CHAPTER 2

MULTIPLE CHOICE ANSWERS AND SOLUTIONS

2-1: d
Jordan
P120,000
( 10,000)
P110,000

Annual salary
Balance, equally
Total

Pippen
Total
P80,000 P200,000
( 10,000) ( 20,000)
P 70,000 P180,000

2-2: a
Bonus (.20 X P90,000)
Interest
JJ (.15 X P100,000)
KK (.15 X P200,000)
LL (.15 X P300,000)
Balance, equally
Total profit share

JJ
P18,000

KK

P15,000

P 30,000

( 6,000)
P27,000

( 6,000)
P 24,000

LL

Total
P 18,000

)
)
P45,000)
90,000
( 6,000) ( 18,000)
P39,000 P 90,000

2-3: a
2-4: a
Allan
Interest
Allan - .10 X (P40,000 + 60,000 /2)
Michael - .10 X (P60,000 + 70,000/2)
Balance, equally
Total

P 5,000
_14,000
P 19,000

Michael

Total

)
P 6,500) P 11,500
_14,000 __28,000
P20,500 P 28,000

2-5: a
Fred
P12,000
30,000
( 35,000)
P 7,000

Interest (.10 of average capital)

Salaries
Balance, equally
Total

Greg
P 6,000
( 35,000)
( P29,000)

Henry
Total
P 4,000 P 22,000
20,000
50,000
( 35,000) (105,000)
(P11,000) (P 33,000)

2-6: b
Average Capital
Date
January 1
July 1
August 1

Capital
Balance
140,000
180,000
165,000

Average capital - P1,845,000/12

Interest
Partnership Operations

Months
Unchanged
6
1
5
12

Peso
Months
P 840,000
180,000
__825,000
P1,845,000

P153,750

(P153,750 X 10%) =

P 15,375
21

2-7: c
Date
January 1
April 1
June 1
September 1

Capital
Balance
P16,000
17,600
19,200
15,200

Months
Unchanged
3
2
3
4
12

Average Capital(P201,600/12) =

Peso
Months
P 48,000
35,200
57,600
__60,800
P201,600

P16,800

2-8: a
Net profit before bonus
Net profit after bonus (P24,000/120%)
Bonus to RJ
Balance (P24,000-P4,000)X3/5
Total profit share

P 24,000
__20,000
4,000
__12,000
P 16,000

2-9: a
AM
P 3,600
7,500
( 7,720)
P 3,380

Total
P 6,800
22,500
( 19,300)
P 10,000

Net income after salary, interest and bonus

Add back: Salary (P10,000 X 12)
P120,000
Interest (P250,000 X .05)
__12,500
Net income after bonus (80%)
Net income before bonus (P600,000/80%)
Paul's bonus

P467,500

Interest
Salaries
Balance, 3:2
Total

LT
P3,200
15,000
(11,580)
P 6,620

2-10: b

_132,500
P600,000
_750,000
P150,000

2-11: b
CC

22

Salary
Balance
Additional profit to DD
Total

P14,000
( 1,500)
P12,500

Net income
Fees Earned
Expenses
Net Income

P90,000
_48,000
P42,000

DD
P 8,400
__2,100
P10,500

EE
Total
P 14,000 P 14,000
5,600
28,000
( 600) ______
P 19,000 P 42,000

Chapter 2

2-12: c
Interest
Annual Salary
Additional profit to give LL, P20,000
Additional profit to give MM, P14,000
Total
*(P9,500/50%) = P19,000

LL
P 2,000
8,500
9,500
_____
P20,000

MM
P 1,250

5,700
__7,050
P14,000

NN
P 750

3,800
_____
P 4,550

Total
P 4,000
8,500
19,000*
__7,050
P 38,550

RR

SS

TT

Total

P15,000

_47,500
P62,500

(P10,000)
_35,625
P25,625

)
)
_11,875
P11,875

P 5,000
__95,000
P100,000

BB

CC

Total

2-13: a
Excess (Deficiency)
RR (P80,000 - P95,000)
SS (P50,000 - P40,000)
Balance 4:3:1
Total
Net Income (200,000 - 100,000) =
2-14: b
AA - 100,000 X 10%
150,000 X 20%
Remainder, 210,000
BB (60,000 X .05)
CC (60,000 X .05)
Balance, equally
Total

P100,000
AA
P 10,000
30,000

)
)

P 40,000

)
P 3,000
_68,000
P71,000

6,000
_204,000
P250,000

BJ

CJ

Total

P1,000

_6,800
P7,800

P4,000

12,000
__3,400
P19,400

P4,000
1,000
22,000
_17,000
P44,000

P 3,000
__68,000
P108,000

_68,000
P71,000

2-15: a
AJ
Bonus to CJ
Net profit before bonus
P44,000
Net profit after bonus (P44,000/110%)P40,000

Interest to BJ

Salaries
P 10,000
Balance, 4:4:2
__6,800
Total
P 16,800
2-16: c
Total profit share of Pedro
Less: Salary to Pedro
Interest
Share in the balance (40%)

P 50,000
__20,000

P200,000

Net profit after salary and interest (130,000/40%)

Add: Total Salaries
Total Interest
Total Partnership Income

P150,000
__70,000

__70,000
P130,000
P325,000
_220,000
P545,000