Answer: D.

P32 333

41. AA, BB, and CC are partners with average capital balances during 20x5 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 AA and P82 625 to CC, the residual profits or loss are divided equally.
In 20x5, the partnership has a net loss of P125 624 before the interest and salaries to partners.
By what amount should AA’s and CC’s capital account change –increase (decrease)?

Answer: A. AA, P30 267; CC, (P40 448)

42. The same information in Number 41, except the partnership had a loss of P125 624 after the interest and salaries to
partners, by what amount should BB’s capital account change –increase (decrease)?

Answer: D. (18 010)

43. XX, YY, and ZZ formed a partnership on January 1 20x5. Each contributed P120 000. Salaries were to be
allocated as follows:

XX YY ZZ
P30 000 P30 000 P45 000

Drawings were equal to salaries and be taken out evenly throughout the year. With sufficient partnership net
income, XX and YY could split a bonus equal to 25% of partnership net income after salaries and bonus (in no
event could the bonus go below zero).
Remaining profits were to be split as follows: 30% for XX: 30% for YY, and 40% for ZZ. For the year, the
partnership net income was P120 000.

Compute the ending capital for each partner:

Answer: C. XX, P125 100; YY, P125 100; ZZ, P124 800

44. CC, PP and AA, accountants, agree to form a partnership and to share profits in the ratio of 5:3:2. They also
agreed that AA is to be allowed a salary of P28 000, and that PP is to be guaranteed P21 000 as his share of the
profits. During the first year of operation, income from fees are P180 000, while expenses total P96 000. What
amount of net income should be credited to each partner’s capital account?

Answer: B. CC, P25 000; PP, 21 000; AA, P38 000

45. Hunt, Rob, Turman, and Kelly own a publishing company that they operate as a partnership. The partnership
agreement includes the ff.:
Hunt receives a salary of P20 000 and a bonus of 3% of income after all bonuses.
Rob 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:

Hunt ………………….. P50 000

Rob …………………… P45 000
Turman ………………...P20 000
Kelly ………………….. P47 000

Any remaining profits and loss are to be divided equally among the partners. Determine how profit of P105,000
would be allocated among the partners.