La Partnership – Basic Considerations and Formation
1
CHAPTER 1 MULTIPLE CHOICE ANSWERS AND SOLUTIONS 1-1:
a
1-2:
Jose's capital should be credited for the market value of the computer contributed by him. b (40,000 + 80,000) 2/3 = 180,000 x 1/3 = 60,000 .
1-3:
a
1-4:
Cash Land Mortgage payable
P100,000 300,000 ( 50,000) 50,000 )
Net ass assets (J ul io, capital )
P350,000 P350,000
Total Capital (P300,000/60%) (P300,000/6 0%) Perla's interest
P500,000 ______40%
Perla's capital Less: Non-cash asset contributed at market value Land P 70,000 Building 90,000 Mortgage Payable ( 40,000)
P200,000
Cash Cash contr i buti on
P 80,000 80,000
b
_120,000
1-5:
method, a transfer of capital is only required. d - Zero, because under the bonus method,
1-6:
b
1-7:
Reyes
Santos
Cash Inventory Building Equipment Mortgage payable
P200,000 – – 150,000 ________
P300,000 150,000 400,000 ( 100,000) 100,000 )
Net asse assett (capi tal )
P350,000
P750,000
AA
BB
CC
P55,000 P55,000
c
Cash Property at Market Value Mortgage payable Equipment at Market Value
P 50,000
_______
P 80,000 ( 35,000) _______ ___ ____
Capi tal
P 50,000
P 45,000
2
1-8:
1-9:
1-10:
Chapter 1
a PP
RR
SS
Cash Computer at Market Value
P 50,000 __25,000
P 80,000 _______
P 25,000 __60,000
Capital
P 75,000
P 80,000
P 85,000
Maria
Nora
c Cash Merchandise inventory Computer equipment Liability Furniture and Fixtures
P 30,000
Total contribution
P230,000
200,000
P575,000 ______60%
Nora's agreed capital Less: investment
P345,000 190,000
Cash to be i nvested nvested
P155,000
d Sam
Tim
Cash Office Equipment Note payable
P140,000 – ________
– P220,000 _( 60,000) 60,000 )
– – ______
Net asset invested
P140,000
P160,000
P
Agr eed capital s, equal equal ly (P300,000/3) (P300,000/3) =
1-12:
P190,000
Total agreed capital (P230,000/40%) Nora's interest
Roy
1-11:
P 90,000 160,000 ( 60,000) ________
P100,000 P100,000
a Lara
Mitra
Cash Computer equipment Note payable
P130,000 – ________
P200,000 50,000 _( 10,000)
Net asset invested
P130,000
P240,000
Goodwil l (P240,000 - P130,000) P130,000) =
P110,000 P110,000
a Perez Cash Office Equipment Merchandise Furniture Notes payable
P 50,000 30,000 –
Net asset asset in vested vested
P 80,000
_______
Reyes P 70,000 – 110,000 100,000 ( 50,000) 50,000) P230,000
–
Partnership – Basic Considerations and Formation
3
1-12: Continued Bonus Method:
Total capital (net asset invested)
P310,000
Goodwil l M ethod:
1-13:
1-14:
Net assets invested Add: Goodwill (P230,000-P80,000)
P310,000 _150,000
Net capital
P460,000
b
Required capital of each partner (P300,000/2) Contributed capital of Ruiz: Total assets P105,000 Less Liabilities __15,000
P150,000
Cash to be contr i buted by Rui z
P 60,000
d
Total assets: Cash Machinery Building Less: Liabilities (Mortgage payable)
1-15:
__90,000
P 70,000 75,000 _225,000
P370,000 __90,000
Net assets (equal to Ferrer's capital account) Divide by Ferrer's P & L share percentage
P280,000 ____70%
Total partnership capital
P400,000
Required capital of Cruz (P400,000 X 30%) Less Assets already contributed: Cash P 30,000 Machinery and equipment 25,000 Furniture and fixtures __10,000
P120,000
Cash to be i nvested by Cr uz
P 55,000
__65,000
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 Asset contributed by D. Arce: Cash P 20,000 Merchandise __10,000
__30,000
Total assets of th e partn ershi p
P 74,000
P 44,000
4
1-16:
Chapter 1
a
Cash to be invested by Mendez: Adjusted capital of Lopez (2/3) Unadjusted capital Adjustments: Prepaid expenses Accrued expenses Allowance for bad debts (5% X P100,000)
P158,400 17,500 ( 5,000) _( 5,000)
Adjusted capital
P165,900
Total partnership capital (P165,900/2/3) Multiply by Mendez's interest
P248,850 ⅓
Mendez's capital Less Merchandise contributed
P 82,950 __50,000
Cash to be i nvested by M endez
P 32,950
Total Capital: Adjusted capital of Lopez Contributed capital of Mendez
P165,900 __82,950
Total capital
1-17:
P248,850
d
Moran, capital (40%) Cash Furniture and Fixtures Divide by Moran's P & L share percentage
P 15,000 _100,000
Total partnership capital Multiply by Nakar's P & L share percentage Required capital of credit of Nakar: Contributed capital of Nakar: Merchandise inventory Land Building Total assets Less Liabilities Requi r ed cash i nvestment by Nak ar
1-18:
P115,000 ______40% P287,500 ______60% P172,500
P 45,000 15,000 __65,000 P125,000 __30,000
P 95,000 P 77,500
c
Garcia's adjusted capital (see schedule 1) Divide by Garcia's P & L share percentage
P40,500 ______40%
Total partnership capital Flores' P & L share percentage
P101,250 ______60%
Flores' capital credit Flores' contributed capital (see schedule 2)
P 60,750 __43,500
Addi ti onal cash to be i nvested by F lor es
P 17,250
Partnership – Basic Considerations and Formation
5
1-18: Continued Schedule 1:
Garcia, capital: Unadjusted balance Adjustments: Accumulated depreciation Allowance for doubtful account
P 49,500 ( 4,500) ( 4,500)
Adjusted balance
P 40,500
Schedule 2:
Flores capital: Unadjusted balance Adjustments: Accumulated depreciation Allowance for doubtful accounts
P 57,000 ( 1,500) ( 12,000)
Adjusted balance 1-19:
P 43,500
d
Ortiz
Ponce
Total
( 60%) ( 40%) P133,000 P108,000 P241,000
Unadjusted capital balances Adjustments: Allowance for bad debts Inventories Accrued expenses
( 2,700) 3,000 _( 2,400)
Adjusted capital balances
P130,900
( 1,800) 2,000 ( 1,600) P106,000
( 4,500) 5,000 ( 4,000) 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%
1-20:
Total capital of the partnership before the admission of Roxas Multiply by Roxas' interest
P296,875 ______20%
Cash to be i nvested by Roxas
P 59,375
d
Merchandise to be invested by Gomez: Total partnership capital (P180,000/60%)
P300,000
Gomez's capital (P300,000 X 40%) Less Cash investment
P120,000 __30,000
M erchandi se to be i nvested by Gomez
P 90,000
Cash to be invested by Jocson: Adjusted capital of Jocson: Total assets (at agreed valuations) Less Accounts payable Required capital of Jocson Cash to be i nvested by Jocson
P180,000 __48,000
P132,000 _180,000 P 48,000
6
Chapter 1
1-21:
b
1-22:
1-23:
1-24:
1-25:
Unadjusted Ell, capital (P75,000 – P5,000) Allowance for doubtful accounts Accounts payable
P 70,000 ( 1,000) ( 4,000)
Adj usted El l , capital
P 65,000
Total partnership capital (P113,640/1/3) Less Divino's capital
P340,920 _113,640
Cortez's capital after adjustments Adjustments made: Allowance for doubtful account (2% X P96,000) Merchandise inventory Prepaid expenses Accrued expenses
P227,280
Cort ez' s capi tal bef ore admissi on of Di vin o
P211,200
c
1,920 ( 16,000) ( 5,200) ___3,200
a
Total assets at fair value Liabilities
P4,625,000 (1,125,000)
Capital balance of F l or a
P3,500,000
c Total capital of the partnership (P3,500,000 ÷ 70%) Eden agreed profit & loss ratio Eden agreed capital Eden contributed capital at fair value
P5,000,000 30% 1,500,000 812,000
Al located cash to be i nvested by Eden
P 688,000
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 tr ansf er (B onus)
1-26:
P 88,200 P(91,800) P
3,600
-
d Total agreed capital (P90,000 ÷ 40%) Contributed capital of Candy (P126,000+P36,000-P12,000) Total agreed capital (P90,000 ÷ 40%) Candy, agreed capital interest Agreed capital of Candy Contributed capital of Candy
P225,000 150,000 225,000 60% 135,000 150,000
Wit hdr awal of Candy
P 15,000
Partnership – Basic Considerations and Formation
1-27:
1-28:
7
a Total agreed capital (210,000 ÷ 70%) Nora’s interest Agreed capital of Nora Cash invested
P300,000 30% P 90,000 42,000
M er chandi se to be i nvested by Nor a
P 48,000
a Contributed capital of May (P194,000 - P56,000) Agreed capital of May (P300,000 x 70%)
P138,000 210,000
Cash to be i nvested by M ay
1-29:
d
1-30:
b
Zero, because the bonus method involves only a transfer of capital.
Cash Accounts receivable- Net Merchandise inventory Computer equipment Furniture and fixtures Total assets at fair value Accounts payable Net assets invested Agreed capital Goodwil l (wit hdrawal)
1-31:
P
Noy 10,000 92,000 216,000 24,000 18,000 360,000 (108,000) 252,000 250,000
P
(2,000)
Bi P 14,000 92,000 150,000 14,000 ---270,000 (72,000) 198,000 200,000 P
2,000
c
Cash Office equipment Merchandise inventory Notes payable Contributed capital Agreed capital Bon us to Roxas
1-32:
P 72,000
Villar P 2,205,000 630,000 ( 210,000) 2,625,000 2,520,000 P( 105,000)
Roxas
P
1,575,000 1,575,000 1,680,000
P 105,000
b Total capital before adjustments (P210,750 + P103,000) Allowance for doubtful accounts Accumulated depreciation (P1,000 – P500) Obsolete inventory
P313,750 ( 10,000) 500 ( 3,500)
Total assets of the partn er shi p
P300,750
8
1-33:
Chapter 1
b
Cash Accounts receivable Merchandise inventory Equipment Accounts payable Notes payable Contributed capital Loss on sale of equipment Net assets
Gibo P 19,200 163,200 240,000 60,000 (60,000) (12,000) 410,400 (1,800) 408,600
Addi ti onal i nvestment by Edu
Agreed capital 1-34:
Agr eed capital
Capital withdrawal
1-36:
-
20,400
P408,600
P408,600
Garnett P2,443,364 ( 80,000) ( 108,000) 2,255,364
Bryant P3,097,528 200,000 ( 140,000) 3,157,528
a
Unadjusted capital Accumulated depreciation Accounts receivable written off Adjusted capital contributed
1-35:
Edu P136,800 129,600 216,000 (96,000) 386,400 1,800 388,200
2,255,364
P
-
1,503,576*
P 1,653,952
* Total agreed capital (P2,255,364 / 60%) Bryant’s interest Agreed capital of Bryant
P3,758,940 40% P1,503,576
a Total capital Total liabilities
P3,758,940 4,299,396
Tot al assets
P8,058,336
a
Unadjusted capital Undervaluation of inventory Allowance for doubtful accounts Accrued expenses Contributed capital Agreed capital of Gordon (P285,000/75%) x 25%
Gordon P220,000 11,000 (2,750) 228,250 133,250
Fernando P309,375 ( 4,125) (20,250) 285,000 285,000
Capit al with drawal by Gordon
P 95,000
P
-
Partnership – Basic Considerations and F ormation
9
SOLUTIONS TO PROBLEMS Problem 1 – 1 1.
a. Books of Pedro Castr o wil l be r etain ed by the par tnershi p
To adjust the assets and liabilities of Pedro Castro. 1.
Pedro Castro, Capital ............................................................. Merchandise Inventory ......................................................
600
Pedro Castro, Capital ............................................................. Allowance for Bad Debts ..................................................
200
3. Accrued Interest Receivable .................................................. Pedro Castro, Capital.........................................................
35
2.
Computation: P1,000 x 6% x 3/12 = P2,000 x 6% x 2/12 =
600
200
35
P15 _20
Total ......................... ...... P35 4.
Pedro Castro, Capital ............................................................. Accrued Interest Payable ................................................... (P4,000 x 5% x 6/12 = P100)
100
Pedro Castro, Capital ............................................................. Accumulated Depreciation – Furniture and Fixtures ........
800
6. Office Supplies ...................................................................... Pedro Castro, Capital.........................................................
400
5.
100
800
400
To record the investment of Jose Bunag. Cash .. ........................................................................................... 15,067.50 Jose Bunag, Capital ............................................................... 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
15,067.50
10
b.
Chapter 1
A n ew 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 ............................................................................... Accounts Payable ......................................................................... Accrued Interest Payable .............................................................. Allowance for Bad Debts ............................................................. Accumulated Depreciation – Furniture and Fixtures ................... Pedro Castro, Capital ................................................................... Cash ....................................................................................... Notes Receivable ................................................................... Accounts Receivable ............................................................. Accrued Interest Receivable .................................................. Merchandise Inventory .......................................................... Office Supplies ...................................................................... Furniture and Fixtures............................................................
4,000 10,000 100 1,200 1,400 30,135 6,000 3,000 24,000 35 7,400 400 6,000
New Partnership Books
To record the investment of Pedro Castro. Cash ........................................................................................... Notes Receivable.......................................................................... Accounts Receivable .................................................................... Accrued Interest Receivable......................................................... Merchandise Inventory ................................................................. Office Supplies ............................................................................. Furniture and Fixtures .................................................................. Notes Payable ........................................................................ Accounts Payable................................................................... Accrued Interest Payable ....................................................... Allowance for Bad Debts....................................................... Accumulated Depreciation – Furniture and Fixtures ............. Pedro Castro, Capital .............................................................
6,000 3,000 24,000 35 7,400 400 6,000 4,000 10,000 100 1,200 1,400 30,135
To record the investment of Jose Bunag. Cash .. ........................................................................................... 15,067.50 Jose Bunag, Capital ...............................................................
15,067.50
Partnership – Basic Considerations and Formation
2.
11
Castro and Bunag Partnership Statement of Financial Position October 1, 2011
A s s e t s Cash ..... ...... ... ........................................................................................... Notes receivable .......................................................................................... Accounts receivable .................................................................................... P 24,000 Less Allowance for bad debts...................................................................... ___1,200 Accrued interest receivable ......................................................................... Merchandise inventory ................................................................................ Office supplies ........................................................................................... Furniture and fixtures .................................................................................. 6,000 Less Accumulated depreciation ................................................................... ___1,400 Total Assets ........................................................................................
P21,067.50 3,000.00 22,800.00 35.00 7,400.00 400.00 __4,600.00 P59,302.50
Liabilities and Capital Notes payable ........................................................................................... Accounts payable ........................................................................................ Accrued interest payable ............................................................................. Pedro Castro, Capital ................................................................................... Jose Bunag, Capital .....................................................................................
P 4,000.00 10,000.00 100.00 30,135.00 _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) Pedro: Cash ....................................................................................... Pablo: Cash ....................................................................................... 11,000 Marketable securities ............................................................. _57,500 Total contributed capital .............................................................................. 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
P 135,000 28,000 ___68,500 P 231,500
12
Chapter 1
. To have a goodwill, the only possible base is the capital of Pablo. The Goodwil l M ethod computation is: Contributed Capital Jose Pedro Pablo
P135,000 28,000 __68,500
Total
P231,500
Agreed Capital
Goodwill
P137,000 (50%) 68,500 (25%) __68,500 (25%)
2,000 40,500 _____ –
274,000
42,500
Total agreed capital (P68,500 25%) = 274,000 Jose, Pedro and Pablo Partnership Statement of Financial Position June 30, 2011
Bonus Method Assets: Cash Accounts receivable (net) Marketable securities Inventory Equipment (net) Goodwill
Goodwill Method
P 49,000 48,000 57,500 85,000 45,000 ______ –
P 49,000 48,000 57,500 85,000 45,000 __42,500
P284,500
P327,000
Accounts payable Jose, capital (50%) Pedro, capital (25%) Pablo, capital (25%)
P 53,000 115,750 57,875 __57,875
P 53,000 137,000 68,500 __68,500
Total
P284,500
P327,000
Total Liabilities and Capital:
Problem 1 – 3 1.
Books of Pepe Basco To adjust the assets.
a. Pepe Basco, Capital ...................................................................... Estimated Uncollectible Account ..........................................
3,200
b. Pepe Basco, Capital...................................................................... Accumulated Depreciation – Furniture and Fixtures .............
500
3,200
500
Partnership Basic Considerations and Formation
13
To close the books.
Estimated Uncollectible Account ....................................................... Accumulated Depreciation – Furniture and Fixtures .......................... Accounts Payable................................................................................ Pepe Basco, Capital ............................................................................ Cash .. ........................................................................................... Accounts Receivable .................................................................... Merchandise Inventory ................................................................. Furniture and Fixtures .................................................................. 2.
4,800 1,500 3,600 31,500 400 16,000 20,000 5,000
Books of the Partnership To record the investment of Pepe Basco.
Cash .... ... ........................................................................................... Accounts Receivable .......................................................................... Merchandise Inventory ....................................................................... Furniture and Fixtures ......................................................................... Estimated Uncollectible account .................................................. Accumulated Depreciation – Furniture and Fixtures ................... Accounts Payable ......................................................................... Pepe Basco, Capital ......................................................................
400 16,000 20,000 5,000 4,800 1,500 3,600 31,500
To record the investment of Carlo Torre.
Cash .... ... ........................................................................................... Carlo Torre, Capital ..................................................................... Computation: Pepe Basco, capital (Base) ........................................................... Divide by Pepe Basco's P & L ratio .............................................
47,250 47,250
P31,500 ___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 wil l be used by the partn er shi p
Books of Sales 1. Adjusting Entries (a) Sales, Capital ......................................................................... Accumulated Depreciation – Fixtures ...............................
3,200
(b) Goodwill ................................................................................ Sales, Capital .....................................................................
32,000
3,200
32,000
14
2.
Chapter 1
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 ....................................................................................... Accounts Inventory ................................................................ Merchandise Inventory .......................................................... Prepaid Insurance................................................................... Delivery Equipment ............................................................... Fixtures .................................................................................. Goodwill ................................................................................
4,800 72,000 192,000 3,200 48,000 96,000 32,000
Books of Roces (Books of the Partnership) 1.
2.
Adjusting Entries
(a) Roces, Capital .............................................................................. Allowance for Bad Debts.......................................................
1,600
(b) Accumulated Depreciation – Fixtures .......................................... Roces, Capital ........................................................................
16,000
(c) Merchandise Inventory ................................................................. Roces, Capital ........................................................................
8,000
(d) Goodwill ....................................................................................... Roces, Capital ........................................................................
40,000
1,600
16,000
8,000
40,000
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 ............................................................. Accumulated Depreciation – Delivery Equipment ...................... Accumulated Depreciation – Fixtures .......................................... Accounts Payable ......................................................................... Notes Payable ............................................................................... Accrued Taxes .............................................................................. Sales, Capital ................................................................................
12,800 8,000 91,200 64,000 40,000 8,000 224,000
Partnership – Basic Considerations and Formatio
b.
15
Sales' books wil l be used by the partn ershi p Book s 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 ....................................................................................... Accounts Receivable ............................................................. Merchandise Inventory .......................................................... Prepaid Insurance................................................................... Delivery Equipment ............................................................... Fixtures .................................................................................. Goodwill ................................................................................
14,400 57,600 132,800 4,800 19,200 144,000 40,000
Books of Sales (B ooks of th e Part nership )
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 ............................................................. Accumulated Depreciation – Delivery Equipment ...................... Accumulated Depreciation – Fixtures .......................................... Accounts Payable ......................................................................... Accrued Taxes .............................................................................. Roces, Capital ..............................................................................
1,600 12,800 64,000 104,000 6,400 224,000
16
c.
Chapter 1
A n ew set of books wil l be opened by the partn er shi p Book s of Roces
1. Adjusting Entries See Requirement (a). 2. Closing Entry
See Requirement (b). Book s of Sales
1. Adjusting Entries See Requirement (a). 2. Closing Entry See Requirement (a). New Par tn er shi p Books
To record the investment of Roces and Sales.
Cash .... ... ........................................................................................... Accounts Receivable .......................................................................... Merchandise Inventory ....................................................................... Prepaid Insurance................................................................................ Delivery Equipment (net) ................................................................... Fixtures (net) ....................................................................................... Goodwill ........................................................................................... Allowance for Bad Debts ............................................................. Accounts Payable ......................................................................... Notes Payable ............................................................................... Accrued Taxes .............................................................................. Roces, Capital .............................................................................. Sales, Capital ................................................................................
19,200 129,600 324,800 8,000 46,400 84,800 72,000 14,400 168,000 40,000 14,000 224,000 224,000
Partnership – Basic Considerations and Formation
17
Problem 1 – 5
1.
To close Magno's books.
Allowance for Bad Debts .................................................................... Accounts Payable................................................................................ Notes Payable ..................................................................................... Accrued Interest Payable .................................................................... R. Magno, Capital ............................................................................... Cash .. ........................................................................................... Accounts Receivable .................................................................... Merchandise Inventory ................................................................. Equipment .................................................................................... Other Assets ................................................................................. 2.
5,000 13,000 12,000 3,000 9,000
To adjust the books of Lagman.
Goodwill . ........................................................................................... Allowance for Bad Debts ............................................................. J. Lagman, Capital ........................................................................ 3.
1,000 6,000 10,000 300 24,700
8,000 210 7,790
To record the investment of Magno.
Cash .... ... ........................................................................................... Accounts Receivable .......................................................................... Merchandise Inventory ....................................................................... Equipment ........................................................................................... Other Assets ........................................................................................ Allowance for Bad Debts ............................................................. Accounts Payable ......................................................................... Notes Payable ............................................................................... Accrued Interest Payable .............................................................. R. Magno, Capital ........................................................................
5,000 13,000 12,000 3,000 9,000 1,000 6,000 10,000 300 24,700
To adjust the investments of the partners.
Cash .... ... ........................................................................................... R. Magno, Capital ........................................................................ (P35,000 – P24,700 = P10,300)
10,300
J. Lagman, Capital .............................................................................. Cash .. ........................................................................................... Accounts Payable to J. Lagman ................................................... (P63,000 + P7,790 = P70,790 – P35,000 = P35,790)
35,790
10,300
23,300 12,490
18
Chapter 1
4.
Lagman and Magno Statement of Financial Position December 31, 2011
A s s e t s Cash .... ... ........................................................................................... Accounts receivable ............................................................................ Less Allowance for bad debts ............................................................. Merchandise inventory ....................................................................... Equipment ........................................................................................... Other assets ......................................................................................... Goodwill ...........................................................................................
P P34,000 1,210
Total Assets ..................................................................................
–
32,790 21,000 8,000 46,000 ___8,000 P115,790
Liabilities and Capital Accounts payable ................................................................................ Notes payable...................................................................................... Accrued interest payable..................................................................... Accounts payable to J. Lagman .......................................................... J. Lagman, capital ............................................................................... R. Magno, capital ................................................................................
P 18,000 15,000 300 12,490 35,000 __35,000
Total Liabilities and Capital .........................................................
P115,790
Problem 1 – 6 1.
Books of Toledo Toledo, Capital ............................................................................. Allowance for Bad Debts (15% x P32,000) ..........................
4,800 4,800
Books of Ureta Ureta, Capital ............................................................................... Allowance for Bad Debts (10% x P24,000) ..........................
2,400
Cash (90% x P12,000).................................................................. Loss from Sale of Office Equipment ............................................ Office Equipment...................................................................
10,800 1,200
Toledo, Capital (1/4 x P1,200) ..................................................... Ureta, Capital ............................................................................... Loss from Sale of Office Equipment .....................................
300 900
2,400
12,000
1,200
Partnership – Basic Considerations and Formation
2.
3.
19
New Partnership Books Cash .. ........................................................................................... Accounts Receivable .................................................................... Merchandise ................................................................................. Office Equipment ......................................................................... Allowance for Bad Debts....................................................... Accounts Payable................................................................... Notes Payable ........................................................................ Toledo, Capital ...................................................................... To record the investment of Toledo.
3,200 32,000 40,000 10,000
Cash .. ........................................................................................... Accounts Receivable .................................................................... Merchandise ................................................................................. Toledo, Capital ............................................................................. Allowable for Bad Debts ....................................................... Accounts Payable................................................................... Ureta, Capital ......................................................................... To record the investment of Ureta.
22,800 24,000 36,000 300
Cash .... ... ........................................................................................... Ureta, Capital ............................................................................... To record Ureta's cash contribution.
3,400
4,800 10,000 2,000 68,400
2,400 16,000 64,700
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
3,400
20
4.
Chapter 1
Toledo and Ureta Partnership Statement of Financial Position July 1, 2011
A s s e t s Cash .... ... ........................................................................................... Accounts receivable ............................................................................ Less Allowance for bad debts ............................................................. Merchandise ........................................................................................ Office equipment ................................................................................ Total Assets ..................................................................................
P 29,400 P56,000 __7,200
48,800 76,000 __10,000 P164,200
Liabilities and Capital Accounts payable ................................................................................ Notes payable...................................................................................... Toledo, capital .................................................................................... Ureta, capital .......................................................................................
P 26,000 2,000 68,100 __68,100
Total Liabilities and Capital .........................................................
P164,200
