1.

Faye is trying to decide whether to accept a salary of $60,000 or a salary of

$25,000 plus a bonus of 20% of net income after the bonus as a means of
allocating profit among the partners. What amount of income would be
necessary so that Faye would consider the choices to be equal? *

2. Elie is trying to decide whether to accept a salary of $60,000 or a salary of

$25,000 plus a bonus of 20% of net income after salaries and bonus as a
means of allocating profit among the partners. Salaries traceable to the other
partners are estimated to be $75,000. What amount of income would be
necessary so that Elie would consider the choices to be equal?

3. Jessie is a partner and has an annual salary of $30,000 per year, but he
actually draws $3,000 per month. The other partner in the partnership has an
annual salary of $40,000 and draws $4,000 per month. What is the total
annual salary that should be used to allocate annual net income among the
partners?

4. A partnership has the following accounting amounts:(1) Sales =

Php70,000; (2) Cost of Goods Sold = Php40,000; (3) Operating Expenses =
Php10,000; (4) Salary allocations to partners = Php13,000; (5) Interest paid to
banks = Php2,000; (6) Partners' withdrawals = Php8,000.Partnership net
income (loss) is ____.

5.Which of the following characteristics of a partnership most likely explains

why a public accounting firm is organized as a partnership from a public
policy viewpoint?
A partnership is not a taxable entity.
A partnership is characterized by unlimited liability.
A partnership is characterized by a fiduciary relationship among the partners.
Salaries to the partners are not considered a component of net income.
6. Liza and Enrique are considering forming a partnership whereby profits
will be allocated through the use of salaries and bonuses. Bonuses will be
10% of net income after total salaries and total bonuses. Liza will receive a
salary of Php30,000 and a 10% bonus. Enrique has the option of receiving a
salary of Php40,000 and a 10% bonus or simply receiving a salary of
Php52,000. Required:Determine the level of income that would be necessary
so that Enrique would be indifferent to the profit-sharing option selected.

7. Daniel and Kathryn have decided to form a partnership to provide

environmental testing services to industry. The individuals will share profits
equally and have conveyed the following assets and liabilities to the
partnership: Daniel: Cash- Php20,000, Equipment (FV)- 12,000, Liabilities-
8,000. Kathryn: Equipment (FV)-34,000, Vehicles- 6,000, Liabilities- 20,000.
Required:Calculate the balance of Daniel in the partnership.

8. The profit and loss sharing agreement for the Andie, Angge, and Maricris
partnership provides that each partner receive a bonus of 5% on the original
amount of partnership net income if net income is above Php25,000. Andie
and Angge receive a salary allowance of Php7,500 and Php10,500,
respectively. Maricris has an average capital balance of Php260,000, and
receives a 10% interest allocation on the amount by which his average capital
account balance exceeds Php200,000. Residual profits and losses are
allocated to Andie, Angge, and Maricris in their respective ratios of 7:5:8.
How much will be the share of Andie?

Your answer
9. Ben, David, and Xian operate a partnership with a complex profit and loss
sharing agreement. The average capital balance for each partner on December
31, 2006 is $300,000 for Ben, $250,000 for David, and $325,000 for Xian.
An 8% interest allocation is provided to each partner. Ben and David receive
salary allocations of $10,000 and $15,000, respectively. If partnership net
income is above $25,000, after the salary allocations are considered (but
before the interest allocations are considered), Xian will receive a bonus of
10% of the original amount of net income. All residual income is allocated in
the ratios of 2:3:5 to Ben, David, and Xian, respectively. If the partnership
incurs net loss of 36,000, how much will be the share of Xian? (Write your
answer as negative if loss.)

10. The profit and loss sharing agreement for the Chloe, Danica, and Mae
partnership provides for a Php15,000 salary allowance to Danica. Residual
profits and losses are allocated 5:3:2 to Chloe, Danica, and Mae, respectively.
In 2006, the partnership recorded Php120,000 of net income that was
properly allocated to the partner's capital accounts. On January 25, 2007,
after the books were closed for 2006, Chloe discovered that office equipment,
purchased for Php12,000 on December 29, 2006, was recorded as office
expense by the company bookkeeper. Prepare the necessary correcting
entry/ies. (Format Dr. Account XXXX Dr. Account XXXX Cr. Account
XXXX Cr. Account XXXX)

SUBMIT