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Partnership Operation
Traffic and Pollution are partners who have an agreement to share profit or
loss in the following manner:
Traffic Pollution
Annual Salaries P 250,000 P 400,000

Interest on Average Balances 10% 10%
Bonus (based on net income 10%
after salaries and interest
Remainder 60% 40%
Traffic’s and Pollution’s average capital balances for the year ended
December 31, 2020 are P 600,000 and P 300,000, respectively.
QUESTIONS:
a. Assuming that the partnership generated a profit of P 900,000, how
much is the total share of Pollution in the net income for the year
ended 2020?
b. Assuming that the partnership generated a profit of P 710,000, how

much is the total share of Pollution in the net income for the year
ended 2020 if income is distributed to the partners only as far as it is
available?
Partnership Operation
Partners A, B and C have average capital balances of P96,000, P48,000 and

P32,000, respectively, during 2020.
The partners agreed on the following:

 Each partner receives 10% interest on his average capital balance.
 After deducting salaries of P24,000 for A and P16,000 for C, the
residual profit or loss is divided equally.
In 2020, the partnership sustained a P26,400 net loss before partner’s

interests and salaries.
1.How much would partner C’s capital account change?

a.P12,800 decrease
b.P19,200 increase
c.P8,800 decrease
d.P8,000 increase
Partnership Dissolution
1. Chest and Legs are partners who share profits and losses in the ratio of
60:40, respectively. On January 1, 2020, their respective capital accounts
were as follows:
Chest P60,000
Legs P50,000
On that date, Abs was admitted as a partner with one-third interest in

capital, and profits for an investment of P40,000. The new partnership,
Workout A began with a total capital of P150,000.
Immediately after Abs’ admission, Chest’s capital should be:
a.50,000
b.54,000
c.56,667
d.60,000
2. Back, Biceps and Abs were partners with capital balances on January 1,
2020 of P300,000, P200,000 and P100,000, respectively.
On July 1, 2020 Back retires from the partnership. On the date of retirement,
the partnership net loss is P60,000 and the partners agreed that certain
asset is to be revalued at P80,000 from its original cost of P50,000.
The partners agreed further to pay Back P255,000 in settlement of his

interest. The remaining partners continue to operate under a new
partnership, Workout B partnership.
What is the total capital Workout B partnership?

a. P345,000
b. P285,000
c. P340,000
d. P280,000
Partnership Liquidation (Lump Sum)
Partnership Liquidation (Lump Sum)
Partnership Liquidation (Installment)
Partnership Liquidation
A, B and C are partners in a business being liquidated The partnership has

cash of P22,000, noncash assets with a book value of P264,000 and liabilities
of P173,250. The following data relates to the partners as of June 1, 2013:
 A has capital balance of P129,250, personal assets of P27,500,
personal liabilities of P13,750
 B extended a loan to the partnership in the amount of P13,750, deficit
of P38,500 personal assets of P41,250, personal liabilities of P16,500
 C has a capital balance of P8,250, personal assets of P68,750 and
personal liabilities of P41,250.
 Their profit and loss ratio is 3:1:1, A, B and C, respectively.
On June 12, 2013, assets with a book value of P82,500 were sold for
P55,000 cash. The proceeds were used to pay off liabilities of the
partnership. During the remainder of June, no additional assets were realized
and the outside creditors began to pressure the partnership for payment.
On July 3, the partners agreed to contribute personal assets to

whatever extent possible, in order to eliminate their respective deficits.
Shortly thereafter, assets with book value of P55,000 and the fair value of
P63,250 were distributed to A.
Assuming additional noncash assets with book value P110,000 were

sold in July for P148,500.
How much cash would be distributed to C?

a. P12,650
b. P3,850
c.P8,800
d. P550
Corporate Liquidation
Compute the following:
Estimated deficiency to unsecured creditors
Payment to partially secured creditors
Payment to unsecured creditors w/

Priority
Payment to unsecured creditors w/o priority

Long term Construction Contracts

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Partnership Operation

Annual Salaries P 250,000 P 400,000

b. Assuming that the partnership generated a profit of P 710,000, how

Partners A, B and C have average capital balances of P96,000, P48,000 and

The partners agreed on the following:

In 2020, the partnership sustained a P26,400 net loss before partner’s

1.How much would partner C’s capital account change?

On that date, Abs was admitted as a partner with one-third interest in

Immediately after Abs’ admission, Chest’s capital should be:

The partners agreed further to pay Back P255,000 in settlement of his

What is the total capital Workout B partnership?

A, B and C are partners in a business being liquidated The partnership has

On July 3, the partners agreed to contribute personal assets to

Assuming additional noncash assets with book value P110,000 were

How much cash would be distributed to C?

Payment to partially secured creditors

Payment to unsecured creditors w/

Payment to unsecured creditors w/o priority

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