Partnership – Basic Considerations and Formation 1
CHAPTER 1
MULTIPLE CHOICE ANSWERS AND
SOLUTIONS
1-1: a
Jose's
capital should be credited for the market value of the computer contributed by
him.
1-2: b (40,000 + 80,000) ¸ 2/3 = 180,000 x 1/3 = 60,000.
1-2: c
1-3: a
Cash P100,000
Land 300,000
Mortgage payable ( 50,000)
Net assets (Julio, capital) P350,000
1-4: b
Total Capital
(P300,000/60%) P500,000
Perla's interest ______40%
Perla's capital P200,000
Less: Non-cash asset contributed at market value
Land P 70,000
Building 90,000
Mortgage
Payable ( 40,000) _120,000
Cash contribution P 80,000
1-5: d - Zero, because under the bonus method,
a transfer of capital is only required.
1-6: b
Reyes Santos
Cash P200,000 P300,000
Inventory – 150,000
Building – 400,000
Equipment 150,000
Mortgage payable ________ ( 100,000)
Net
asset (capital) P350,000 P750,000
1-7: c
AA BB CC
Cash P 50,000
Property at Market Value P 80,000
Mortgage payable ( 35,000)
Equipment at Market
Value _______ _______ P55,000
Capital P 50,000 P 45,000 P55,000
2 Chapter 1
1-8: a
PP RR SS
Cash P 50,000 P 80,000 P 25,000
Computer at Market Value __25,000 _______ __60,000
Capital P 75,000 P 80,000 P 85,000
1-9: c
Maria Nora
Cash P 30,000
Merchandise inventory P 90,000
Computer equipment 160,000
Liability ( 60,000)
Furniture and Fixtures
200,000 ________
Total contribution P230,000 P190,000
Total agreed capital
(P230,000/40%) P575,000
Nora's interest ______60%
Nora's agreed capital P345,000
Less: investment 190,000
Cash to be invested P155,000
1-10: d
Roy Sam Tim
Cash P140,000 – –
Office Equipment – P220,000 –
Note payable ________ _( 60,000) ______
Net asset invested P140,000 P160,000 P
–
Agreed capitals, equally
(P300,000/3) = P100,000
1-11: a
Lara Mitra
Cash P130,000 P200,000
Computer equipment – 50,000
Note payable ________ _( 10,000)
Net asset invested P130,000 P240,000
Goodwill (P240,000 - P130,000) = P110,000
1-12: a
Perez Reyes
Cash P 50,000 P 70,000
Office Equipment 30,000 –
Merchandise – 110,000
Furniture 100,000
Notes payable _______ ( 50,000)
Net asset invested P 80,000 P230,000
Partnership – Basic Considerations and Formation 3
Bonus
Method:
Total capital
(net asset invested) P310,000
Goodwill Method:
Net assets invested P310,000
Add: Goodwill
(P230,000-P80,000) _150,000
Net capital P460,000
1-13: b
Required capital of each partner (P300,000/2) P150,000
Contributed capital of
Ruiz:
Total assets P105,000
Less
Liabilities __15,000 __90,000
Cash to be contributed by Ruiz P 60,000
1-14: d
Total assets:
Cash P 70,000
Machinery 75,000
Building _225,000 P370,000
Less: Liabilities
(Mortgage payable) __90,000
Net assets (equal to
Ferrer's capital account) P280,000
Divide by Ferrer's P
& L share percentage ____70%
Total partnership
capital P400,000
Required capital of Cruz
(P400,000 X 30%) P120,000
Less Assets already
contributed:
Cash P 30,000
Machinery and
equipment 25,000
Furniture and
fixtures __10,000 __65,000
Cash to be invested by Cruz P 55,000
1-15: d
Adjusted assets of C Borja
Cash P 2,500
Accounts
Receivable (P10,000-P500) 9,500
Merchandise
inventory (P15,000-P3,000) 12,000
Fixtures __20,000 P 44,000
Asset contributed by D.
Arce:
Cash P 20,000
Merchandise __10,000 __30,000
Total assets of the partnership P 74,000
4
Chapter 1
1-16: a
Cash to be invested by Mendez:
Adjusted
capital of Lopez (2/3)
Unadjusted
capital P158,400
Adjustments:
Prepaid
expenses 17,500
Accrued
expenses ( 5,000)
Allowance
for bad debts (5% X P100,000) _( 5,000)
Adjusted
capital P165,900
Total partnership
capital (P165,900/2/3) P248,850
Multiply by Mendez's interest ⅓
Mendez's capital P 82,950
Less Merchandise
contributed __50,000
Cash to be invested by Mendez P 32,950
Total Capital:
Adjusted
capital of Lopez P165,900
Contributed
capital of Mendez __82,950
Total
capital P248,850
1-17: d
Moran, capital (40%)
Cash P 15,000
Furniture and
Fixtures _100,000 P115,000
Divide by Moran's P
& L share percentage ______40%
Total partnership
capital P287,500
Multiply by Nakar's P
& L share percentage ______60%
Required capital of
credit of Nakar: P172,500
Contributed capital of
Nakar:
Merchandise
inventory P 45,000
Land 15,000
Building __65,000
Total assets P125,000
Less
Liabilities __30,000 P 95,000
Required cash investment
by Nakar P 77,500
1-18: c
Garcia's adjusted capital (see schedule 1) P40,500
Divide by Garcia's P
& L share percentage ______40%
Total partnership
capital P101,250
Flores'
P & L share percentage ______60%
Flores'
capital credit P 60,750
Flores'
contributed capital (see schedule 2) __43,500
Additional cash to be invested by
Flores P 17,250
Partnership – Basic Considerations and Formation 5
Schedule 1:
Garcia,
capital:
Unadjusted
balance P 49,500
Adjustments:
Accumulated
depreciation ( 4,500)
Allowance
for doubtful account ( 4,500)
Adjusted
balance P 40,500
Schedule 2:
Flores capital:
Unadjusted
balance P 57,000
Adjustments:
Accumulated
depreciation ( 1,500)
Allowance
for doubtful accounts ( 12,000)
Adjusted
balance P 43,500
1-19: d
Ortiz Ponce Total
( 60%) ( 40%)
Unadjusted capital
balances P133,000 P108,000 P241,000
Adjustments:
Allowance for
bad debts ( 2,700) ( 1,800) ( 4,500)
Inventories 3,000 2,000 5,000
Accrued
expenses _( 2,400) ( 1,600) ( 4,000)
Adjusted capital
balances P130,900
P106,000 P237,500
Total capital before the
formation of the new partnership (see above) P237,500
Divide by the total
percentage share of Ortiz and Ponce (50% + 30%) ______80%
Total capital of the
partnership before the admission of Roxas P296,875
Multiply by Roxas'
interest ______20%
Cash to be invested by Roxas P
59,375
1-20: d
Merchandise to be invested by Gomez:
Total
partnership capital (P180,000/60%) P300,000
Gomez's
capital (P300,000 X 40%) P120,000
Less Cash
investment __30,000
Merchandise
to be invested by Gomez P 90,000
Cash to be invested by
Jocson:
Adjusted capital
of Jocson:
Total
assets (at agreed valuations) P180,000
Less
Accounts payable __48,000 P132,000
Required
capital of Jocson _180,000
Cash
to be invested by Jocson P 48,000
6 Chapter 1
1-21: b
Unadjusted Ell, capital (P75,000 – P5,000) P 70,000
Allowance for doubtful
accounts ( 1,000)
Accounts payable ( 4,000)
Adjusted Ell, capital P 65,000
1-22: c
Total partnership capital (P113,640/1/3) P340,920
Less David's capital _113,640
Cortez's capital after
adjustments P227,280
Adjustments made:
Allowance for
doubtful account (2% X P96,000) 1,920
Merchandise
inventory ( 16,000)
Prepaid
expenses ( 5,200)
Accrued
expenses ___3,200
Cortez's capital before
adjustments P211,200
1-23: a
Total assets at fair value
P4,625,000
Liabilities
(1,125,000)
Capital balance of Flor P3,500,000
1-24: c
Total capital of the
partnership (P3,500,000 ÷ 70%) P5,000,000
Eden agreed profit & loss ratio 30%
Eden agreed capital 1,500,000
Eden contributed capital at fair value 812,000
Allocated cash to be
invested by Eden P 688,000
1-25: c
__Rey
__Sam_ __Tim
__Total_
Contributed capital
(assets-liabilities)P471,000
P291,000 P195,000 P957,000
Agreed capital (profit
and loss ratio) 382,800 382,800
191,400 957,000
Capital transfer (Bonus)
P 88,200 P(91,800) P 3,600 -
1-26: d
Total agreed capital
(P90,000 ÷ 40%) P225,000
Contributed capital of
Candy (P126,000+P36,000-P12,000) 150,000
Total agreed capital
(P90,000 ÷ 40%)
225,000
Candy, agreed capital
interest 60%
Agreed capital of Candy 135,000
Contributed capital of
Candy
150,000
Withdrawal P 15,000
Partnership – Basic Considerations and Formation 7
1-27: a
Total agreed capital (210,000 ÷ 70%) P300,000
Nora’s interest 30%
Agreed capital of Nora P 90,000
Cash invested 42,000
Cash to be invested by
Nora P 48,000
1-28: a
Contributed capital of May
(P194,000 - P56,000) P138,000
Agreed capital of May (P300,000
x 70%) 210,000
Cash to be invested by May P 72,000
1-29: c
__Alex_ _Carlos_ __Total__
Contributed capital P100,000 P84,000 P184,000
Agreed capital 92,000 92,000 184,000
Capital invested P( 8,000) P 8,000 -
8 Chapter 1
SOLUTIONS TO PROBLEMS
Problem 1 – 1
1. a. Books of Pedro Castro will be retained
by the partnership
To
adjust the assets and liabilities of Pedro Castro.
1. Pedro Castro, Capital................................................................................... 600
Merchandise
Inventory........................................................................... 600
2. Pedro Castro, Capital................................................................................... 200
Allowance for
Bad Debts......................................................................... 200
3. Accrued Interest Receivable.......................................................................... 35
Pedro Castro,
Capital.............................................................................. 35
Computation:
P1,000 x 6% x 3/12 = P15
P2,000 x 6% x 2/12 = _20
Total........................................... P35
4. Pedro Castro, Capital................................................................................... 100
Accrued Interest
Payable......................................................................... 100
(P4,000 x 5% x
6/12 = P100)
5. Pedro Castro, Capital................................................................................... 800
Accumulated
Depreciation – Furniture and Fixtures................................. 800
6. Office Supplies............................................................................................. 400
Pedro Castro,
Capital.............................................................................. 400
To record the investment of Jose Bunag.
Cash .................................................................................................................... 15,067.50
Jose Bunag, Capital....................................................................................... 15,067.50
Computation:
Pedro Castro, Capital
(1) P600 P31,400
(2) 200 35 (3)
(4) 100 400 (6)
(5) ___800
P1,700 P31,835
P30,135
Jose
Bunag, Capital : 1/2 x P30,135 = P15,067.50
Partnership – Basic Considerations and Formation 9
b. A new set of books will be used
Books of Pedro Castro
To adjust the assets and liabilities.
See
Requirement (a).
To close the books.
Notes Payable...................................................................................................... 4,000
Accounts Payable................................................................................................. 10,000
Accrued Interest Payable...................................................................................... 100
Allowance for Bad Debts...................................................................................... 1,200
Accumulated Depreciation –
Furniture and Fixtures.............................................. 1,400
Pedro Castro, Capital........................................................................................... 30,135
Cash............................................................................................................. 6,000
Notes Receivable.......................................................................................... 3,000
Accounts Receivable..................................................................................... 24,000
Accrued Interest
Receivable.......................................................................... 35
Merchandise Inventory................................................................................ 7,400
Office Supplies............................................................................................. 400
Furniture and
Fixtures................................................................................... 6,000
New
Partnership Books
To record the investment of Pedro Castro.
Cash ............................................................................................................... 6,000
Notes Receivable.................................................................................................. 3,000
Accounts Receivable............................................................................................. 24,000
Accrued Interest Receivable.................................................................................. 35
Merchandise Inventory........................................................................................ 7,400
Office Supplies..................................................................................................... 400
Furniture and Fixtures........................................................................................... 6,000
Notes Payable.............................................................................................. 4,000
Accounts Payable......................................................................................... 10,000
Accrued Interest
Payable.............................................................................. 100
Allowance for Bad
Debts.............................................................................. 1,200
Accumulated
Depreciation – Furniture and Fixtures...................................... 1,400
Pedro Castro, Capital................................................................................... 30,135
To record the investment of Jose Bunag.
Cash .................................................................................................................... 15,067.50
Jose Bunag, Capital....................................................................................... 15,067.50
10 Chapter 1
2. Castro and Bunag
Partnership
.......... Balance
Sheet
.......... October
1, 2008
.......... A
s s e t s
Cash........................................................................................................................................ P21,067.50
Notes receivable ............................................................................................................... 3,000.00
Accounts
receivable ............................................................................................................... P 24,000
Less Allowance
for bad debts................................................................................................... ___1,200 22,800.00
Accrued interest
receivable...................................................................................................... 35.00
Merchandise
inventory........................................................................................................... 7,400.00
Office supplies ............................................................................................................... 400.00
Furniture and
fixtures.............................................................................................................. 6,000
Less Accumulated
depreciation................................................................................................ ___1,400 __4,600.00
Total Assets ............................................................................................................... P59,302.50
Liabilities and Capital
Notes payable ............................................................................................................... P 4,000.00
Accounts payable ............................................................................................................... 10,000.00
Accrued interest
payable......................................................................................................... 100.00
Pedro Castro,
Capital.............................................................................................................. 30,135.00
Jose Bunag,
Capital ............................................................................................................... _15,067.50
Total
Liabilities and Capital......................................................................................... P59,302.50
Problem
1 – 2
Contributed Capitals:
Jose: Capital
before adjustment..................................................................................... P 85,000
Notes Payable.............................................................................................. 62,000
Undervaluation of
inventory........................................................................ 13,000
Underdepreciation........................................................................................ ( 25,000) P 135,000
Pedro: Cash............................................................................................................. 28,000
Pablo: Cash............................................................................................................. 11,000
Marketable securities.................................................................................... _57,500 ___68,500
Total contributed capital......................................................................................................... P 231,500
Agreed Capitals:
Bonus Method:
Jose (P231,500 x 50%)........................................................................................ P115,750
Pedro (P231,500 x 25%)..................................................................................... 57,875
Pablo (P231,500 x 25%)...................................................................................... __57,875
Total.................................................................................................................... P231,500
Partnership – Basic Considerations and Formation 11
Goodwill
Method. To have a
goodwill, the only possible base is the capital of Pablo. The computation is:
Contributed Agreed
Capital Capital Goodwill
Jose P135,000 P137,000 (50%) 2,000
Pedro 28,000 68,500 (25%) 40,500
Pablo __68,500 __68,500 (25%) _____–
Total P231,500 274,000 42,500
Total agreed capital (P68,500 ¸ 25%)
= 274,000
Jose, Pedro and Pablo Partnership
Balance Sheet
June 30, 2008
Bonus
Method Goodwill Method
Assets:
Cash P 49,000 P 49,000
Accounts
receivable (net) 48,000 48,000
Marketable
securities 57,500 57,500
Inventory 85,000 85,000
Equipment
(net) 45,000 45,000
Goodwill ______– __42,500
Total P284,500 P327,000
Liabilities and Capital:
Accounts
payable P 53,000 P 53,000
Jose,
capital (50%) 115,750 137,000
Pedro,
capital (25%) 57,875 68,500
Pablo,
capital (25%) __57,875 __68,500
Total P284,500 P327,000
Problem
1 – 3
1. Books of Pepe Basco
To adjust the assets.
a. Pepe Basco,
Capital.............................................................................................. 3,200
Estimated
Uncollectible Account.................................................................. 3,200
b. Pepe
Basco, Capital.............................................................................................. 500
Accumulated
Depreciation – Furniture and Fixtures...................................... 500
12 Chapter 1
To close the
books.
Estimated Uncollectible Account.................................................................................. 4,800
Accumulated Depreciation – Furniture
and Fixtures...................................................... 1,500
Accounts Payable......................................................................................................... 3,600
Pepe Basco, Capital...................................................................................................... 31,500
Cash .................................................................................................................... 400
Accounts Receivable............................................................................................. 16,000
Merchandise Inventory........................................................................................ 20,000
Furniture and Fixtures........................................................................................... 5,000
2. Books of the Partnership
To record the investment of Pepe Basco.
Cash ............................................................................................................................ 400
Accounts Receivable..................................................................................................... 16,000
Merchandise Inventory................................................................................................ 20,000
Furniture and Fixtures................................................................................................... 5,000
Estimated Uncollectible
account........................................................................... 4,800
Accumulated Depreciation –
Furniture and Fixtures.............................................. 1,500
Accounts Payable................................................................................................. 3,600
Pepe Basco, Capital.............................................................................................. 31,500
To record the investment of Carlo
Torre.
Cash ............................................................................................................................ 47,250
Carlo Torre, Capital............................................................................................. 47,250
Computation:
Pepe Basco, capital (Base)................................................................................... P31,500
Divide by Pepe Basco's P
& L ratio...................................................................... ___40%
Total
agreed capital.............................................................................................. P78,750
Multiply by Carlo Torre's P
& L ratio.................................................................. ___60%
Cash
to be invested by Carlo Torre....................................................................... P47,250
Problem
1 – 4
a. Roces' books will be
used by the partnership
Books of Sales
1. Adjusting
Entries
(a) Sales, Capital................................................................................................ 3,200
Accumulated
Depreciation – Fixtures...................................................... 3,200
(b) Goodwill....................................................................................................... 32,000
Sales, Capital........................................................................................... 32,000
Partnership – Basic Considerations and Formation 13
2. Closing Entry
Allowance for Bad Debts...................................................................................... 12,800
Accumulated Depreciation –
Delivery Equipment................................................. 8,000
Accumulated Depreciation –
Fixtures................................................................... 91,200
Accounts Payable................................................................................................. 64,000
Notes Payable...................................................................................................... 40,000
Accrued Taxes...................................................................................................... 8,000
Sales, Capital........................................................................................................ 224,000
Cash............................................................................................................. 4,800
Accounts Inventory..................................................................................... 72,000
Merchandise
Inventory................................................................................ 192,000
Prepaid Insurance......................................................................................... 3,200
Delivery Equipment..................................................................................... 48,000
Fixtures........................................................................................................ 96,000
Goodwill....................................................................................................... 32,000
Books of Roces (Books of the
Partnership)
1. Adjusting Entries
(a) Roces,
Capital...................................................................................................... 1,600
Allowance for Bad
Debts.............................................................................. 1,600
(b) Accumulated
Depreciation – Fixtures................................................................... 16,000
Roces, Capital.............................................................................................. 16,000
(c) Merchandise
Inventory........................................................................................ 8,000
Roces, Capital.............................................................................................. 8,000
(d) Goodwill............................................................................................................... 40,000
Roces, Capital.............................................................................................. 40,000
2. To record the investment of Sales.
Cash ............................................................................................................................ 4,800
Accounts Receivable..................................................................................................... 72,000
Merchandise Inventory................................................................................................ 192,000
Prepaid Insurance......................................................................................................... 3,200
Delivery Equipment..................................................................................................... 48,000
Fixtures .................................................................................................................... 96,000
Goodwill .................................................................................................................... 32,000
Allowance for Bad Debts...................................................................................... 12,800
Accumulated Depreciation –
Delivery Equipment................................................. 8,000
Accumulated Depreciation –
Fixtures................................................................... 91,200
Accounts Payable................................................................................................. 64,000
Notes Payable...................................................................................................... 40,000
Accrued Taxes...................................................................................................... 8,000
Sales, Capital........................................................................................................ 224,000
14 Chapter 1
b. Sales' books will be
used by the partnership
Books of Roces
1. Adjusting
Entries
See Requirement (a).
2. Closing
Entry
Allowance for Bad Debts...................................................................................... 1,600
Accumulated Depreciation –
Delivery Equipment................................................. 12,800
Accumulated Depreciation –
Fixtures................................................................... 64,000
Accounts Payable................................................................................................. 104,000
Accrued Taxes...................................................................................................... 6,400
Roces, Capital...................................................................................................... 224,000
Cash............................................................................................................. 14,400
Accounts Receivable..................................................................................... 57,600
Merchandise Inventory................................................................................ 132,800
Prepaid Insurance......................................................................................... 4,800
Delivery Equipment..................................................................................... 19,200
Fixtures........................................................................................................ 144,000
Goodwill....................................................................................................... 40,000
Books of Sales (Books of the
Partnership)
1. Adjusting Entries
See Requirement (a).
2. To record the investment of Roces.
Cash ............................................................................................................................ 14,400
Accounts Receivable..................................................................................................... 57,600
Merchandise Inventory................................................................................................ 132,800
Prepaid Insurance......................................................................................................... 4,800
Delivery Equipment..................................................................................................... 19,200
Fixtures .................................................................................................................... 144,000
Goodwill .................................................................................................................... 40,000
Allowance for Bad Debts...................................................................................... 1,600
Accumulated Depreciation –
Delivery Equipment................................................. 12,800
Accumulated Depreciation –
Fixtures................................................................... 64,000
Accounts Payable................................................................................................. 104,000
Accrued Taxes...................................................................................................... 6,400
Roces, Capital...................................................................................................... 224,000
Partnership – Basic Considerations and Formation 15
c. A new set of books
will be opened by the partnership
Books of Roces
1. Adjusting
Entries
See Requirement (a).
2. Closing
Entry
See Requirement (b).
Books of Sales
1. Adjusting
Entries
See Requirement (a).
2. Closing
Entry
See Requirement (a).
New Partnership Books
To record the investment of Roces and
Sales.
Cash ............................................................................................................................ 19,200
Accounts Receivable..................................................................................................... 129,600
Merchandise Inventory................................................................................................ 324,800
Prepaid Insurance......................................................................................................... 8,000
Delivery Equipment (net)............................................................................................. 46,400
Fixtures (net) 84,800
Goodwill ............................................................................................................... 72,000
Allowance for Bad Debts...................................................................................... 14,400
Accounts Payable................................................................................................. 168,000
Notes Payable...................................................................................................... 40,000
Accrued Taxes...................................................................................................... 14,000
Roces, Capital...................................................................................................... 224,000
Sales, Capital........................................................................................................ 224,000
16 Chapter 1
Problem
1 – 5
1. To close Magno's books.
Allowance for Bad Debts.............................................................................................. 1,000
Accounts Payable......................................................................................................... 6,000
Notes Payable.............................................................................................................. 10,000
Accrued Interest Payable.............................................................................................. 300
R. Magno, Capital........................................................................................................ 24,700
Cash .................................................................................................................... 5,000
Accounts Receivable............................................................................................. 13,000
Merchandise Inventory........................................................................................ 12,000
Equipment............................................................................................................ 3,000
Other Assets......................................................................................................... 9,000
2. To adjust the books of Lagman.
Goodwill .................................................................................................................... 8,000
Allowance for Bad Debts...................................................................................... 210
J. Lagman, Capital................................................................................................ 7,790
3. To record the investment of Magno.
Cash ............................................................................................................................ 5,000
Accounts Receivable..................................................................................................... 13,000
Merchandise Inventory................................................................................................ 12,000
Equipment ............................................................................................................... 3,000
Other Assets ............................................................................................................... 9,000
Allowance for Bad Debts...................................................................................... 1,000
Accounts Payable................................................................................................. 6,000
Notes Payable...................................................................................................... 10,000
Accrued Interest Payable...................................................................................... 300
R. Magno, Capital................................................................................................ 24,700
To adjust the investments of the
partners.
Cash ............................................................................................................................ 10,300
R. Magno, Capital................................................................................................ 10,300
(P35,000 – P24,700 = P10,300)
J. Lagman, Capital........................................................................................................ 35,790
Cash .................................................................................................................... 23,300
Accounts Payable to J. Lagman............................................................................ 12,490
(P63,000 + P7,790 = P70,790 –
P35,000 = P35,790)
Partnership – Basic Considerations and Formation 17
4. Lagman and Magno
.......... Balance
Sheet
.......... December
31, 2008
.......... A
s s e t s
Cash ............................................................................................................................ P –
Accounts receivable...................................................................................................... P34,000
Less Allowance for bad debts........................................................................................ 1,210 32,790
Merchandise inventory................................................................................................. 21,000
Equipment ............................................................................................................... 8,000
Other assets ............................................................................................................... 46,000
Goodwill ............................................................................................................... ___8,000
Total
Assets......................................................................................................... P115,790
Liabilities and Capital
Accounts payable......................................................................................................... P 18,000
Notes payable............................................................................................................... 15,000
Accrued interest payable............................................................................................... 300
Accounts payable to J. Lagman.................................................................................... 12,490
J. Lagman, capital........................................................................................................ 35,000
R. Magno, capital......................................................................................................... __35,000
Total
Liabilities and Capital................................................................................. P115,790
Problem
1 – 6
1. Books of Toledo
Toledo, Capital.................................................................................................... 4,800
Allowance for Bad
Debts (15% x P32,000).................................................. 4,800
Books of Ureta
Ureta, Capital....................................................................................................... 2,400
Allowance for Bad
Debts (10% x P24,000).................................................. 2,400
Cash (90% x P12,000)......................................................................................... 10,800
Loss from Sale of Office Equipment..................................................................... 1,200
Office Equipment......................................................................................... 12,000
Toledo, Capital (1/4 x P1,200)............................................................................. 300
Ureta, Capital....................................................................................................... 900
Loss from Sale of Office Equipment............................................................. 1,200
18 Chapter 1
2. New Partnership Books
Cash .................................................................................................................... 3,200
Accounts Receivable............................................................................................. 32,000
Merchandise......................................................................................................... 40,000
Office Equipment................................................................................................. 10,000
Allowance for Bad
Debts.............................................................................. 4,800
Accounts Payable......................................................................................... 10,000
Notes Payable.............................................................................................. 2,000
Toledo, Capital............................................................................................ 68,400
To record the investment of Toledo.
Cash .................................................................................................................... 22,800
Accounts Receivable............................................................................................. 24,000
Merchandise......................................................................................................... 36,000
Toledo, Capital.................................................................................................... 300
Allowable for Bad
Debts............................................................................... 2,400
Accounts Payable......................................................................................... 16,000
Ureta, Capital............................................................................................... 64,700
To record the investment of
Ureta.
3. Cash ............................................................................................................................ 3,400
Ureta, Capital....................................................................................................... 3,400
To record Ureta's cash contribution.
Computation:
Toledo, capital (P68,400 – P300)........................................................................ P 68,100
Divide by Toledo's profit share percentage........................................................... ____50%
Total
agreed capital of the partnership................................................................. P136,200
Multiply by Ureta's profit
share percentage.......................................................... ____50%
Agreed
capital of Ureta........................................................................................ P 68,100
Ureta, capital....................................................................................................... __64,700
Cash
contribution of Ureta................................................................................... P
3,400
or
Toledo, capital (P68,400 – P300)........................................................................ P 68,100
Less Ureta, capital................................................................................................ __64,700
Cash
contribution of Ureta................................................................................... P 3,400
Partnership – Basic Considerations and Formation 19
4. Toledo and Ureta
Partnership
.......... Balance
Sheet
.......... July
1, 2008
.......... A
s s e t s
Cash ............................................................................................................................ P 29,400
Accounts receivable...................................................................................................... P56,000
Less Allowance for bad debts........................................................................................ __7,200 48,800
Merchandise ............................................................................................................... 76,000
Office equipment.......................................................................................................... __10,000
Total
Assets......................................................................................................... P164,200
Liabilities and Capital
Accounts payable......................................................................................................... P 26,000
Notes payable............................................................................................................... 2,000
Toledo,
capital............................................................................................................. 68,100
Ureta, capital __68,100
Total
Liabilities and Capital................................................................................. P164,200
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