Reference no: EM132758193
Questions -
Q1. Partners AA and BB have profit and loss agreement with the following provisions: salaries of P30,000 and P45,000 for AA and BB, respectively; a bonus to AA of 10% of net income after salaries and bonus; and interest of 10% on average capital balances of P20,000 and P35,000 for AA and BB, respectively. One-third of any remaining profits will be allocated to AA and the balance to BB. If the partnership had net income of P102,500, how much should be allocated to Partner AA?
a. 44,250
b. 47,500
c. 41,000
d. 41,167
Q2. The ABC Partnership has assets with book value of P240,000 and a market value of P195,000, outside liabilities of P70,000, loans payable to Partner A of P20,000 and capital balances for Partners A, B and C of P70,000, P30,000 and P50,000 respectively. The partners share profits and losses equally.
How would the first P100,000 of available assets be distributed?
a. P70,000 to outside liabilities, P20,000 to A, and the balance equally among the partners
b. P70,000 to outside liabilities and P30,000 to A
c. P70,000 to outside liabilities, P25,000 to A and P5,000 to C
d. P40,000 to A, P20,000 to C and the balance equally among partners
Q3. Partners Charlie and Delta share profits in the ratio of 6:4 respectively. On December 31, 2018 their respective capital balances were Charlie, P120,000 and Delta, P100,000. On that date Mae was admitted as partner with a one-third interest in capital and profits for an investment of P80,000. The new partnership began in 2019 with total capital of P300,000. Immediately after Mae's admission, Charlie's capital should be:
a. P120,000
b. P108,000
c. P100,000
d. P160,000