On January 1, 2030, AAA, BBB, CCC and DDD formed ABCD Trading Co., a partnership with capital contributions as follows: AAA – P50,000; BBB – P25,000, CCC – P25,000 and DDD – P20,000. The partnership agreement stipulates that each partner shall receive a 5% interest on capital contributed and that AAA and BBB shall receive salaries of P5,000 and P3,000, respectively. The agreement further provides that CCC shall receive a minimum of P2,500 per annum and DDD, a minimum of P6,000 which is inclusive of amounts representing interest and their respective shares in partnership profits. The balance of the profits shall be distributed among AAA, BBB, CCC and DDD in the ratio of 3:3:2:2. 15. What amount must be earned by the partnership in 2030, before any charge for interest and partners’ salaries, in order that AAA may receive an aggregate of P12,500 including interest, salary and share of profits? A. P30,667 B. P32,333 C. P16,667
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.
On January 1, 2030, AAA, BBB, CCC and DDD formed ABCD Trading Co., a partnership with capital contributions as follows: AAA – P50,000; BBB – P25,000, CCC – P25,000 and DDD – P20,000. The partnership agreement stipulates that each partner shall receive a 5% interest on capital contributed and that AAA and BBB shall receive salaries of P5,000 and P3,000, respectively. The agreement further provides that CCC shall receive a minimum of P2,500 per annum and DDD, a minimum of P6,000 which is inclusive of amounts representing interest and their respective shares in partnership profits. The balance of the profits shall be distributed among AAA, BBB, CCC and DDD in the ratio of 3:3:2:2.
15. What amount must be earned by the partnership in 2030, before any charge for interest and partners’ salaries, in order that AAA may receive an aggregate of P12,500 including interest, salary and share of profits?
A. P30,667
B. P32,333
C. P16,667
D. P30,000
16. RRR is trying to decide whether to accept a bonus of 25% of net income after salaries and bonus or a salary of P97,500 plus a bonus of 10% of net income after salaries and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P450,000. What amount of income would be necessary so that RRR would consider the choices to be equal?
A. P1,100,000
B. P1,197,500
C. P650,000
D. P1,262,500
18. OOO and UUU are partners who share
OOO 180,000
UUU 70,000
EEE desires to join the firm and offered to invest 96,000 for a 1/3 interest. OOO and UUU declined his offer, but they extended a counter-offer to EEE of 88,000 for a 25% interest in the capital and profits and losses of the firm. If EEE accepted the offer, what would be the balance of OOO’s capital account after EEE’s admission?
A. 199,000
B. 187,000
C. 178,250
D. 181,750
19. MMM and WWW are partners with capital balances of P30,000 and P70,000 ,respectively. MMM has a 30% interest in profits and losses. At this time, the partnership has decided to admit RRR and LLL as new partners. RRR contributes cash of P55,000 for a 20% interest in capital and a 30% interest in profits and losses. LLL contributes cash of P10,000 and an equipment for a 25% interest in capital and 35% interest in profits and losses. If bonus amounting to P18,250 is given to the old partners, what is the value of the equipment contributed by LLL?
a. 31,750
b. 43,750
c. 50,000
d. 50,138
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