Acctg122 Chapter 2 Exercises
Acctg122 Chapter 2 Exercises
Acctg122 Chapter 2 Exercises
Exercise 2-1. Tracy and Amor formed a partnership on January 1, 2020. Tracy contributed
P500,000 while Amor P250,000. At the end of the year 2020 the partnership
earned a profit amounting to P1,500,000. During 2020, Tracy and Amor made
additional investments and withdrawals. The capital balances of Tracy and Amor
before the distribution of profits were P700,000 and P400,000 respectively.
Required: Prepare journal entries to record the distribution of profit using the following
independent assumption:
2. Profit and loss ratio: 60% and 40% to Tracy and Amor respectively.
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5. Profit and loss ratio: According to ending capital balance.
Exercise 2.2
1. Amie and Benny are partners who shares profits and losses in the ratio of 70%: 30%,
respectively. Amie’s salary is P120,000 and P60,000 for Benny. The partners were
also paid for interest on their average capital balances. In 2020, Amie received
P15,000 of interest and Benny P6,000. The profit and loss allocation is determined
after deductions for the salary and interest payments. If Benny’s share in the
residual profit (profit after deducting salaries and interest) was P120,000 in 2020,
what was the total partnership profit?
OR
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3. A,B,C and D own a publishing company that they operate as a partnership.
The partnership agreement includes the following:
* A receives a salary of P40,000 and a bonus of 3% of profit after all bonuses.
* B receives a salary of P20,000 and a bonus of 2% of profit after all bonuses.
* All partners will receive 10% interest on their average capital balances.
A B C D Total
Salary 40000 20000 60000
Interest 10% 10000 9000 4000 9400 32400
Bonus 6360 4240 10600
Balance
equally 53000 53000 53000 53000 212000
10936 315000
Total 0 86240 57000 62400 315000 profit
103000
212000
315,00
Total profit 0
Salary 60000
Interest 32400 92400
222,60 222600/105
After 0 %
212000
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Daisy Capital (3/5 x 75,000) 45,000
Income Summary 75,000
5. Apple, a partner in the Grand Partnership, has a 40% participation in partnership
profits and losses. Apple’s capital account has a net decrease of P160,000 during the
calendar year 2020. During 2020, Apple withdrew P420,000 and contributed
property valued at P200,000 to the partnership. How much was the net income of
Grand Partnership for the year 2020?
6. The partnership agreement of Rosa, Lenny, & Leah provides for the year-end
allocation of net income in the following order:
1. Rosa will receive 10% of net income up to P200,000 and 20% in excess of
P200,000.
2. Lenny and Leah, each of them will receive 10% of the remaining income over
P300,000.
3. The balance of income is to be allocated equally among the three partners.
The partnership’s 2020 income was P1,000,000 before any allocations to partners.
What amount should be allocated to Rosa?
180,000.0
and 20% in excess of 200000 0
180,000
10% of the remaining income
over 300000 70000 70000 140000
Balance equally 226667 226667 226666 680000
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Weighted average capital
Peso
Date Capital Months Months
March 1, 2019 50000 3 150000
June 1, 2019 70000 3 210000
September 1, 2019 55000 4 220000
10 580000
divide 12 annual
48333.333
3
Refer to Exercise 3
8-10. Leo, Nardo, Alex, and Lean own a publishing company that they operate as a
partnership. The partnership agreement includes the following:
Leo receives a salary of P20,000 and a bonus of 3% of income after all bonuses.
Nardo receives a salary of P10,000 and a bonus of 2% of income after all bonuses.
All partners are to receive 10% interest on their average capital balances.
The average capital balances are as follows:
Leo ………………………………….. P50,000
Nardo ………………………………… 45,000
Alex ………………………………….. 20,000
Lean ………………………………….. 47,000
Any remaining profits and loss are to be divided equally among the partners.
The net income for the year is P105,000..
8. The share of Leo in the net income for the year will be
a. P41,450 b. P28,000 c. P39,700 d. not given
9. The share of Nardo in the net income for the year will be
a. P29,200 b. P16,500 c. P29,950 d. not given
10. The share of Alex in the net income for the year will be
a. P2,000 b. P15,450 c. P16,700 d. not given
11. The share of Lean in the net income for the year will be
a. P18,150 b. 4,700 c. P19,400 d. not given
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