35,000 = .20NI P7,000
P35,000 + P7,000 = .20NI
P42,000 = .20NI
NI = P210,000
50. d
Using bonus formula to solve for income:
Bonus = .20 (NI Bonus Salary)
35,000 = .20 NI [.20 x P35,000] [.20 x P100,000*]
62,000 = .2Income
P310,000 = income
*salaries 25,000 + 75,000
51. c
P30,000 + P40,000 = P70,000, annual salary to allocate net income.
52. b
[P70,000 (P40,000 + P10,000 +P2,000)]
- Salary to partners is an allocation of net income (they are not expenses)
- Partners withdrawals are deduction to capital accounts.
53. c
Bonus = 20% (NI before deduction on salaries, interests and bonus)
B = 20% (NI after deduction of salaries, interests and bonus + salaries + interests + bonus)
B = 20% [P46,750 + (P1,000 x 12 months) + (.05 x P25,000) + B]
B = .20 [P60,000 + B]
B = P12,000 + .20B
1.20 B = P12,000
B = P15,000
54. b
Abe
Bert
Carl
Old P & L
70%
20%
10%
Interests Acquired
85%
New P & L
59.50%
17.00%
8.50%
Dave
Total
15%
100%
100%
15.00%
100%
55. b
Unadjusted net income, 20x5
Add (deduct): adjustments Accrued expense 20x5
Accrued income 20x5
Prepaid expense 20x4
Deferred or unearned income 20x4
Adjusted net income, 20x5
Multiplied by: P& L of Dave
Share in net income 20x5
Theories
1. True
2. False
3. True
4. False
5. False
6.
7.
8.
9.
10,
d
d
c
d
d
11.
12.
13.
14.
15,
c
a
b
d
c
15,000
(1,050)
875
(1,400)
__1,225
P 14,650
_____17%
P2,490.50
16.
17.
18.
19.
20.
e
c
c
d
b