UNIVERSITY OF CEBU-BANILAD

COLLEGE OF BUSINESS ADMINISTRATION

BANILAD, CEBU CITY
Accounting 2 (Partnership Operations)
Name ___________________ Course & Yr. _______ Schedule _______________ Score __________

I – Encircle the letter of the best answer in each of the given statement/s.

1. The equity of a partner in the net assets of the partnership is different from the partner’s share in
profits or losses.
A. True
B. False
2. The profits or losses shall be distributed in conformity with the agreement. If only the share of each
partner in the profits has been agreed upon, the share of each in the losses shall be in the same
proportion.
A. True
B. False
3. The industrial partner is not liable for losses because he cannot withdraw the work or labor done by
him.
A. True
B. False
4. The basis on which profits or losses are shared is a matter of agreement among the partners and may
not necessarily be the same as their capital contribution ratio.
A. True
B. False
5. When the beginning capital balances are used in allocating profits, year-end investments are
discouraged.
A. True
B. False
6. Interest on loans from partners is recognized as partnership income.
A. True
B. False
7. Under the pure capital ratio plan of allocating profits, the partner who invested more capital will
ultimately shoulder a bigger share of the net loss.
A. True
B. False
8. The income summary account is credited in the entry to record distribution of profits.
A. True
B. False
9. A partner who contributes money or property as well as his work or industry to the capital of the
partnership is called industrial partner.
A. True
B. False
10. The basis for distribution of profits or losses is a matter of agreement among the partners. It may be
based on their capital contribution ratio.
A. True
B. False
11. Under which of the following circumstance that a capital account of a partner is effected by a credit?
A. when there is additional investment C. when there is an excess amount allowable for withdrawal
B. when there is a share in profit D. when there is a permanent withdrawal
12. Personal withdrawal by a partner in anticipation for profits are not viewed as permanent in character. This
requires a –
A. debit to drawing account C. debit to capital account
B. credit to capital account D. credit to drawing account
13. The drawing account will be held open until such time that Statement of Financial Position is prepared with a
supporting.
A. Statement of Comprehensive Income C. Statement of Cash Flows
B. Statement of Changes in Partners’ Equity D. Statement of Financial position
14. Which of the following are needed in determining the Statement of Changes in Partners Equity.
A. partners’ equity at the beginning of the period C. partners’ drawing
B. share in profit D. all of the above
15. In preparing closing entries of the partnership, -
A. all nominal accounts are reduced to zero balance
B. Income & Expense Summary is closed to Capital Account
 C. Income & Expense Summary is closed to Drawing Account
D. Drawing Account is left open
16. Failure to stipulate on how profit and loss be divided among partners. It should be –
A. in proportion to what has been contributed C. equally divided
B. settled in the court of law D. by other legal means agreeable among partners
17. In case the partnership makes profit, how will an industrial partner be given a share?
A. what is just equitable B. equally C. arbitrarily D. depending on the court’s decision
18. A partner who contributes money or property as well as his work or industry to the partnership is a/an –
A. industrial partner B. capitalist-industrial partner C. capitalist partner D. dormant partner
19. The most equitable basis of distributing profit by way of capital contribution is –
A. beginning capital B. ending capital C. average capital D. equally
20. If a partner incurs personal expense but are paid by the partnership, such expense is chargeable to –
A. partnership’s expense account C. partner’s expense account ( advances to officers and employees)
B. partner’s drawing account D. partner’s receivable account

III – Give the requirements accordingly with supporting computation/s.

1. Mr. Wai and Mr. Tuon are partners of WAI TUON TRADING. At the end of the calendar year 2003,
the income and expense summary shows a credit balance of P1,500,000. The following data were
taken from their respective capital account ledgers.

Mr. Wai Mr. Tuon

Jan 1 Balance P600,000 Jan 1 Balance P1,200,000
Mar 31 Investment 120,000 April 1 Withdrawal 60,000
Aug 1 Withdrawal 120,000 Sept. 30 Investment 180,000

Required: Distribute the partnership net income assuming the following were used as the basis:
Consider each case separately)

Mr. Wai Mr. Tuon

a. Beginning capital ratio ________ _________
b. Ending capital ratio ________ _________
c. An arbitrary ratio of 1 : 4 ________ _________

2. Assume that the following are the balances of selected accounts of Khalyl Dionne’s Enterprise on
December 31, 2015, the end of its accounting period.
Debit Credit
Merchandise Inventory, 1/1/15 P800,000
Ms. Khalyl, Capital P1,200,000
Ms. Dionne, Capital 1,400,000
Ms. Khalyl, Drawing 100,000
Ms. Dionne, Drawing 140,000
Sales 16,000,000
Sales Discounts 100,000
Purchases 13,000,000
Freight In 20,000
Purchase returns and allowances 200,000
Salaries expense 960,000
Taxes and Licenses 320,000
Depreciation 880,000
Supplies Expense 160,000

Merchandise inventory on December 31, 2015 was P400,000. The partners shared profits and losses
equally.

Required:
1. Closing entries on December 31, 2105.
2. Share of Ms. Khalyl in the net income ________________
3. Journal entry to distribute net profit to partners.
_
3. Mr. Lee Bhug and Mr. Jhud Kho are partners of Sarangani Machine Shop. The Income and Expense
Summary account before final closing shows a credit balance of P240,000 at the end of the fiscal
year.

The following were taken from their respective capital account ledgers:

Mr. Lee Bhug Mr. Jhud Kho

January 1 Balance P220,000 January 1 Balance P300,000
April 1 Withdrawal 16,000 March 1 Investment 20,000
September 1 Investment 8,000 August 1 Withdrawal 30,000

Required: Compute the following with supporting schedule:

1. Share of each partner in the net income assuming 20% interest is allowed to partners based on
ending capital balances, P20,000 salaries to each of the partners and the remaining amount is
distributed based on arbitrary ratio 6:4.
Mr. Lee Bhug ____________________ Mr. Jhud Kho _________________
2. Share of each partner in the net income assuming 10% based on beginning capital is provided
and the remaining amount is distributed based on ending capital balances.
Mr. Lee Bhug ___________________ Mr. Jhud Kho _________________
3. Average capital of Mr. Jhud Kho _________________

4. The capital accounts of Michael and Jackson as partners of M & J Enterprises are shown below:

Michael, Capital Jackson, Capital

Aug. 1 P20,000 Jan 1 160,000 Mar 1 10,000 Jan 1 240,000
Nov 1 40,000 Sep 1 20,000

The net income during the year was P240,000.

Required:
1. Average capital of Michael _______________
2. Average capital of Jackson _______________
3. Compute each partners share of net income using average capital ratio.
Michael _____________ Jackson _____________

5. Shaquil Oneal and Kobe Bryant, partners of Lakers Marketing showed to you their partnership
agreement as follows:

a. Oneal will be allowed to an annual salary of P30,000 while Bryant, P45,000.

b. Both are allowed to a 10% interest on their beginning capital balances of P240,000 and P150,000
respectively.
c. Any remainder, equally.

Required: Compute the share of each partner in the net income under the following separate cases.
Case A – Net income is P120,000.
Oneal ______________ Bryant ________________

Case B – Net Income is P90,000

Oneal ______________ Bryant ________________

Case C – Net Loss is P30,000

Oneal ______________ Bryant ________________

6. Claro and Carla are owners of Clear Coffee Shop. They started their partnership on January 1, 2015.
Their agreement provided, among others, the following with regards to the division of profit and loss.

1. Claro shall receive an annual salary of P60,000.

2. Carla shall be entitled for an annual bonus of 10% of Net Income.
3. The remaining balance shall be divided equally.
 The net income for six (6) months period ended June 30, 2015 is P27,000.

Required: Compute the share of each partner.

Claro _________________ Carla ________________

7. Mr. Thick and Mr. Yhaub are partners of ThickYhaub Trading Center. The Income and Expense Summary
account before final closing shows a credit balance of P240,000 at the end of the year.
The following data were taken from their respective capital account ledgers:
Mr. Thick Mr. Yhaub
Jan. 1 Balance P110,000 Jan. 1 Balance P150,000
April 1 Withdrawal 8,000 Mar. 1 Investment 10,000
Sept. 1 Investment 4,000 Aug. 1 Withdrawal 15,000
Required:
1. Compute the ending capital balance of Mr. Yhaub _______________
2. Average capital balance of Mr. Thick __________________
3. Net increase (decrease) on capital account of Mr. Yhaub _______________
4. Share in net profit using ending capital ratio.
Mr. Thick _______________
Mr. Yhaub _______________

8. Khalyl and Khyle are partners of Cebu Vintage Car. The Income and Expense Summary account before final
closing shows a credit balance of P450,000 at the end of the fiscal year.

The following were taken from their respective capital account ledgers:

Khalyl
Jan. 1 Balance P752,000
Oct. 1 Withdrawal 70,000
Dec. 1 Investment 50,000

Khyle
Jan. 1 Balance P680,000
March 1 Investment 80,000
Nov. 1 Withdrawal 10,000
Dec. 1 Investment 40,000

Required: Compute the profit to be distributed to partners under the following assumptions.

1. Annual salaries of P45,000 and P30,000; 8% interest based on beginning capital balance of each
partner and remainders equally.
Khalyl _________________ Khyle _______________

2. 20% interest is allowed to partners based on the ending capital balances; annual salaries to each
partner, P50,000 and P20,000; and balance for distribution according to the ratio of 50% - 50%.
Khalyl __________________ Khyle _________________

3. Annual salaries of P120,000 and P100,000; Bonus to Khalyl of 25% of profit before salaries to both;
remainder is divided based on average capital ratio.
Khalyl __________________ Khyle _________________

9. Mr. Kho and Mr. Diego are partners of “KHODIGO TRADING’. At the end of the calendar year 2009, the
income and expense summary shows a credit balance of P250,000.
The following data were taken from their respective capital account ledgers.
Mr. Kho Mr. Diego
January 1 Balance P100,000 January 1 Balance P200,000
March 31 Investment 20,000 April 1 Withdrawal 10,000
August 1 Withdrawal 20,000 Sept. 30 Investment 30,000
The partners have agreed to divide their partnership’s income among themselves on the following basis:
a. Mr. Kho, being the managing partner will receive P30,000 annual salary while Mr. Diego will receive
P12,000.
b. In addition, Mr. Kho will receive a bonus of 10% of net income after deducting salaries.
c. 10% interest is allowed to partners based on ending capital balances.
d. Remaining balance of the net income will be distributed based on the ratio 2:3.
Required:
1. Average capital balance of Mr. Kho ________________
2. The ending capital balance of Mr. Diego ______________
 3. The total interest allowed to partners is _______________
4. The partners total beginning capital balance is ________________
5. The amount of bonus that Mr. Kho will receive ________________
6. The journal entry to record the salaries allowed to partners as part of profit and loss distribution.
_

7. The total share of Mr. Diego in the distribution of net income _______________
8. The share of Mr. Diego in the remaining balance (remainder) of profit or loss is
_________________

Key :
I-
1. A
2. A
3. A
4. A
5. A
6. B
7. A
8. B
9. B
10. A
11. A
12. A
13. B
14. D
15. A
16. A
17. A
18. B
19. C
20. C

II –

1. Wai Tuon
a. 500,000 1,000,000
b. 468,750 1,031,250
c. 300,000 1,200,000

2. 1. Sales 16,000,000
Sales discounts 100,000
Income & Expense Summary 15,900,000
#
- Purchase Return & Allowances 200,000
 Income & Expense Summary 13,620,000
Purchases 13,000,000
Freight In 20,000
Merchandise Inventory, Beg. 800,000
#
- Merchandise Inventory, End 400,000
Income & Expense Summary 400,000
#
- Income & Expense Summary 2,320,000
Salaries Expense 960,000
Taxes and Licenses 320,000
Depreciation 880,000
Supplies Expense 160,000
#
- Income & Expense Summary 360,000
Ms. Khalyl, Drawing 180,000
Ms. Dionne, Drawing 180,000
#
2. P180,000
3. refer above

3. Lee Bhug Jhud Kho

1. 122,160 117,840
2. 101,394.42 138,605.58
3. 304,166.67

4. 1. 158,333.33
2. 225,000
3. Michael 99,130.43
Jackson 140,869.57

5. Case A Oneal 57,000 Bryant 63,000

Case B Oneal 42,000 Bryant 48,000
Case C Oneal (18,000) Bryant (12,000)

6. Claro 27,150
Carla (150)

7. 1. 145,000
2. 105,333.33
3. (5,000)
4. Thick 101,354.58
Yhaub 138,645.42

8. 1. Khalyl 235,380
Khyle 214,620

2. Khalyl 234,200
Khyle 215,800

3. Khalyl 290,868 / 290,868.08

Khyle 159,132 / 159,131.92

9. 1. 106,666.67
2. 220,000
3. 32,000
4. 300,000
5. 20,800
6. Income & Expense Summary 42,000
Mr. Kho, Drawing 30,000
Mr. Diego, Drawing 12,000
 #
7. 127,120
8. 93,120