True or False

1. The equity of a partner in the net assets of the partnership is not the same as the partner's
share in profits or losses.
2. It is possible for a partner's capital account to increase as a result of the allocation of a loss.
3. Salary and interest allowances are reported in the statement of comprehensive income as
salaries and interest expenses.
4. In certain cases when distribution of profits or losses involves salary and interest allowances,
some partners may receive an increase in equity and others may suffer a decrease.
5. Using average capital balances as a basis for profit distribution is preferable because it
reflects the capital actually available for use by the partnership during the year. Temporary
withdrawals should be considered even when they are within allowable limits
6. In the absence of stipulation, the share of each partner in profits or losses shall be in the
same proportion to what he may have contributed, but the industrial partner may not be liable
for the losses.
7. A partnership agreement may validly stipulate that one partner shall receive no share in
profits or losses.
8. The interest on partners' capital can be considered as expenses depending on the partners'
agreement.
9. The increase in equity of the partner due to distribution of profits can be attributed to a
particular asset.
10. When a profit or loss sharing agreement provides for salary and interest allowances to the
partners, these salary and interest allowances should be deducted from revenues in arriving at
partnership profit.
11. When ending capital balances are used, additional investments during the year are
encouraged.
12. The salary allocation to partners also appears as salaries expense on the partnership's
statement of comprehensive income.
13. The form and content of the statement of comprehensive income of a partnership resemble
those of a sole proprietorship with no exceptions
14. The provision for interest on partners' capital will not be honored because the operations
resulted to a loss even if the agreement provided for such interest.
15. The basis for distribution of profits or losses is a matter of agreement among the partners. It
may be based on their capital contribution ratio.
16. The income summary account is credited in the entry to record distribution of profits.
17 Interest on loans from partners is recognized as partnership income.
18. When beginning capital balances are used in allocating profits, year-end investments are
discouraged.
19. If a partnership agreement does not specify how profits or losses are to be distributed, they
should be allocated based on relative capital account balances.
20. The industrial partner is not liable for losses because he cannot withdraw the work or labor
already done by him.
21. Partnership profits and losses are divided among partners according to their sharing
agreement. If no sharing agreement exists, profits or losses are divided equally.
22. It is possible to allocate profit or loss to partners based solely on average capital balances.
Multiple Choice
1. Ceradoy, Manongsong and Anuran are partners sharing residual profits in the ratio of
3:2:1. The partnership agreement provides for 8% interest on capital and a salary for
Manongsong of P80,000 per annum. Profit for 2023 was P840,000 and the year-end
balances on partners’ capital accounts are as follows: Ceradoy, P200,000; Manongsong,
P150,000 and Anuran, P120,000. What was Anuran's shared residual profits for 2023?

a. P120,400
b. P126,670
c. P130,000
d. P140,000

2. Malaluan and Baral are in partnership. They share profits in the ratio 3:2 and close their
accounts on June 30 each year. On Jan. 1, 2023, Castro joined the partnership. The profit-
sharing ratio was revised to become Malaluan 50%, Baral 25% and Castro 25% after
providing for annual salaries as follows: Baral, P20,000 and Castro, P12,000. The
partnership profit for the year ended June 30, 2023 was P480,000, accruing evenly over the
year. What are the partners' total share in profits for the year ended June 30, 2023?

Malaluan Baral Castro

a. P256,000 P162,000 P62,000
b. P248,000 P168,000 P64,000
c. P264,000 P166,000 P66,000
d. P264,000 P156,000 P60,000

3. Refozar, Martinez and Magsino formed a partnership. It's on a calendar year basis. The
profit-sharing arrangements are as follows:
- Until June 30, 2023, the annual salaries are provided as follows: Martinez, P40,000
and Magsino, P20,000. The residual profit will be shared in the ratio of 6:2:2.
- From July 1, 2023, the salaries will be discontinued and the profit to be divided in the
revised ratio of 5:3:2.
Profit for the year ended Dec. 31, 2023 was P400,000 before charging partners' salaries,
accruing evenly through the year, and after charging an expense of P40,000, which it was
agreed related wholly to the first six months of the year. How should the profit for the year
be divided among the partners?

Refozar Martinez Magsino

a. P182,000 P130,000 P188,000
b. P200,000 P116,000 P84,000
c. P198,000 P118,000 P88,000
d. P180,000 P132,000 P88,000

4. Rubio and Bisana established a trading partnership. They share profits equally after
allowing salaries of P40,000 per year for Rubio and interest on partner's capital at 5% per
year. On Jan. 1, 2023, their capital balances are as follows: Rubio, P200,000 and Bisana,
P100,000.

On July 1, 2023, Bisana invested an additional P100,000 and Rubio's salary was
discontinued. The partnership profit for the year ended Dec. 31, 2023 was P337,500. What
was Rubio's total profit share for the year ended Dec. 31, 20237

a. P182,500
b. P178,750
c. P180,000
d. P190,000

5. Villanueva and Mulles are partners sharing profits in the ratio 3:2. On Jan. 1, 2023,
Lucena joined the partnership and the new profit sharing ratio is as follows: Villanueva 40%,
Mulles 30% and Lucena 30%. Profits for the year ended June 30, 2023 were:

6 months ended Dec. 31, 2022 P300,000

6 months ended June 30, 2023 P450,000
An irrecoverable debt of P50,000 was written off in the six months to June 30 in computing
the P450,000 profit. It was agreed that this expense should be borne by Villanueva and
Mulles only. What is Villanueva's total profit share for the year ended June 30, 2023?

a. P330,000
b. P310,000
c. P340,000
d. P350,000

6. Figueroa and Aguhob are partners in a CPA Review School. They share profits in the
ratio of 2:1. On July 1, 2023 they admitted Figueroa's son Doblas as a partner. Figueroa
guaranteed that Doblas' profit share would not be less than P25,000 for the six months to
Dec. 31, 2023. The profit sharing arrangements after Doblas' admission is as follows:
Figueroa 50%, Aguhob 30% and Doblas 20%. The profit for the year ended Dec. 31, 2023
was P240,000 accruing evenly over the year. What should Figueroa's total profit share be
for the year ended Dec. 31, 20237

a. P140,000
b. P139,000
c. P114,000
d. P139,375
Multiple Choice
1. Which of the following distributions would be made last in dividing profits to the partners when
interest on capital balances and salary allowances are involved?

a. Equally.
b. Specified ratio.
c. Salary allowances.
d. Interest on capital balances.

2. A partner who contributes money or property as well as his work or industry to the capital of
the partnership is called

a. Industrial partner
b. Capitalist partner
c. Managing partner
d. Capitalist-industrial partner

3. Closing entries of a partnership include entries to

a. record distribution of cash to the partners.

b. eliminate the capital accounts and record the distribution of assets to partners to effect the
partnership termination and liquidation.
c. close income and expense accounts to the income summary account; and then close the
profits or losses to the drawing accounts.
d. close the profits or losses and dividends declared accounts to retained earnings.

4. Arzadon, Ballada and Castro are partners. Their contributions are as follows. Arzadon,
P600,000; Ballada, P400,000 and Castro, services. The partners did not agree on how to divide
profits or losses. If there is a loss of P100,000, how should the loss be shared by the partners?

a. Arzadon, P60,000; Ballada, P40,000 and Castro, nothing.

b. Arzadon, P35,000; Ballada, P25,000 and Castro, P40,000.
c. Arzadon, P35,000; Ballada, P35,000 and Castro, P30,000.
d. Arzadon, P30,000; Ballada, P20,000 and Castro, P50,000.
5. A 1:3:2 ratio is the same as

a. 10% : 30% : 20%.

b. 1/10 : 3/10 : 2/10.
c. 1/6 : 1/2 : 1/3.
d. 20% : 50% : 30%.

6. Periodic withdrawals by partners are best viewed as

a. expense of doing business.

b. taxable income to the partners.
c. distribution of partnership assets to the partners.
d. payment for partners' personal services to the partnership.

7. Pozon, Ventic and Biore are partners. Pozon is an industrial partner. During the first year of
operation, the firm realized a profit of P60,000. During the second year, the firm sustained a loss
of P30,000. So, the total profit for the two years of operations was only P30,000. In the Articles
of Partnership, it was agreed that Pozon, the industrial partner, would get one-third of the profit
but would not share in the losses. How much will Pozon, the industrial partner, get?

a. Pozon will get only P10,000 which is one-third of the profit.

b. Pozon will get only P20,000 in the first year and none in the second year.
c. Pozon will share in the loss in the second year.
d. Pozon will get only P20,000 which is 1/3 of the profit of the first year of operations.

8. Which of the following is not considered a legitimate expense of a partnership?

a. Supplies used in the partners' offices.

b. Salaries for management hired to run the business.
c. Depreciation on assets contributed to the partnership by the partners.
d. Interest paid to partners based on the amount of their invested capital.
9. Opiso, Bombeo and Palatino are partners. Their contributions are as follows: Opiso,
P600,000; Bombeo, P400,000 and Palatino, services. The partners agreed to divide profits or
losses in the following percentages: Opiso, 35%; Bombeo, 25% and Palatino, 40%. If there is a
profit of P100,000, how should the profit be distributed among the partners?

a. Opiso, P35,000; Bombeo, P35,000 and Palatino, P30,000.

b. Opiso, P30,000; Bombeo, P20,000 and Palatino, P50,000.
c. Opiso, P35,000; Bombeo, P25,000 and Palatino, P40,000.
d. Opiso, P60,000; Bombeo, P40,000 and Palatino, nothing.

10. The most equitable distribution of partnership profit based on capital contributions uses
which of the following capital concept?

a. Equally
b. Ending capital
c. Beginning capital
d. Average capital
Multiple Choice
1. The partnership agreement of Niza and Sala provides the interest at 10% per year is to be
credited to each partner on the basis of weighted-average capital balances. A summary of
Sala's capital account for the year ended Dec. 31, 2023 follows:
Balance, Jan. 1 P420,000
Additional Investment, July 1 120,000
Withdrawal, Aug. 1 (45,000)
Balance, Dec. 31 495,000

What amount of interest should be credited to Sala's capital account for 2023?
a. P45,750 c. 49,500
b. P46,125 d. 51,750

2. Barroga and Gonzales are partners who shares profits and losses in the ratio of 60:40,
respectively. Barroga's salary is P60,000 and P30,000 for Gonzales. The partners are also paid
interest on their average capital balances. In 2023, Barroga received P30,000 of interest and
Gonzales, P12,000. The profit and loss allocation is determined after deductions for the salary
and interest payments. If Gonzales' share in the residual profit (profit after deducting salaries
and interest) was P60,000 in 2023, what was the total partnership profit?

a. P192,000 c. P345,000
b. P282,000 d. P387,000

3. Cabance, a partner in the Cabance and Mendoza Partnership has a 30% share in the
partnership profit and loss. His capital account had a net decrease of P60,000 in 2023. In 2023,
he withdrew P130,000 against his capital and invested property valued at P25,000 in the
partnership. The profit of the partnership is

a. P550,000 c. P233,333.
b. P350,000. d. P150,000.
4. Antiporda and Sy are partners who share profits and losses after salary and interest
allowances in the ratio of 60:40, respectively. Antiporda's salary is P20,000 and Sy's is P10,000.
The partners are also paid interest on their average capital balances. In 2023, Antiporda
received P10,000 in interest and Sy P4,000. If Sy's share of partnership profit was P40,000 in
2023, what was the total partnership profit?

a. P95,000 c. P109,000
b. P100,000 d. P144,000

5. In its first year of operations, the partnership of Reyes, Baliño and Dimalanta made a profit of
P20,000, before providing for salaries of P5,000 and 3,000 per annum for Reyes and Baliño,
respectively. The capital contributions of the partners are as follows: Reyes, P30,000; Baliño,
P20,000 and Dimalanta, P10,000. Assuming that no profit and loss ratio are provided in the
partnership agreement and that there has been no change in the capital contributions during the
year, how much profit share would Reyes be entitled to receive?

a. P11,000 c. P10,000
b. P15,000 d. P5,000

6. If a partnership has profit of P44,000 and Partner Garcesa is to be allocated a bonus of 10%
of profit after the bonus, Garcesa's bonus would be

a. P4,400.
b. P3,600.
c. P4,000.
d. None of the above.

7. The Marasigan and Rosales partnership agreement provides special compensation to the
managing partner, Marasigan; Marasigan receives a bonus of 15% of profit before salary and
bonus; and also receives a salary of P45,000. Any remaining profit or loss is to be allocated
equally. During 2023, the partnership had profit of P50,000 before the bonus and salary
allowances. As a result of these distributions, Rosales' equity in the partnership would
a. increase.
b. decrease.
c. decrease the same as Marasigan's.
d. not change.

8. Abulencia and Daguiso have the following profit and loss agreement: salaries of P30,000 and
P45,000 for Abulencia and Daguiso, respectively; a bonus to Abulencia of 10% of profit after
salaries and bonus; and interest of 10% on average capital balances of P20,000 and P35,000
for Abulencia and Daguiso, respectively. One-third of any remaining profit is allocated to
Abulencia and the balance to Daguiso. If the partnership had a profit of P102,500, how much
should be allocated to Abulencia?

a. P41,000 c. P44,250
b. P41,167 d. P47,500

9. On Jan. 2, 2023, Basilio and Quezada formed a partnership. Basilio contributed a capital of
P175,000 and Quezada, P25,000. They agreed to share profits and losses in the ratio of 8:2,
respectively. Quezada is the general manager, and works in the partnership fulltime. Quezada
is given a salary of P5,000 a month; an interest of 5% of the beginning capital (of both partners)
and a bonus of 15% of profit before salary, interest, and bonus. The statement of
comprehensive income of the partnership for the year ended Dec. 31, 2023 follows:

Net Sales P875,000

Cost of Goods Sold P700,000
Gross Profit P175,000
Expenses (including the salary, interest and the bonus) P143,000
Profit P 32,000

The amount of bonus to Quezada in 2023 amounted to:

a. P16,456. c. P13,304.
b. P20,700. d. P18,000.
10. Nabua is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus
a bonus of 10% of profit after the bonus as a way of dividing profits among the partners. What
amount of profit would make the choices equal?

a. P150,000 c. P 15,000
b. P165,000 d. P135,000

11. Tanupan is trying to decide whether to accept a salary of P40,000 or a salary of P25,000
plus a bonus of 10% of profit after salaries and bonus as a way of dividing profits among the
partners. Salaries traceable to the other partners is P100,000. What amount of profit would
make the choices equal?

a. P165,000 c. P290,000
b. P265,000 d. P305,000

12. Hermocilla, Gonzaga, and Mallari are partners with average capital balances during the year
of P120,000, P60,000 and P40,000, respectively. Partners receive 10% interest on their
average capital balances. After deducting salaries of P30,000 to Hermocilla and P20,000 to
Gonzaga, 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 Hermocilla's capital account
change?

a. P42,000 increase
b. P35,000 decrease
c. P11,000 decrease
d. P7,000 increase

13. Espiritu and Cheng have the following profit and loss agreement: salaries of P30,000 and
P45,000 for Espiritu and Cheng, respectively; a bonus to Espiritu of 10% of profit after salaries
and bonus; interest of 10% on average capital balances of P20,000 and P35,000 for Espiritu
and Cheng, respectively, and any balance equally. If the profit is P102,500, how much should
be allocated to Espiritu?
a. P58,250 c. P44,250
b. P47,796 d. P44,125
14. Santos and Gloria share profits in the ratio of 3:2. However, Santos is to receive a bonus of
20% of the profits, in addition to his profit share. The partnership made a profit for the year of
P24,000 before the bonus. Assuming Santos' bonus is computed on profit after deducting said
bonus, how much profit share will Gloria receive?

a. P15,200 c. P 9,600
b. P 8,000 d. P 9,000

15. Ravelo and Febrero are partners agreeing to allow monthly salaries of P6,000 and P5,000,
respectively; 6% interest on the capital investment at the beginning of the year of P300,000 and
P230,000, respectively; and the balance equally. The first year registered a profit of P100,000.
The partners' share should be

a. Ravelo, P58,100; Febrero, P41,900.

b. Ravelo, P56,600; Febrero, P43,400.
c. Ravelo, P54,500; Febrero, P45,500.
d. Ravelo, P50,000; Febrero, P50,000.

16. The partnership agreement of Santiago and Generales provided that interest of 10% per
annum is to be credited to each partner on the basis of average capital balances. A summary of
Generales' capital account for the year ended Dec. 31, 2023 follows:

Balance, Jan. 1 P280,000

Additional Investments, July 1 80,000
Withdrawal, August 1 (30,000)
Balance, Dec. 31 P330,000

The amount of interest that should eventually be credited to Generales' capital is

a. P30,500.
b. P33,000.
c. P30,750.
d. P34,500.
Multiple Choice

1. A partnership employed an inexperienced bookkeeper. He has prepared the current account

of one of the partners as follows:

Current Account

Interest Capital P 28,000 Balance Brought Forward P 2,070

Salaries 15,000 Drawings 62,000

Balance Carried Forward 108,700 Profit 87,000

P 151,700 P 151,700

The balance brought forward is entered correctly and the other entries are all correct in amount.
However, the bookkeeper is not very sure of the difference between the debits and credits for
the current account. What is the corrected balance carried forward?

a. A debit balance of P15,300

b. A debit balance of P65,300
c. A credit balance of P70,700
d. A credit balance of P164,700

2. A partner's personal gas receipts have been treated as part of the partnership's service
vehicle expenses. Which of the following entries is necessary to correct the error?

Debit Credit
a. Drawings Service Vehicles Expense
b. Service Vehicles Expense Drawings
c. Service Vehicles Expense Capital
d. Capital Service Vehicles Expense
3. What entry is necessary to reflect interest earned on partners' capital account balances?

Debit Credit
a. Partners’ Current Profit and Loss Appropriation
b. Profit and Loss Appropriation Partners’ Current
c. Profit and Loss Appropriation Cash
d. Profit and Loss Appropriation Partners’ Capital

4. What entry is necessary to reflect interest payable on partners' drawings?

Debit Credit
a. Partners’ Drawings Partners’ Current
b. Profit and Loss Appropriation Partners’ Drawings
c. Partners’ Drawings Interest Payable
d. Partners’ Current Profit and Loss Appropriation
Multiple Choice

1. Aristorenas, Soriano and Filamor have the following profit and loss agreement:

● Partners Aristorenas and Soriano will receive salaries of P40,000 each.

● Partner Filamor will get a bonus of 10% of profit after salaries and bonus.
● Remaining profits are shared by Aristorenas, Soriano and Filamor in the ratio of 3:4:3,
respectively.

The partnership had a profit of P91,000. How much should be allocated to Filamor?
a. P 4,000 c. P 9,100
b. P 4,070 d. P27,300

2. A partnership showed the following account balances: sales, P70,000; cost of sales, P40,000;
operating expenses, P10,000; partners' salaries, P13,000; interest paid to banks, P2,000 and
partners' drawings, P8,000. The partnership profit is

a. P20,000. c. P 5,000.
b. P18,000. d. P(3,000).

3. Villena, a partner in the Dulay, Villena & Co., has a 30% participation in partnership profits
and losses. Villena's capital account has a net decrease of P120,000 during the calendar year
2023. During 2023, Villena withdrew P260,000 (charged against his capital account) and
contributed property valued at P50,000 to the partnership. What was the profit of the Dulay,
Villena & Co. for the year 2023?

a. P1,100,000 c. P700,000
b. P466,667 d. P300,000

4. Marasigan, Cabance and Cequina formed a partnership on Jan. 1, 2023. Each contributed
P120,000. Salaries were to be allocated as follows: Marasigan, P30,000; Cabance, P30,000;
Cequina, P45,000. Drawings were equal to salaries and to be taken out evenly throughout the
year. With sufficient partnership profit, Marasigan and Cabance could split a bonus equal to
25% of partnership profit after salaries and bonus (in no event could the bonus go below zero).

Remaining profits were to be split as follows: 30% for Marasigan; 30% for Cabance, and 40%
for Cequina. For the year, partnership profit was P120,000. Compute the ending capital for each
partner:

a. Marasigan, P125,100; Cabance, P125,100, Cequina, P124,800

b. Marasigan, P126,000; Cabance, P126,000, Cequina, P124,500
c. Marasigan, P125,500; Cabance, P125,500, Cequina, P124,000
d. Marasigan, P155,100; Cabance, P155,100; Cequina, P169,800
5. Del Mundo, Ballada and Mendoza are partners sharing profit on a 7:2:1 ratio. Burgos was
admitted into the partnership with 15% share in profit on Jan. 1, 2023. The old partners continue
to share profit in their original ratios.

For the year 2023, the partnership showed a profit of P15,000. However, it was discovered that
the following items were omitted in the firm's books:

Unrecorded at year-end: 2022 2023

Accrued Expense P1,050

Accrued Income 875
Prepaid Expense P1,400
Unearned Income 1,225

The share of Ballada in the 2023 profit is

a. P2,197.50 c. P2,490.50
b. P2,637.00 d. P3,149.75

6. The partnership of Ronzales, Adalem and Bio divides profits or losses in the ratio of 4:5:3.
During 2023, the business earned P80,000. Bio's share of this profit is

a. P33,334 c. P32,000
b. P26,667 d. P20,000

7. Kwong and Morales entered into a partnership as at Mar. 1, 2023 by investing P125,000 and
P75,000, respectively. They agreed that Kwong, as the managing partner, was to receive a
salary of P30,000 per year and a bonus computed at 10% of the profit after adjustment for the
salary; the balance of the profit was to be distributed in the ratio of their original capital
balances. On Dec. 31, 2023, normal account balances were as follows:

Cash P70,000 Accounts Payable P 60,000

Accounts Receivable 67,000 Kwong, Capital 125,000
Furniture & Fixtures 45,000 Morales, Capital 75,000
Sales Returns 5,000 Kwong, Drawing 20,000
Purchases 196,000 Morales, Drawing 30,000
Operating Expenses 60,000 Sales 233,000

Inventories on Dec. 31, 2023 were as follows: supplies, P2,500, merchandise, P73,000. Prepaid
insurance was P950 while accrued expenses were P1,550. Depreciation rate was 20% per
year. The partners' capital balances on Dec. 31, 2023, after closing the profit and drawing
accounts, were:
 Kwong Morales Kwong Morales
a. P135,940 P47,960 c. P139,680 P48,680
b. P139,540 P49,860 d. P142,350 P47,670

8. The Soliman and Palaganas Partnership agreement provides for Soliman to receive a 20%
bonus on profits before the bonus. Remaining profits and losses are divided between Soliman
and Palaganas in the ratio of 2:3, respectively. Which partner has a greater advantage when
partnership has a profit or when it has a loss?

Profit Loss
a. Soliman Palaganas
b. Soliman Soliman
c. Palaganas Soliman
d. Palaganas Palaganas

9. At the beginning of 2023, the statement of financial position for EasyPage Company showed
the following balances in the partners' capital accounts: Rivera, P24,000 and Rosario, P26,000.
Rivera and Rosario share profits and losses in a 3:7 ratio. During 2023, EasyPage experienced
a P40,000 loss. Rivera withdrew P10,000 from the partnership during the year and Rosario
withdrew P18,000. What will be the balance in Rivera's capital on Dec. 31, 2023?

a. P 3,600 c. P12,000
b. P 2,000 d. P26,000

10. On Jan. 1, 2023, Demafiles and Barbosa decided to form a partnership. At the end of the
year, the partnership made a profit of P120,000. The capital accounts of the partnership showed
the following transactions:

Demafiles, Capital Barbosa, Capital

Dr Cr. Dr. Cr.
Jan. 1 - P 40,000 - P 25,000
Apr. 1 P 5,000 - - -
June 1 - - - 10,000
Aug. 1 - 10,000 - -
Sept. 1 - - P 3,000 -
Oct. 1 - 5,000 1,000 -
Dec. 1 - 4,000 - 5,000

Assuming that an interest of 20% per annum is given on average capital and the balance of the
profits is allocated equally, the allocation of profits should be

a. Demafiles, P60,000; Barbosa, P59,400. c. Demafiles, P67,200; Barbosa, P52,800.

b. Demafiles, P61,200; Barbosa, P58,800. d. Demafiles, P68,800; Barbosa, P51,200.
11. Barbo is a partner and has an annual salary of P24,000 but actually draws P3,000 per
month. The other partner has an annual salary of P35,000 and draws P2,000 per month. What
is the total annual salary that should be used to allocate profit between the partners?

a. P119,000 c. P60,000
b. P 71,000 d. P59,000

12. The partnership agreement of Zuniga, Armenta & Galang provided for the year-end allocation
of profit in the following order:
● First, Zuniga is to receive 10% of profit up to P200,000 and 20% over P200,000.
● Second, Armenta and Galang each are to receive 5% of the remaining profit over
P300,000.
● The balance of profit is to be allocated equally among the three partners.

The partnership's 2023 profit was P500,000 before any allocations to partners. What amount
should be allocated to Zuniga?

a. P202,000 c. P206,000
b. P216,000 d. P220,000

13. Bacalso and Tenajeros have respective partnership capital balances of P48,000 and
P24,000 on Jan. 1. Bacalso withdrew P6,000 on May 1 and P6,000 on July 1 Tenajeros invested
an additional P12,000 on April 1 and withdrew P8,000 on Oct. 1 The average capital balances for
Bacalso and Tenajeros for the year are:

a. Bacalso, P48,000; Tenajeros, P24,000.

b. Bacalso, P42,000; Tenajeros, P26,000.
c. Bacalso, P41,000; Tenajeros, P31,000.
d. Bacalso, P36,000; Tenajeros, P28,000.

14. On Jan. 1, 2023, Anatalio, Yecyec, Guzon and Calimpusan formed Butuan Trading Co., a
partnership, with contributions as follows: Anatalio, P50,000; Yecyec, P25,000; Guzon, P25,000
and Calimpusan, P20,000. The partnership contract provided that each partner shall receive a
5% interest on contributed capital, and that Anatalio and Yecyec shall receive salaries of P5,000
and P3,000, respectively.

The contract also provided that Guzon shall receive a minimum of P2,500 per annum, and
Calimpusan a minimum of P6,000 per annum, which is inclusive of amounts representing
interest and share of remaining profits. The balance of the profits shall be distributed to
Anatalio, Yecyec, Guzon and Calimpusan in a ratio 3:3:2:2.

What amount must be earned by the partnership, before any charge for interest and salaries, so
that Anatalio may receive an aggregate of P12,500 including interest, salary and share of
profits?
a. P32,333 c. P30,667
b. P30,000 d. P16,667

15. Garachico, Perez, and Burgos formed a partnership on Jan. 1, 2023, and contributed
P150,000, P200,000, and P250,000, respectively. Their articles of co-partnership provided that
the operating profit be shared among the partners as follows: as salary, P24,000 for Garachico,
P18,000 for Perez, and P12,000 for Burgos; interest of 12% on the average capital during 2023
of the three partners; and the balance in the ratio of 2:4:4, respectively.

The operating profit for the year ended Dec. 31, 2023 amounted to P176,000. Garachico
contributed additional capital of P30,000 on July 1 and made withdrawal of P10,000 on Oct. 1;
Perez contributed additional capital of P20,000 on Aug. 1 and made a withdrawal of P10,000 on
Oct. 1; and, Burgos made a withdrawal of P30,000 on Nov. 1. The partners' capital balances on
Dec. 31, 2023 are

a. Garachico, P179,680; Perez, P229,360; and, Burgos, P239,360.

b. Garachico, P223,180; Perez, P272,060; and, Burgos, P280,760.
c. d. Garachico, P189,680; Perez, P239,360; and, Burgos, P269,360.
d. Garachico, P179,760; Perez, P229,520; and, Burgos, P239,520.

16. Castillo, Labasan and Hollanes are partners with average capital balances during 2023 of
P472,500, P238,650, and P162,350, respectively. The partners receive 10% interest on their
average capital balances; after deducting salaries of P122,325 to Castillo and P82,625 to
Hollanes, the residual profits or loss is divided equally.

In 2023, the partnership had a loss of P125,624 before the interest and salaries to partners. By
what amount should Castillo's and Hollanes' capital account change - increase (decrease)?

Castillo Hollanes Castillo Hollanes

a. P30,267 P(40,448) c. P(40,844) P31,235
b. P29,476 P 17,536 d. P 28,358 P32,458

17. The partnership agreement of Carlos, Niza and Usop provided for the following terms on
distribution of profits and losses:
● Carlos is to receive 10% of the profit up to P1,000,000 and 20% on the amount of excess;
● Niza and Usop each, are to receive 5% of the remaining profit in excess of P1,500,000
after Carlos' share as per above;
● The balance to be divided equally.
For the year just ended, the partnership realized a profit of P2,500,000 before distribution to
partners. The share of Carlos is

a. P1,080,000. c. P1,300,000.
b. P1,000,000. d. P1,100,000
18. Onate, Guillermo and Cumagun are partners sharing profits on a 5:3:2 ratio, On Jan 1. 2023.
Aglucob was admitted into the partnership with a 10% share in profits. The old partners
continue to participate in profits in their original ratio.

For 2023, the profit of the partnership was reported as P12, 500k However, it was discovered
that the following items were omitted in the firm's books:

Unrecorded at year-end 2022 2023

Prepaid Expense P800
Accrued Expense P600
Unearned Income 700
Accrued Income 500

The new profit and loss ratio for Guillermo, and the share of partner Cumagun in the 2023 profit
would be

a. 30% and P2,214. c. 27% and P2,286.

b. 27% and P2,214. d. 30% and P2,286.

19. Perez, Yuzon and Mercado formed a partnership on Jan. 1, 2023 with the following initial
investments:

Perez - P100,000
Yuzon - 150,000
Mercado - 225,000

The partnership agreement states that profits and losses are to be shared equally by the
partners after consideration is made for the following:
- Salaries allowed to partners: P60,000 for Perez, P48,000 for Yuzon and P36,000 for
Mercado.
- Average partner's capital balances during the year shall be allowed 10% interest.

Additional information:
- On June 30, 2023, Perez invested an additional P60,000.
- Mercado withdrew P70,000 from the partnership on Sept. 30, 2023.
- Share on the remaining partnership profits was P5,000 for each partner.
The total partnership capital on Dec. 31, 2023 was

a. P405,000. c. P672,750.
b. P671,500. d. P480,000.