Partnership Formation & Operation

1. B PP QQ 11
Allow. for DA (370) (270)
PPE 1,000 (250)
Accrued exp (1,000) (800)
Inventory (500) 1,500
Net Adjustment (870) 180

2. D Accounts Payable 63,750

Accrued Expenses 1800
Total Liabilities 65,550

3. A Total Liabilities 65,550 12. A

Total Capital 92,435
Total Assets 157,985

4. B Abie and JM Capital

(2M - 500k = 1.5M/60% = 2.5M x 40% 1,000,000
Abie, Capital (300,000)
JM'S cash contribution 700,000
13. C
5. C Angel, Capital (5.5M - 500K) 5,000,000
Bea, Capital (10,000 sh x P300) 3,000,000
Total Capital before Colleen 8,000,000
Divide by: 80% 14. D
Total Capital 10,000,000
Multipy by: 20%
Colleen's Cash Contribution 2,000,000

6. A Regina (20%) Jessica (30%) Nataly (50%)

Agreed Capital 2,000,000 3,000,000 5,000,000 15. C
Initial Capital 1,600,000 1,000,000 3,000,000
Addtnl investment 400,000 2,000,000 2,000,000

7. A Total Agreed Capital 16. B

(210,000/30%) 700,000
B's Interest 70%
B, Capital 490,000
Land contribution (256,000)
B's additional investment 234,000

8. A Adjusted M, Capital (26,400-240+2,000+350-400) 28,110

Divided by: 2/3
Total Agreed Capital 42,165
 Claire's interest 1/3 17. B
Cash to be contributed by Claire 14,055

9. B Charles' investment of assets 1,496,000

Cash to be contributed by Raven 4,488,000
Cash to be contributed by Erik 8,976,000
Total Assets 14,960,000 18. D

10. B Total Agreed Capital (50k+70k=120k/30%) 400,000

Jude's interest 70%
Jude, Capital 280,000
Investment of Machinery (180,000)
Jude's contribution of cash 100,000 19. B
John's contribution of cash 50,000 20. D
Total Cash 150,000
 Gab Migs Total 21. B Partnership Profit
Salary 800,000 800,000 Multiply by:
Balance (303,000) (181,800) (484,800) Andie's share
Distribution 497,000 -181800 315,200
22. C Wash, Capital
Net Sales 1,824,000 240,000
COGS (1,568,000-584,000) (984,000)
Gross Profit 840,000
Operating Expenses (552,400)
Net Income 287,600 Wash share in profit
Divided by:
Year-end capital balance 360,000 Partnership Profit
Capital before sharing of net income (264,000)
Net income after salary 96,000 23. B Income summary credit balance
Love's interest 55% Less: Salary Allowances
Love's share in net income 52,800 Remaining profit
Salary allowance 36,000 Multiply by:
Share of Love on net income 88,800 Kenji's share in proft
Capital balance before profit
Income Summary credit balance 200,000 Kenji, Capital balance, end
Multiply by: 40%
Share of Patrick 80,000 24. A
Interest
Dino Gavin Total Salaries
Salaries 72,000 60,000 132,000 Balance
Interest 18,000 13,800 31,800 Share in NI
Balance (31,900) (31,900) (63,800) Ending bal.
Share in NI 58,100 41,900 100,000 Adjusted bal.

Net Income 60,000 If the partners wish to distribute the

Multiply by: 50,000/79667 then their total capital must be lowe
Dawn's share 37,657 Using:

Insta Gram Total

Interest 16,625 21,000 37,625
Salaries 35,000 43,750 78,750
Balance 90,000 60,000 150,000 Capital bal.
Share in NI 141,625 124,750 266,375
25. C
Insta, Capital before net income 285,000 Salaries
Share in net income 141,625 Interest
Intsa, Capital balance at end of 2021 426,625 Bonus
Balance
 CHAN DARA Total Share in NI
Salaries 261,000 259,000 520,000
Interest 30,000 30,000 60,000 26. C
Balance (2,500) (2,500) (5,000) Bonus
Share in NI 288,500 286,500 575,000 Balance
Share in NI
Bing Bong Bang Total
Interest 12,000 6,000 4,000 22,000 B = 20% (NI-B)
Salaries 30,000 20,000 50,000 B= 20% (960,000 - B)
Balance (35,000) (35,000) (35,000) (105,000) B = 160,000
Share in NI 7,000 (29,000) (11,000) (33,000)
27. D
A B Total Interest
Salaries 200,000 200,000 Salaries
Balance (168,000) (112,000) (280,000) Balance
Share in NL 32,000 (112,000) (80,000) Share in NI

28. D
Bonus
Interest
Balance
Share in NI

29. B Net Income

Underdepreciation
Overstated Inventory
Adjusted Net Income
Multiplied by:
Increase in RR and PP capital

30. A
Salary
Interest
Balance
Share in NI

Cap. Before NI
Share in NI
Ending Capital
tnership Profit 4,000,000 31. C Revenues
100/160 Expenses excldng sal. and int. but incldng bo
2,500,000 (99,400-24,000-2500)
Net Profit
Wash, Capital
160,000 Bonus = 20% (Adjusted Net Profit + Bonus
120,000 share in profit B = 20% (120,000 + B)
40,000 B = 24,000 + 0.20B
0.80B = 24,000
sh share in profit 120,000 B = 30,000
25%
tnership Profit 480,000 32. A

ome summary credit balance 180,000

s: Salary Allowances (93,000)
maining profit 87,000
3/5
ji's share in proft 52,200
ital balance before profit 90,000 33. A
ji, Capital balance, end 142,200 Salary
Interest
David Curry Tomas Total Balance
3,900 292 170 4,362 Share in NI
12,500 8,750 6,250 27,500
42,983 7,164 21,491 71,638
59,383 16,206 27,911 103,500 Cap. Before NI
70,000 11,800 (1,700) 80,100 Share in NI
129,383 28,006 26,211 183,600 Ending Capital

he partners wish to distribute the lowest possible amount of cash, 33

n their total capital must be lower than 183,600. Net Assets
David, Capital = 129383/60% 215,638 cannot be Net Adjustments
Curry, Capital = 28,006/10% 280,060 cannot be Capital
Tomas, Capital = 26,211/30% 87,370 can be Required Capital

David Curry Tomas Total

52,422 8,737 26,211 87,370
34. D
C I G Total Bonus
1,250 1,250 2,500 Interest
1,500 1,188 1,063 3,750 Balance
8,250 8,250 Share in NI
13,750 19,250 22,000 55,000
 24,750 21,688 23,063 69,500 35. A
Salary
C D Total Interest
160,000 160,000 Balance (5:2:3)
480,000 320,000 800,000 Share in net loss
640,000 320,000 960,000
Beginning cap of B
Share in net loss
20% (960,000 - B) Withdrawal
B, Capital end first year

Red White Blue Total Ending Cap

6,000 3,000 2,000 11,000 36
15,000 10,000 25,000 Salary
(17,500) (17,500) (17,500) (52,500) Interest
3,500 (14,500) (5,500) (16,500) Balance (5:2:3)
Share in net inco
Amy Kaye Total
60,000 60,000
40,000 32,000 72,000
252,000 216,000 468,000
352,000 248,000 600,000

19,500
derdepreciation (2,100)
erstated Inventory (11,400)
usted Net Income 6,000
50%
ease in RR and PP capital 3,000

X Y Z Total
198,000 198,000
56,400 40,500 14,700 111,600
(19,650) (23,580) (35,370) (78,600)
36,750 214,920 (20,670) 231,000

X Y Z
376,000 270,000 98,000 744,000
36,750 214,920 (20,670) 231,000
412,750 484,920 77,330 975,000
 192,900
ses excldng sal. and int. but incldng bonus
,400-24,000-2500) (72,900)
120,000

= 20% (Adjusted Net Profit + Bonus

% (120,000 + B)
,000 + 0.20B

X Y Z Total
198,000 198,000
56,400 40,500 14,700 111,600
(19,650) (23,580) (35,370) (78,600)
36,750 214,920 (20,670) 231,000

X Y Z
376,000 270,000 98,000
36,750 214,920 (20,670)
412,750 484,920 77,330

MN OP Total
220,000 309,375 529,375
8,250 (24,375) (16,125)
228,250 285,000 513,250

Amy Kaye Total

60,000 60,000
40,000 32,000 72,000
252,000 216,000 468,000
352,000 248,000 600,000
 A B C Total
26,000 13,000 39,000
14,300 10,400 14,300 39,000
(52,000) (20,800) (31,200) (104,000)
(11,700) 2,600 (16,900) (26,000)

ning cap of B 104,000

2,600
(13,000)
ital end first year 93,600

118300 93600 113,100

A B C Total
26,000 13,000 39,000
11,830 9,360 11,310 32,500
(9,750) (3,900) (5,850) (19,500)
28,080 18,460 5,460 52,000
 Partnership Dissolution

1. B Jay Sheryl Aileen Total

bal. before admission 180,000 180,000 360,000
asset revaluation 54,000 36,000 90,000
admission of aileen (78,000) (72,000) 150,000 -
cap balance after adm 156,000 144,000 150,000 450,000

2. D AC CC Bonus
old partners 525,000 500,000 25,000
new partner 175,000 200,000 (25,000)
Total 700,000 700,000

Jay Pee Agreed Capital

(500+25=525/75%=700k x 25%) 175,000
Add: Bonus to old partners 25,000
Contributed capital 200,000

3. C

4. A

5. B

6. C

7
8. B AC CC Bonus
old partner 135,000 130,000 5,000
new partner 15,000 20,000 (5,000)
total 150,000 150,000

9. B Sielo, Capital
(66k-2400+22k+6500-4k+3500)/2/3 * 1/3 45,800
Multiply by: 60%
Cash to be Invested 27,480
Add: Cash invested by Cleto 30,000
Total Cash of the Partnership 57,480

10. A Alice Melvyn

Capital balance 266,000 216,000
Net Adjustments 7,800 5,200
Capital before ad 273,800 221,200
Agreed Cap
(495k/80%) x 50% 309,375
(495k/80%) x 30% 185,625
Cash settlement (35,575) 35,575

11. B MM NN OO Total
before withdrawal 300,000 300,000 200,000 800,000
share in loss (5,000) (5,000) (5,000) (15,000)
withdrawal of OO (195,000) (195,000)
capital balance end 295,000 295,000 - 590,000

12. B Marly, Capital before withdrawal 200,000

Share in gain 5,000
Marly, Capital 205,000
Furniture (15,000)
Credited to Notes Payable 190,000

13 Leah Gian Leonard Sam Total

capital balances 250,000 150,000 180,000 580,000
purchase of interest (125,000) 125,000
investment 300,000 300,000
bonus 12,500 5,000 7,500 (25,000)
asset revaluation 60,000 24,000 36,000 120,000
Total Capital 197,500 179,000 223,500 400,000 1,000,000

AC CC
old partner 600,000 455,000 145,000
 new partner 400,000 425,000 (25,000)
1,000,000 880,000 120,000

Old P/L ratio New P/L ratio

Leah 50% (0.5 x 0.6) 30%
Gian 20% (0.2 x 0.6) 12%
Leonard 30% (0.3 x 0.6) 18%
Sam 40%

14. D Rob Bob Lob Total

capital balances 102,000 78,000 160,000 340,000
assset revaluation 21,600 14,400 36,000 72,000
Bonus to Rob 26,400 (7,543) (18,857)
Retirement of Rob (150,000) (150,000)
Capital bal. after ret - 84,857 177,143 262,000

15
16. A Drebin Regine Cherine Total
capbal before ad 350,000 300,000 650,000
investment of C 250,000 250,000
bonus to new part (35,000) (15,000) 50,000
bal. after admis 315,000 285,000 300,000 900,000

17. D Siony Tony Romy Total

capbal before ad 200,000 100,000 300,000
investment of R 125,000 125,000
bonus to old part 14,062.50 4,687.50 (18,750)
bal. after admis 214,062.50 104,687.50 106,250 425,000

18. D Old P/L ratio New P/L ratio

Barbie 50% (0.5 x 0.8) 40%
Kim 30% (0.2 x 0.8) 24%
Kathryn 20% (0.3 x 0.8) 16%
Marian 20%

19. A Corrected Net Income

(25,000 +1200-3100-2000+1500+900) 23,500
Barbie's interst 40%
Barbie share in Net Income 9,400

20. C
AC CC bonus
old partners 1,230,000 1,200,000 30,000 Total bonus (9000/30%)
new partner 410,000 440,000 (30,000)
total 1,640,000 1,640,000

Total Agreed Capital (1.2M + 30,000)/75% 1,640,000

Old partners' contributed capital (1,200,000)
Cash to be contributed by Ian 440,000

21. B Jake Cyrus Charicse Total

capital 180,000 180,000 360,000
revaluation 54,000 36,000 90,000
purchase of int (78,000) (72,000) 150,000
capital, end 156,000 144,000 150,000 450,000

22. A Purchase of 1/3 of Jake's interest 60,000

P/L sharing for excess (30,000 x 60%) 18,000
Total cash received by Jake 78,000
21. A M Capital Z Capital
capital 140,000 120,000
adjustments 16,500 16,500
bal 123,500 103,500

Net Assets 227,000

Ordinary Capital (100,000)
Share Premium 127,000

22.A Aliza Marie Charme

capital 120,000 155,000 115,000
share in loss (35,000) (87,500) (17,500)
asset reval 3,000 7,500 1,500
bonus to rem part 10,000 (15,000) 5,000
retirement (60,000)
capital balance 98,000 - 104,000

23. A Mars Len Brie Total

Salaries 120,000 240,000 360,000 720,000
Interest 400,000 100,000 500,000 1,000,000
Bonus 228,000 228,000
Balance 820,800 205,200 1,026,000 2,052,000
Share in NI 1,340,800 773,200 1,886,000 4,000,000
Salary withdraw (30,000) (60,000) (90,000) (180,000)
Orig Cap 4,000,000 1,000,000 5,000,000 10,000,000
Capital balance 5,310,800 1,713,200 6,796,000 13,820,000
bonus to rem 636,800 159,200 (796,000)
retirement (6,000,000) (6,000,000)
Balance 5,947,600 1,872,400 - 7,820,000
30,000