What is the net income / net loss of the partnership for the year ended December 31, 2021?

INSTRUCTIONS TO CANDIDATES

ANSWER ALL QUESTIONS

Number 1  and 2 

On December 31, 2020, Jamie, Anthony, and Barbie organized a JAM partnership wherein Jamie contributed P3,200,000 for 20% interest in the partnership. Barbie contributed P 9,600,000 for a capital credit of P8,000,000. After closing the accounting book, Anthony and Barbie withdrew the following amounts respectively: P800,000 and P960,000. Profit or Loss arrangement are agreed as follows:

. Annual salary of P40,000, P32,000 and P24,000 respectively

. The remainder will be divided in the ratio of 2:3:5On December 31, 2021 the capital balance of Jamie is P3,224,000.

1. What is the net income / (net loss) of the partnership for the year ended December 31, 2021?

2. What is the capital balance of Barbie on December 31, 2021?

Number 3

If a retiring partner receives more than his adjusted capital balance before retirement, what is the logical reason if the

capital balances of the remaining partner decrease after the said retirement?

A. Bonus is given by remaining partners to retiring partner

B. Bonus is given by retiring partner to remaining partners

C. Goodwill arising from retirement of a partner is recognized.

D. Impairment loss of an existing asset is recognized at the time of retirement.

Number 4

Kevin, a partner in a law firm, decided to withdraw from the partnership. Kevin’s share in the partnership profits and losses was 20%. Upon withdrawal from the partnership he was paid cash in final settlement for his interest. The total of the partners’ capital account before the recognition of the revaluation prior to Kevin’s withdrawal was P315,000. After his withdrawal the remaining partners’ capital accounts, excluding their share of revaluation, totaled P246,000, but including their share of revaluation, totaled P384,000.

4. What is the total amount of cash paid to Kevin?

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