SOLUTION: AAA BBB

10% Interest (120,000; 60,000; 40,000) 12,000.00 6,000.00

Salaries 30,000.00
Balance- equally (35,000.00) (35,000.00)
7,000.00 (29,000.00)
AAA would increase by 7,000

ADAM EVE
ANNUAL SALARY 60,000.00 60,000.00
BONUS 60,000.00
BALANCE - equally 150,000.00 150,000.00
270,000.00 210,000.00

Bonus= 20% ( 480,000 - 120,000 - B)

=20% ( 360,000 - B) *Net Income is 360,000 after salaries but before bonus
= 72,000 - .20B
1.2 B = 72,000 NET INCOME for distribution to partners
1.2 B/1.2 = 72000/ 1.2 SALARIES OF PARTNERS
Bonus= 60,000 NET INCOME AFTER SALARIES
 AMOUNT MONTHS UNTIL DEC. 31
50,000.00 10/12
20,000.00 7/12
(15,000.00) 4/12

OR BALANCE MONTHS UNCHANGED

50,000.00 3
70,000.00 3
55,000.00 4
TOTAL
DIVide by 12 months

X CAPITAL 148,000.00
Y CAPITAL 260,000.00
Z CAPITAL 192,000.00
TOTAL CAPITAL OF OLD PARTNERS 600,000.00 80%

CAPITAL OF OLD PARTNERS 600,000.00

DIVIDE BY 80% 0.80
TOTAL CAPITAL OF NEW PARTNERSHIP 750,000.00 100%
TOTAL CAPITAL OF NEW PARTNERSHIP 750,000.00
MULTIPLY BY SHARE OF NEW PARTNER - A 20%
CASH CONTRIBUTION OF A 150,000.00 20%

CAPITAL BEFORE
REVALUATION REVALUATION
BAHAG, CAPITAL 360,000.00 120,000.00
HARI, CAPITAL 240,000.00 80,000.00
REYNA - NEW PARTNER
TOTAL 600,000.00 200,000.00

REYNA'S CAPITAL CONTRIBUTION 100,000.00

DIVIDE BY INTEREST PURCHASED 1/8
CAPITAL OF OLD PARTNERS AFTER REVALUATION 800,000.00
CAPITAL OF OLD PARTNERS BEFORE REVALUATION 600,000.00
REVALUATION 200,000.00

NOTE: ACTUALLY, IF REVALUATION METHOD IS USED THE AMOUNT CREDITED TO NEW PARTNER IS ALWAYS EQ

PLEASE DON'T FORGET TO STUDY THE ADDITIONAL PROBLEM ON OPERATIONS INVOLVING THE "ORDER OF PRIO
 CCC TOTAL
4,000.00 22,000.00
20,000.00 50,000.00
(35,000.00) (105,000.00) balancing figure
(11,000.00) (33,000.00) (33,000.00)

TOTAL
120,000.00
60,000.00
300,000.00
480,000.00

laries but before bonus

480,000.00
120,000.00
360,000.00
 41,666.67
11,666.67
(5,000.00)
48,333.33

150,000.00
210,000.00
220,000.00
580,000.00
48,333.33
 CAPITAL AFTER TRANSFER CAPITAL AFTER
REVALUATION ADMISSION
480,000.00 (60,000.00) 420,000.00
320,000.00 (40,000.00) 280,000.00
- 100,000.00 100,000.00
800,000.00 - 800,000.00

EW PARTNER IS ALWAYS EQUAL TO HIS ACTUAL CONTRIBUTION

LVING THE "ORDER OF PRIORITY".

Order of Priority Octavio Colin
10% Interest on average capital 4,290.00 5,983.33
Bonus after interest on average capital 9,372.67
Annual salaries (60:54) 44,396.84 39,957.16
Totals 58,059.51 45,940.49

Computation of Average Capital - Octavio Months Peso

Date Amount to December Months
January 1 81,600.00 3 244,800.00
April 1 30,000.00 9 270,000.00
Total 12 514,800.00
Divide by 12.00

Computation of Average Capital - Colin Months Peso

Date Amount to December Months
January 1 74,000.00 7 518,000.00
August 1 40,000.00 5 200,000.00
Total 12 718,000.00
Divide by 12.00

Bonus computation:
Net income 104,000.00
Total interest (10,273.33)
Net income after interest 93,726.67
Multiply by: 10%
Bonus to Octavio 9,372.67
 Salaries computation:
Net income 104,000.00
Less: Total interest 10,273.33
Bonus to Octavio 9,372.67 19,646.00
Net income available for salary distribution 84,354.00

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NOTE: If there is no provision for "ORDER OF PRIORITY", then the solution will be as follows:

Octavio Colin
Interest on average capital 4,290.00 5,983.33
Bonus after interest on average capital 9,372.67
Annual salaries (60:54) 60,000.00 54,000.00
Balance: 60:40 (17,787.60) (11,858.40)
Totals 55,875.07 48,124.93
 Change the interest to
10%

Total
10,273.33
9,372.67
84,354.00
104,000.00

Average
Capital

42,900.00

Average
Capital

59,833.33
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e as follows:

Total
10,273.33
9,372.67
114,000.00
(29,646.00)
104,000.00