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EXERCISES
1. 1) Sales 772,160
Sales Discount 12,160
Income & Expense Summary 760,000
2) Merchandise Inventory, End 290,000
Income & Expense Summary 324,180
Merchandise Inventory, Beg. 137,900
Purchases 463,430
Freight In 12,850
3) Income & Expense Summary 134,120
Selling Expenses 71,080
General Expenses 63,040
Income & Expense Summary
2) 324,180 1) 760,000
3) 134,120
Balance - 301,700
4) Income & Expense Salary (301,700 x 30%) 90,510
Income Taxes Payable 90,510
Blanca Bola Total
a) 10% interest credit in excess of P300,000 10,000 10,000
b) 15% interest charge on deficient contribution (15,000) ( 15,000)
c) Annual salaries 60,000 60,000 120,000
d) remaining 2:1 64,127 32,063 96,1910
134,127 77,063 211,190
Blanca, Drawings Bola, Drawings
57,500 5) 134,127 50,000 5) 77,063
76,627 27,063
5) Income & Expense Summary 211,190
Blanca, Personal 134,127
Bola, Personal 77,063
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Case C Quizon Eron Total
Salaries 60,000 x 3/12 @ 15,000.00 15,000.00 30,000.00
Balance 270 / 480 x 22,500 12,656.00 - 12,656.00
210 / 480 x 22,500 - 9,844.00 9,844.00
Profit share 27,656.00 24,844.00 52,500.00
Capital balance 270,000.00 210,000.00 480,000.00
Drawing balance (33,000.00) ( 9,000.00) (42,000.00)
264,656.00 225,844.00 490,500.00
Salaries ( 15,000.00) ( 15,000.00) ( 30,000.00)
Partners Equity 249,656.00 210,844.00 460,500.00
4. a. X Y Z Total
10% interest on capital in excess of 3,000,000 10,000.00 10,000.00
Annual salaries 150,000.00 200,000.00 250,000.00 600,000.00
10% Bonus 80,909.00 80,909.00
Residual 4:4:2 323,636.00 323,636.00 161,818.00 809,090.00
Total 473,636.00 523,636.00 502,727.00 1,500,000.00
Let B = Bonus
= 10% (1500,000 10,000 600,000 B)
= 89,000 - .1B
= 89,000 / 1.1
= 80,909
b. X Y Z Total
T 10% Interest 10,000 10,000
Annual Salaries 150,000 200,000 250,000 600,000
10% Bonus 150,000 150,000
Residual 4:4:2 600,000 600,000 300,000 1,500,000
Total 750,000 800,000 710,000 2,260,000
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9. 2010 Fe, Drawing (3/5 x 99,000) 59,400
Al , Drawing (2/5 x 99,000) 39,400
Income Summary 99,000
2011 Income Summary 55,000
Fe, Drawing (55,000 x 6/11) 30,000
Al, Drawing (55,000 x 5/11) 25,000
10. a) Fe Al Total
Salary 72,000 60,000 132,000
Remaining Divided Equally 1,500 1,500 3,000
Recorded share in net income 73,500 61,500 135,000
Should be 70,909 59,091 130,000
Overstated Distribution 2,591 2,409 5,000
11. Fe Al Total
Profit share at net income reported 72,000 60,000 132,000
Should be:
Salary 72,000 60,000 132,000
Remainder equally 2,500 2,500 5,000
Total 74,500 62,500 137,000
Understated Distribution in 2011 2,500 2,500 5,000
Overstated Distribution in 2010 2,591 2,409 5,000
Net Over (Under) 91 (91)
Correcting entry in 2012:
Fe, Drawing 91
Al, Drawing 91
MULTIPLE CHOICE
1. P240,000 X 25 / 125 48,000 Answer: B
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2. Withdrawal 104,000 OR Capital
Less: Asset contribution 20,000 Withdrawal 104,000 20,000 Asset
84,000 36,000 NI Share
Less: Net decrease 48,000 Net 48,000
36,000
0 Net Income Share of 36,000/30%
Net Income for 2010 (B) 120,000 = Total Net Income of P120,000
3. Answer: D William Aboitiz Total
Salary 7,200 16,000 23,200
10% 2,000 1,600 3,600
Remainder, equally (8,600) (8,600) (17,200)
600 9,000 9,600
4. Answer: D Ellen Greg William Total
a) salary 30,000 20,000 50,000
b) 10% interest on average capital balance 12,000 6,000 4,000 22,000
c) remainder to be divided equally (11,000) (11,000) (11,000) (33,000)
1,000 25,000 13,000 39,000
7. G H Total
Salary 12,000 12,000 Let x = NI before S, I, B
5% interest on beginning capital 1,250 1,250 x = 12,000+1,250+.2x+46,750
20% bonus 15,000 15,000 .8x = 60,000
Balance 90%, 10% 42,075 4,675 46,750 = 75,000
42,075 19,675 75,000
Revenues 96,450
Expenses ( 49,700)
Net Income after salaries, 46,750 Answer: A (75,000 x 20% = 15,000
Interest, bonus
8. a) Bueno Perez Total
Salary 60,000 60,000
5% interest on starting capital 8,750 1,250 10,000
Bonus of 15% 19,800 19,800
Remaining 80%, 20% 33,760 8,440 42,200
42,510 89,490 132,000
9. Hermie 130,000 x 6 780,000
160,000 x 3 480,000
150,000 x 3 450,000
1,710,000 /12 = 142,500
Mar 190,000 x 7 1,330,000
210,000 x 2 420,000
200,000 x 3 600,000
2,350,000 /12 = 195,833
Amy 270,000 x 10 2,700,000
250,000 x 2 500,000
3,200,000 /12 = 266,667
Profit share: Hermie Mar Amy Total
Salaries 24,000 18,000 12,000 54,000
12% interest 17,100 23,500 32,000 72,600
9,880 19,760 19,760 49,400
Answer: E 50,980 61,260 63,760 176,000
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8,000 Additional 8,000
Ending 100,000 Net Income 48,000
12.
A B C Total
Interest 36,000 18,000 12,000 66,000
Salariawingses 90,000 60,000 150,000
Remainder (105,000) (105,000) (105,000) (315,000)
21,000 ( 99,000)
Answer A
13.
A B C D Total
5% interest 2,500 1,250 1,250 1,000 6,000
Salaries 5,000 3,000 8,000
3:3:2:2 5,000 16,667
12,500 30,667
Answer C
Answer A
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