290920302-Solution-Manual-Partnership-Corporation-2014-2015-pdf - Copy.pdf

Partnership and Corporation Solution Manual 2014-2015

Chapter 1 Review of the Accounting Process ** Quizzers – Problems Problems ** I.

B – 25,000 25,000

B – 100,000 100,000

II.

Maria Julieta Lopez Allera-Alegrado Allera-Alegrado

Assets

Beg. Bal. AJE #1

Cash 150,000 5,000

Liabilities = + Accrued Accounts Accrued Alegado Income = Payable Expense + Capital 48,000 = + 100,000

A/R 80,000 (5,000)

(6,000) (3,000) 8,000 8,000

72,000

A-

VII.

15,000

57,000

100,000 +

8,000 130,000

(58,000)

172,000

P. Amandoron Company

350,000 1,200,000 125,000 575,000

1,550,000 700,000 850,000

-D

Ruben Realty Co. 36,000 12

=

P3,000 x 5

=

P15,000 - A

36,000 12

=

P3,000 x 7

=

P21,000 - B

Evelyn T. Alegre Cash in Bank Office Equipment Office Furniture

VI.

42,000 =

229,000

Current Assets Property and Equipment Less: Current Liabilities Long Term Liabilities Owner’s Equity

V.

Expenses (40,000)

(3,000) (15,000)

15,000 149,000

IV.

Revenue 122,000

(6,000)

#2 #3

III.

Capital

Assets = 850,000 + 30,000 300,000 60,000 = 1,240,000 =

Liability

+

Owner’s Equity

1,150,000 + 30,000 60,000 60,000

+

1,180,000 - D

Raul Langbid Co. truck

–

P18,000 12

=

P1,500 x 3 = P4,500

building

–

P15,000 12

=

P1,250 x 3 =

3,750 P 8,250 -A

Blas Sardido Co. Sales (250,000 x P 15) Cost of Sales: Beg. Inventory Purchases (400,000 x P11) Available for Sale Less: Ending Inventory (150,000 x P11) Gross Profit

3,750,000 4,400,000 4,400,000 1,650,000

2,750,000 1,000,000

- none of the choices

VIII. Alfredo Yao Co. ERRATUM: Available for Sale P26,000 instead of P6,000 P6,000 Beg. Inventory Purchases Freight In Available for Sale Ending Inventory Cost of Sales

15,000 10,000 1,000 26,000 5,000 21,000

-D

-D

Solution Manual in Partnership and Corporation 2014-2015

1

IX.

Rolando Ibañez Enterprises Accounts Payable P35,000 BB 25,000 20,000 On acct. 30,000 - A

Payment

X.

BB Billing

Accounts Receivable 350,000 5,000 Write-off 100,000 145,000 - A 300,000

Vicente Chotangco, Jr. BB

XI.

E. Detoya & Sons BB

XII.

Accounts Receivable 50,000 36,000 4,000 - A 60,000 110,000 40,000 70,000

Accounts Receivable 100,000 2,000 67,000 100,000 69,000 31,000 80,000 Sales 49,000 Account Sales 90,000 Cash Sales 139,000 - B

L. Caminade Enterprises Accounts Payable 20,000 70,000 50,000 80,000 130,000

BB Account Purchases Cash Purchases Total Purchases - B

XIII. Laureano Cacho Trading 1,240,000 – 100,000 = 1,140,000 = 228,000 5 years 5 Cost of Machine Less: Acc. Dep’n. Net Book Value Sold at Loss on disposal

P1,240,000 228,000 P1,012,000 960,000 (P 52,000) - A

XIV. Santos Advertising Advertising Agency

Gomezano SM Marketing Yu and Sons

XV.

1 – 30 days 10,000 15,000 35,000 60,000 x 5% 3,000

31 – 60 days 20,000 30,000 45,000 95,000 x 8% 7,600

61 days and over 20,000 5,000 25,000 x 10% 2,500

= 13,100 – 8,000 = 5,100 - A

Leopoldo Medina Trading

250 units x P31 = P7,750 65 x 33 = 2,145 FIFO P9,895 - C

P27,605 ÷ 835 x 315 = P10,413.86 Average 9,895.00 P 518.86 bigger - B

XVI. Lucky Strike Co. Beg. Inventory Purchases Freight In Purchase Ret. & Allow. Available for Sale Cost of Goods Sold: Sales P4,500,000 Less: Gross Profit (40%) 1,800,000 Estimated Inventory, end Less: Actual Inventory after fire Damaged by fire


P 3,450,000 2,740,000 20,000 ( 25,000) P 6,185,000

2,700,000 P3,485,000 - A 2,948,000 P 537,000 - C

2

IX.

Rolando Ibañez Enterprises Accounts Payable P35,000 BB 25,000 20,000 On acct. 30,000 - A

Payment

X.

BB Billing

Accounts Receivable 350,000 5,000 Write-off 100,000 145,000 - A 300,000

Vicente Chotangco, Jr. BB

XI.

E. Detoya & Sons BB

XII.

Accounts Receivable 50,000 36,000 4,000 - A 60,000 110,000 40,000 70,000

Accounts Receivable 100,000 2,000 67,000 100,000 69,000 31,000 80,000 Sales 49,000 Account Sales 90,000 Cash Sales 139,000 - B

L. Caminade Enterprises Accounts Payable 20,000 70,000 50,000 80,000 130,000

BB Account Purchases Cash Purchases Total Purchases - B

XIII. Laureano Cacho Trading 1,240,000 – 100,000 = 1,140,000 = 228,000 5 years 5 Cost of Machine Less: Acc. Dep’n. Net Book Value Sold at Loss on disposal

P1,240,000 228,000 P1,012,000 960,000 (P 52,000) - A

XIV. Santos Advertising Advertising Agency

Gomezano SM Marketing Yu and Sons

XV.

1 – 30 days 10,000 15,000 35,000 60,000 x 5% 3,000

31 – 60 days 20,000 30,000 45,000 95,000 x 8% 7,600

61 days and over 20,000 5,000 25,000 x 10% 2,500

= 13,100 – 8,000 = 5,100 - A

Leopoldo Medina Trading

250 units x P31 = P7,750 65 x 33 = 2,145 FIFO P9,895 - C

P27,605 ÷ 835 x 315 = P10,413.86 Average 9,895.00 P 518.86 bigger - B

XVI. Lucky Strike Co. Beg. Inventory Purchases Freight In Purchase Ret. & Allow. Available for Sale Cost of Goods Sold: Sales P4,500,000 Less: Gross Profit (40%) 1,800,000 Estimated Inventory, end Less: Actual Inventory after fire Damaged by fire


P 3,450,000 2,740,000 20,000 ( 25,000) P 6,185,000

2,700,000 P3,485,000 - A 2,948,000 P 537,000 - C

2

XVII. Universal Financing Co. Principal

P50,000 x 15%

90 days = P 1,875 360 50,000 P 51,875 MV -C

P 1,875 ÷ 3 x 2 = P1,250 - A Interest Expense Accrued Interest Expense

1,250 1,250

** Quizzers ** Test III Manufacturing

Dr. 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20)

Finished Goods, Beg. Finished Goods, End Goods in Process, Beg. Goods in Process, End Raw Materials, Beg. Raw Materials, End Factory Supplies Inventory Factory Supplies Used Salaries - Office Salaries - Factory Repair - Office Equipment Repairs - Factory Equipment Light and Water - Office Light and Water - Factory Tools Used Patents Amortization of Patents Purchases, Raw Materials Freight In Sales

Cr.

Income Statement

Dr.

Balance Sheet

Cr. Cr.

Dr.

√

√

Cr.

√ √ √

√

√

√ √

√

√ √ √ √ √ √ √ √ √ √ √ √ √

Test IV – Multiple Choice (Problem) 1.

2.

3.

4.

5.

Raw Materials, Beg. Purchases, Raw Materials Freight In Available for Sale Less: Raw Materials, End Direct Materials

P 120,000 110,000 5,000 P 235,000 105,000 P 130,000

(B)

Direct Materials Direct Labor Prime Cost

P 130,000 308,000 P 438,000

(A)

Manufacturing Overhead: Indirect Labor Indirect Materials Amortization of Trademark Real Expense - Factory Depreciation - Factory Factory Overhead

P 45,000 65,000 50,000 25,000 40,000 P 225,000

(A)

Conversion Cost: Direct Labor Manufacturing Overhead

P 308,000 225,000

Factory Cost: Direct Materials Direct Labor Manufacturing Overhead


P 533,000

(A)

P 130,000 308,000 225,000 P 663,000

(C)

3

6.

7.

Cost of Goods Manufactured: Direct Materials Direct Labor Manufacturing Overhead Factory Cost Add: Work in Process, Beg. Total cost placed in process Less: Work in Process, End Cost of Goods Manufactured

P 130,000 308,000 225,000 P 663,000 250,000 P 913,000 275,000 P 638,000

(A)

Cost of Goods Manufactured Finished Goods, Inventory Goods Available for Sale Less: Finished Goods, End Cost of Goods Manufactured and sold

P 638,000 170,000 P 808,000 290,000 P 518,000

(A)

Chapter 2 Partnership – Nature and I nformation ** Exercises/Problems ** 2-1.

Sanada and Estrebilla Requirement 1:

Cash Merchandise Inventory Sañada, Capital

250,000 160,000

Cash Delivery Car Estrebilla, Capital

380,000 950,000

410,000

1,330,000

Requirement 2: Current Assets: Cash Merchandise

Partners’ Equity

P 630,000 160,000

Non-Current Assets: Delivery Equipment Total Assets 2-2.

P 790,000

Sañada, Capital Estrebilla, Capital

P 410,000 1,330,000

950,000 P1,740,000

P1,740,000

Maula, Montecina and Maceda Requirement 1a:

Cash Furniture and Fixtures Transportation Equipment Accounts Payable Maula, Capital Montecina, Capital

P200,000 120,000 850,000 P 100,000 270,000 800,000

Jeremy Maceda was admitted in the partnership as an industrial partner with a 15% share in profit. Requirement 1b:

Cash Furniture and Fixtures Transportation Equipment Maula, Capital Montecina, Capital

P200,000 120,000 850,000 270,000 900,000

** (Same notation for Maceda)

Requirement 2: Assets Current Assets Cash Non-Current Assets Furniture & Fixtures 120,000 Transportation Equipment 850,000

Total Assets


Current Liabilities Accounts Payable

100,000

200,000

970,00

1,170,000

Partners’ Equity Maula, Capital Montecina, Capital Maceda, Capital Total Partners’ Equity Total Liability & Partners’ Equity

270,000 800,000 1,070,000 1,170,000

4

2-3.

Malquisto and Rocabo Requirement 1:

Debits: Cash Accounts Receivable Merchandise Equipment

P 375,000 90,000 420,000 250,000

Credits: Estimated Uncollectible Accumulated Depreciation Accounts Payable Account balance of Malquisto Requirement 2:

P 1,000 50,000 75,000

a) Malquisto, Capital Estimated Uncollectible Account

126,00 P1,009,000 4,000 4,000

b) Malquisto, Capital Merchandise

30,000

c) Malquisto, Capital Accumulated Depreciation

20,000

30,000

d) Malquisto, Capital Accrued Utilities Requirement 3:

P1,135,000

20,000 1,500 1,500

Est. Uncollectible Accounts Accumulated Depreciation Accounts Payable Accrued Utilities Expense Malquisto, Capital Cash Accounts Receivable Merchandise Equipment

5,000 70,000 75,000 1,500 953500 375,000 90,000 390,000 250,000

Requirement 4: Malquisto and Rocabo Statement of Financial Position As of _________ Assets Current Assets: Cash Accounts Receivable Est. Uncollectible Account Merchandise Non-Current Assets: Equipment (Net) Total Assets

851,750 90,000 5,000

85,000 390,000 180,000 1,506,750

Liabilities Accounts Payable 75,000 Accrued Utilities Expense 1,500

76,500

Partners’ Equity 953,500 476,750

1,430,750

Owner’s Equity

1,506,750

Malquisto, capital Rocabo, Capital Total Liabilities &

(the account Accumulated Depreciation is no longer carried in the book of the partnership)

2-4.

Malquisto, Beringuel and Alemanza

Requirement 1: Adjusting entries in their respective Sole Proprietorship Book Malquisto 1) Malquisto, Capital 4,000 Est. Uncoll. Acct. 2) Malquisto, Capital Merchandise

42,000

3) Malquisto, Capital Acc. Dep’n.

5,000

4,000

Beringuel Est. Uncoll. Acct. 500 Beringuel, Capital Beringuel, Capital Merchandise

60,000

42,000

Beringuel, Capital Acc. Dep’n.

100,000

5,000

4) Cash 50,000 Malquisto, Capital 50,000

500

Alemanza, Capital Merchandise

45,000

60,000

Alemanza, Capital Acc. Dep’n.

5,000

100,000

Cash 150,000 Beringuel, Capital 150,000


Alemanza Alemanza, Capital 1,500 Est. Uncoll. Acct.

Cash Alemanza, Capital

1,500

45,000

5,000 250,000 250,000

5

Requirement 2:

Closing Entries in their respective sole proprietorship book.

Malquisto Est. Uncoll. Acct. 7,000 185,000 Acc. Dep’n. Malquisto, Capital 1,556,000 Cash A/R Merchandise Equipment

Requirement 3:

950,000 70,00 378,000 350,000

Beringuel Est. Uncoll. Acct. 4,500 330,000 Acc. Dep’n. Beringuel, Capital 1,625,500 Cash A/R Merchandise Equipment

850,000 90,000 540,000 480,000

Alemanza Est. Uncoll. Acct. 3,500 180,000 Acc. Dep’n. Alemanza, Capital 1,246,500 Cash A/R Merchandise Equipment

750,000 25,000 405,000 250,000

Compound Opening Journal Entry

Cash Accounts Receivable Merchandise Equipment Estimated Uncollectible Account Malquisto, Capital Beringuel, Capital Alemanza, Capital

3,000,000 185,000 1,323,000 358,000 15,000 1,606,000 1,775,500 1,496,500

(Accumulated Depreciation-Equipment is no longer shown in the opening-entry)

2-5.

Laureto and Auditor Partnership

Assumption 1

Requirement 1: Journal Entries to close their Respective Sole Proprietorships’ Book Laureto Accounts Payable Notes Payable Interest Payable Allow. for Doubtful Accounts Accumulated Depreciation Laureto, Capital Cash Accounts Receivable Notes Receivable Interest Receivable Merchandise Equipment

Requirement 2:

50,000 20,000 500 10,000 15,000 275,500 125,000 80,000 50,000 1,000 75,000 40,000

Auditor Accounts Payable Allow. for Doubtful Accounts Acc. Dep’n. – Equipment Auditor, Capital Cash Accounts Receivable Merchandise Equipment

75,000 12,000 40,000 389,000 186,000 120,000 150,000 60,000

Journal Entries to record investment in the Partnership Book

Laureto Cash Accounts Receivable Notes Receivable Interest Receivable Merchandise Equipment Allowance for Doubtful Accounts Accounts Payable Notes Payable Interest Payable Laureto, Capital

Auditor Cash 186,000 Accounts Receivable 120,000 Merchandise 150,000 Equipment 20,000 Accounts Payable Allowance for Doubtful Accounts Auditor, Capital

75,000 12,000 389,000

6,000

Book of Auditor Auditor, Capital 12,000 Allowance for Doubtful Acct.

12,000

Auditor, Capital Merchandise

7,500

3,750

Auditor, Capital Acc. Dep’n. Equipment

8,000

125,000 80,000 50,000 1,000 75,000 25,000 10,000 50,000 20,000 500 275,000

Assumption 2 Requirement 1: Book of Laureto Laureto, Capital Allowance for Doubtful Acct. Laureto, Capital Merchandise Laureto, Capital Acc. Dep’n. Equipment

Adjusting Entries 6,000

3,750

17,000 17,000


7,500

8,000

6

Closing Entries in their Respective Sole Proprietorship Book Book of Laureto Allowance for Doubtful Acct. Acc. Dep’n. Equipment Accounts Payable Notes Payable Interest Payable Laureto, Capital Cash Accounts Receivable Notes Receivable Interest Receivable Merchandise Equipment

Requirement 2:

16,000 32,000 50,000 20,000 500 248,750 125,000 80,000 50,000 1,000 71,250 40,000

Book of Auditor Allowance for Doubtful Acct. 24,000 48,000 Acc. Dep’n. Equipment Accounts Payable 75,000 Auditor, Capital 361,500 Cash Accounts Receivable Merchandise Equipment

Journal Entries to record investment in the Partnership Book

Laureto

Auditor

Cash Accounts Receivable Notes Receivable Interest Receivable Merchandise Equipment Allowance for Doubtful Accts. Accounts Payable Notes Payable Interest Payable Laureto, Capital

2-6.

125,000 80,000 50,000 1,000 71,250 8,000 16,000 50,000 20,000 500 248,750

Cash Accounts Receivable Merchandise Equipment Allowance for Doubtful Accts. Accounts Payable Auditor, Capital

186,000 120,000 142,000 12,000 24,000 75,000 361,500

Mendez and Salazar ERRATUM: P300,000 cost of building was Salazar’s investment

Requirement 1a:

Requirement 1b:

2-7.

186,000 120,000 142,500 60,000

Cash Building Furniture Mendez, Capital Salazar, Capital

300,000 300,000 70,000

Cash Accounts Receivable Building Furniture Accounts Payable Mendez, Capital Salazar, Capital

300,000 30,000 300,000 70,000

140,000 530,000

20,000 170,000 510,000

Dabucol and Miranda Compound Journal Entry Cash 220,000 Computer 550,000 Furniture & Fixtures 200,000 Prepaid Rental 6,000 Dabucol, Capital Miranda, Capital

566,000 410,000

Computations: Cash Computer Furniture & Fixtures Prepaid Rental

Dabucol 100,000 300,000 160,000 6,000 566,000

Miranda 120,000 250,000 40,000 410,000


Total 220,000 550,000 200,000 6,000 976,000

7

2-8.

Torralba and Rosada Requirement 1: Debits: Cash Accounts Receivable Merchandise Equipment

85,000 60,000 120,000 150,000

Credits: Allow. For Doubtful Accounts Acc. Depreciation Accounts Payable Torralba, Capital

4,000 30,000 80,000

415,000

114,000 301,000

Requirement 2: Allow. for Doubtful Accounts Torralba, Capital

3,000 3,000

Torralba, Capital Merchandise

15,000

Torralba, Capital Accumulated Depreciation

15,000

15,000 15,000

Accounts Payable Torralba, Capital

4,000 4,000

Requirement 3: Allow. for Doubtful Accounts Accumulated Depreciation Accounts Payable Torralba, Capital Cash Accounts Receivable Merchandise Equipment

1,000 45,000 76,000 278,000 85,000 60,000 105,000 150,000

Requirement 4: Cash (85,000+1/2 of P278,000) Accounts Receivable Merchandise Equipment Allow. for Doubtful Accounts Accounts Payable Torralba, Capital Rosada, Capital (1/2 of P278,000)

224,000 60,000 105,000 105,000 1,000 76,000 278,000 139,000

Requirement 5: Torralba and Rosada Partnership Statement of Financial Position As of _________ Assets Cash Accounts Receivable Less: Allow. For Doubtful Accounts Merchandise Current Assets Non-Current Assets: Equipment

Liabilities 60,000 1,000

Total Assets 2-9.

224,000

Accounts Payable

59,000 105,000 338,000

Torralba, Capital Rosada, Capital

105,000

76,000

Partners’ Equity 278,000 139,000

417,000

Total Liability & Partners’ Equity

493,000

493,00

Galbog and Torrequemada Requirement 1: Glabog, Capital Estimated Uncollectible Account

15,000

Glabog, Capital Merchandise

30,000

Glabog, Capital Accumulated Depreciation

20,000


15,000 30,000 20,000

8

Requirement 2:

Journal Entries to close the books of Glabog Allow. for Doubtful Accounts Accumulated Depreciation Accounts Payable Glabog, Capital Cash Accounts Receivable Merchandise Equipment

15,000 20,000 60,000 670,000 320,000 75,000 220,000 150,000

Requirement 3: Assets Current Assets: Cash (P320,000 + P500,000) Accounts Receivable Allow. for Doubtful Accounts Merchandise Non-Current Asset: Equipment Total Assets

Liability

75,000 15,000

820,000

Accounts Payable

60,000 220,000

Partners’ Equity Glabog, Capital 670,000 Torrequemada, Capital 500,000 Total Liability & Partners’ Equity

130,000 1,230,000

60,000

1,170,000 1,230,000

2-10. Angie Aguilon Company Requirement 1:

Capital Contribution of Zulueta Unadjusted capital of Aguilon Accounts Receivable to be derecognized Recognized prepaid expenses Revaluation of Equipment Adjusted Aguilon Capital

267,000 ( 25,000 ) 13,000 25,000 280,000

Capital contribution of Zulueta is equal to P280,000,Matching the adjusted capital of Aguilon. Requirement 2: Angie Aguilon Company Statement of Financial Position As of June 30 __________ Assets Cash Merchandise Prepaid Expense Non-Current Asset: Equipment Acc. Depreciation Total Assets

Liability 35,000 185,000 13,000 120,000 10,000

Accounts Payable Accrued Expenses Total Liabilities

45,000 18,000 63,000

233,000 Partners’ Equity

110,000 343,000

A. Aguilon, Capital Total Liability & Partners’ Equity

280,000 343,000

2-11. Misamis Construction Supply Requirement A:

Hingco’s Capital Balance

Debits: Cash in Bank Accounts Receivable Merchandise Inventory Equipment Total Debit

420,000 82,000 100,000 130,000 732,000

Credits: Allow. for Doubtful Accounts Acc. Depreciation Total Credit Hingco's Capital Balance

8,500 15,000 23,500 708,500

Barillo's Capital Balance Debits: Cash in Bank Accounts Receivable Merchandise Inventory Total Debit

450,000 60,000 250,000 760,000

Credits: Allow. for Doubtful Accounts Barillo's Capital Balance

7,500 752,500


9

Requirement B:

a) Allow. for Doubtful Accounts Hingco, Capital Accounts Receivable

8,500 73,500

Allow. for Doubtful Accounts Barillo, Capital Accounts Receivable

7,500 52,500 60,000

b) Hingco, Capital Merchandidse

10,000

Barillo, Capital Merchandidse

20,000

10,000 20,000

c) Acc. Depreciation Hingco, Capital Requirement C:

82,000

5,000 5,000

Cash in Bank Merchandise Inventory Equipment Hingco, Capital

420,000 90,000 120,000

Cash in Bank Merchandise Inventory Barillo, Capital

450,000 230,000

Requirement D:

630,000

680,000 Hingco and Barillo Statement of Financial Position As of July 31 20__

Assets Cash in Bank Merchandise Inventory Equipment Total

Partners’ Equity Hingco, Capital Barillo, Capital

870,000 320,000 120,000 1,310,000

Total

630,000 680,000 1,310,000

2-12. Janulgue and Rota Requirement 1: Janulque's Book: Janulgue, Capital Allow. for Doubtful Accounts

30,000

Janulgue, Capital Acc. Depreciation

10,000

30,000 10,000

Rota's Book: Rota, Capital Merchandise

30,000

Accounts Payable Rota, Capital

25,000

Requirement 2: To record the contribution of Janulgue Cash Accounts Receivable Merchandise Prepaid Insurance Equipment Allow. for Doubtful Accounts Janulgue, Capital To record the contribution of Rota Cash Accounts Receivable Merchandise Allow. for Doubtful Accounts Rota, Capital


30,000 25,000

180,000 200,000 500,000 6,000 70,000 50,000 906,000

150,000 100,000 620,000 2,000 868,000

10

2-13. Medina and Loqueloque Adjusting Entries in the books of Medina Requirement 1:

Requirement 2:

a) Medina, Capital Allow. for Doubtful Accounts

4,750 4,750

b) Medina, Capital Merchandise

25,000

c) Acc. Depreciation Medina, Capital

90,000

d) Medina, Capital Accrued Rental Expense

60,000

e) Prepaid Expenses Medina, Capital

25,000

25,000 90,000 60,000 25,000

Loqueloque should contribute cash of P3,795,250 equal to the capital balance of Medina computed as follows:

Capital balance of Medina before adjustment Add: Adjustment

3,770,000 25,250 3,795,250

Journal Entries to open the book of the Partnership: Requirement 3:

Cash Accounts Receivable Merchandise Prepaid Expenses Store Equipment Allow. for Doubtful Accounts Accounts Payable Accrued Rental Expense Medina, Capital Loqueloque, Capital

4,845,250 65,000 2,325,000 25,000 850,000 9,750 450,000 60,000 3,795,250 3,795,250

2-14. Pamulagan and Salec-Amer Requirement 1:

a) Amer, Capital Allow. for Doubtful Accounts b) Amer, Capital Accrued Expense Payable c) Amer, Capital

10,000 10,000 2,000 2,000 10,000

Merchandise

Requirement 2:

P10,000

Cash in Bank Pamulagan, Capital

543,000

Cash in Bank Accounts Receivable Merchandise Inventory Furniture and Fixtures Allow. for Doubtful Accounts Accrued Expense Accounts Payable Amer, Capital

250,000 100,000 95,000 130,000

543,000

10,000 2,000 20,000 543,000

Requirement 3: Assets Cash in Bank Accounts Receivable Allow. for Doubtful Account Merchandise Inventory Furniture and Fixtures Total Assets

Liabilities 793,000 100,000 10,000

90,000 95,000 130,000 1,108,000

Accounts Payable Accrued Expense Total Liabilities Partners’ Equity

Amer, Capital Pamulagan, Capital Total Partners’ Equity Total Liabilities and Partners’ Equity


2,000 20,000 22,000

543,000 543,000 1,086,000 1,108,000

11

2-15. Degracia and Mascariñas Mascariñas offered Investment: Cash Equipment Total

200,000 80,000 280,000

Degracia's Adjusted Capital Balance: Cash Merchandise Total

80,000 175,000 255,000

1/2 of P280,000 Degracia's adjusted investment Reduction from Degracia's Investment

140,000 255,000 115,000

Composed of: Cash Merchandise

Requirement 1:

80,000 35,000 115,000 1/2 of Mascariñas offered Investment of P280,000 Degracia's Investment Reduction from Degracia's Investment Cash Merchandise

Requirement 2:

80,000 35,000 115,000

Estimated Uncollectible Accounts Degracia, Capital Accounts Receivable

15,000 85,000

Accounts Payable Degracia, Capital

60,000

100,000 60,000

Degracia, Capital Cash Merchandise Requirement 3:

140,000 255,000 115,000

115,000 80,000 35,000

Just to comply with the requirements, these adjusting entries were prepared. The receivable and payable accounts remain in the sole proprietor’s records.

To record contribution of Degracia: Merchandise (175,000-35,000) Degracia, Capital

140,000 140,000

To record contribution of Mascariñas: Cash Equipment Mascariñas, Capital

200,000 80,000 280,000

2-16. Estalilla, Fortuna and Sonsona Requirement A: Capital balance prior to formation of the partnership:

Cash Accounts Receivable Allow. of Accounts Receivable Merchandise Transportation Equipment Acc. Depreciation Building Acc. Depreciation Land Accounts Payable Capital balances prior to formation


Estalilla 30,000 105,000 (6,000) 150,000

Fortuna 70,000 90,000 (4,000) 280,000

Sonsona 40,000 70,000 (15,000) 120,000 350,000 (80,000)

650,000 (100,000) (40,000) 789,000

800,000 (50,000) 1,186,000

(45,000) 440,000

12

Requirement B: The new Capital balance after the revaluation of non-cash assets: Estalilla 30,000 105,000 (10,000) 130,000

Cash Accounts Receivable Allow. of Accounts Receivable Merchandise Transportation Equipment Acc. Depreciation Building Acc. Depreciation Land Accounts Payable Capital balances prior to formation

Requirement C:

a)

b)

c)

d) e)

Requirement D:

Fortuna 70,000 90,000 (9,000) 220,000

650,000 (50,000) (40,000) 815,000

850,000 (50,000) 1,171,000

Estalilla, Capital Allow. for Doubtful Accounts

4,000

Fortuna, Capital Allow. for Doubtful Accounts

5,000

Allow. for Doubtful Accounts Sonsona, Capital

4,500

(45,000) 404,500

4,000 5,000 4,500

Estalilla, Capital Merchandise

20,000

Fortuna, Capital Merchandise

60,000

Sonsona, Capital Merchandise

20,000

Sonsona, Capital Acc. Depn.-Transportation Equipment

20,000

Acc. Depreciation.- Building Estalilla, Capital

50,000

Land Fortuna, Capital

50,000

20,000 60,000 20,000 20,000

50,000 50,000

Cash Accounts Receivable Merchandise Transportation Equipment Building Land Allow. for Doubtful Accounts Acc. Depn. –Transportation Equipment Acc. Depreciation. –Building Accounts Payable Estalilla, Capital Fortuna, Capital Sonsona, Capital

Requirement E:

Sonsona 40,000 70,000 (10,500) 100,000 350,000 (100,000)

140,000 265,000 450,000 350,000 650,000 850,000 29,500 100,000 50,000 135,000 815,000 1,171,000 404,500

Estalilla, Fortuna, Sonsona Statement of Financial Position As of 31 March 20A Assets Cash Accounts Receivable Allow. for Doubtful Accounts Merchandise Transportation Equipment Acc. Depreciation - Transportation Equip. Building Acc. Depreciation - Building Land Total


140,000 265,000 29,500 350,000 100,000 650,000 50,000

235,500 450,000 250,000 600,000 850,000 2,252,000

13

Liabilities and Partners’ Equity

Liabilities Accounts Payable

135,000

Partners’ Equity Estalilla, Capital Fortuna, Capital Sonsona, Capital Total Liabilities & Partners’ Equity

815,000 1,171,000 404,500

2,390,500 2,252,000

** Multiple Choice (Problem) ** 2-I.

JJ Pawnshop

Q – 1

B

Q – 2

A Solution: Assets Liabilities Owner's Equity

2-II.

100% 40% 60%

800,000 320,000 480,000

► ►

P480,000 ÷ 60% P800,000 - P480,000

= =

P800,000 P320,000

(B) (A)

Edulan, Tabarranza and Labasan

Q – 3

C

Q – 4

C Solution: 75,000 ÷1/5

2-III.

-

=

375,000 - 75,000 300,000 ÷ 2 150,000

(C) - equal to total capitalization of the partnership - contribution of Tabaranza

(C) - each contribution of Labasan and Edulan

Santos and Bombeo C

Q – 5

350,000

- the cost of land when sold in that date is considered the fair market value of the land

Q – 6

2-IV.

200,000 120,000

cash fair market value of equipment

320,000

(C)

Kudemus and Rendon

Q – 7

Kudemus Cash

400,000

Accounts Receivable

120,000

Allowance for Doubtful Accounts

(1,200)

Merchandise

50,000

Rendon 600,000

60,000

Building Accounts Payable

1,050,000 ( 300,000)

Total Q – 8

558,000

1,410,000

=

1,968,000

(A)

Rendon Rendon, Capital Add: Liability

1,410,000 120000 1,710,000

2-V.

+

(B)

Dolor and Aleman

Q – 9

The land should be valued in the partnership book at P200,000 (C)

Q – 10

Aleman’s capital account should be credit ed in the amount of P187,500 (B)

Q – 11

The capital account balances of Dolor’s capital account during the partnership formation would be P250,000 (D)

2-VI.

Awayan and Nadua

Q – 12 Accounts Receivable Allowance

Awayan 80,000 8,000 72,000


Nadua 95,000 14,250 80,750

(A)

14

Q – 13

Awayan 150,000 72,000 125,000 15,000 362,000

Cash Accounts Receivable Merchandise Prepaid Expense

Q – 14

(A)

Nadua 120,000 80,750 170,000 (10,000) 360,750

Cash Accounts Receivable Accrued Expense Prepaid Expense

(A)

2-VII. Beceira and Obeso Q – 15

Capital contribution of Obeso: 2 units Altis taxi

1,950,000

Less: Liability assumed by partnership Obeso, capital

200,000 1,750,000

required additional contribution of Beceira

x 20% 350,000

(C)

1,950,000 200,000 1,750,000

(B)

additional cash that Beceira should contribute Q – 16

Q – 17

Cost of 2 units Altis Less: Liability assumed by the partnership Capital contribution of Obeso Partner’s Capital Balances: Cash (P350,000 + P350,000 2 units Corolla 2 units Altis Accounts Payable (P250,000 + P200,000) Beceira, Capital Obeso, Capital Beceira, Capital Obeso, Capital

1,790,000 1,750,000 3,540,000

700,000 1,340,000 1,950,000 450,000 1,790,000 1,750,000

(D)

2-VIII. Rada and Besinan Q – 18

Accounts Receivable x Probability of Collection Estimated Realizable Value

40,000 70% 28,000

Original balance of Allowance Increased by New balance of Allowance

3,000 9,000 (A) 12,000

Q – 19

At fair market value of P100,000 (B)

Q – 20

Cash Accounts Receivable Laundry Equipment Accounts Payable Net Assets

2-IX.

65,000 28,000 100,000 (15,000) 178,000

(A) The amount of cash to be contributed by Besinan

Basa and Alfeche

Q – 21

429,000 (C)

Q – 22

390,000 (B)

Cash Accounts Receivable Merchandise Prepaid Expense Accrued Expense (C)

Basa

Alfeche

145,000 64,000 200,000 20,000

160,000 45,000 190,000

429,000

(5,000) 390,000

390,000 (39,000)

Amount of cash to be deducted from Basa


(B)

15

Q – 23 Cash Balance of Basa Excess Capital Contribution of Alfeche Cash Balance of Basa

145,000 -39,000 106,000

Cash Balance of Alfeche

160,000

(D)

Chapter 3 Partnership Operations ** Exercises and Problems ** 3-1

Cebu Grocers Requirement 1 Agreed Ratio Matero 30% x 120,000 = Bernacer 20% x 120,000 = Selisana 50% x 120,000 = Profit distributed Requirement 2 Proportional Ratio Matero 60/160 x 120,000 Bernacer 80/160 x 120,000 Selisana 20/160 x 120,000

Requirement 3 Income and Expense Summary Matero, Drawing Bernacer, Drawing Selisana, Drawing 3-2

= = =

45,000 60,000 15,000 120,000

120,000 36,000 24,000 60,000

Cotabato Micro-Appliance Center P/L Ratio ( in proportion to capital) Profit P80,000 Share of Pedrosa (80,000 x 8%) Share of Cogollo (80,000 – 6,400 x 62.5%) Share of Eruela ( 80,000 – 6,400 x 37.5%) Profit distributed

3-3

36,000 24,000 60,000 120,000

Cogollo 62.5%

Eruela 37.5% (2)

6,400

(1)

46,000 46,000

+

27,600 27,600

+

6,400

=

80,000 (3)

Steve and Raymund Income & Expense Summary Steve, Drawing Raymund, Drawing

P450,000 P229,500 220,500

Steve Bonus to Raymund Balance: Steve (P450,000 - 67,500 x 3/5) Raymund (P450,000 – 67,500 x 2/5) Total 3-4

Pedrosa

= =

Raymund P67,500

P229,500 153,000 P220,000

P229,500

Musuan Supermarket Requirement 1a 800,000 1,500

x

279,500

=

149,066.67

700,000 1,500

x

279,500

=

130,433.33 279,500.00 Journal Entry

Income & Expense Summary Japad, Drawing Ayuban, Drawing Solution Manual in Partnership and Corporation 2014-2015

279,500 149,066.67 130,433.33

16

Requirement 1b: 810,000 1,515 705,000 1,515

x

279,500

=

149,435.64

x

279,500

=

130,064.36 279,500.00 Journal Entry

Income & Expense Summary Japad, Drawing Ayuban, Drawing

P279,000 149,435.64 130,064.36

Requirement 1c: Debit Jan. 1 Apr.1 Oct.1

Credit

No. of Months Unchanged x 3 x 6 x 3

Balances 800,000 820,000 810,000

10,000

Peso Unit 2,400,000 4,920,000 2,430,000

.

12

9,750,000 ÷ 12 812,500

Average Capital of Japad

Debit Jan. 1 Apr.1 Nov.1

Credit

Balances 700,000 680,000 705,000

20,000 25,000

No. of Months Unchanged x 3 x 7 x 2 12

Peso Unit 2,100,000 4,760,000 1,410,000 8,270,000 ÷ 12 689,166. 67

.

Average Capital of Ayuban P 812,500 1,501.6667

x

P279,500

=

151,227.80

P689,166.67 1,501.6667

x

P279,500

=

128,272.20 279,500.00

Journal Entry Income & Expense Summary Japad, Drawing Ayuban, Drawing Requirement 1d: Japad Ayuban

-

P279,500 P279,500

x x

3/5 2/5

= =

279,500 151,227.80 128,272.20

167,700 111,800 279,500 Journal Entry

Income & Expense Summary Japad, Drawing Ayuban, Drawing

279,500 167,700 111,800

Requirement 1e: Japad

-

P279,500

x

Ayuban

-

P279,500

x

½ = 139,750 ½ = 139,750 279,500 Journal Entry

Income & Expense Summary Japad, Drawing Ayuban, Drawing 3-5

279,500 139,750 139,750

Mallari and Asuncion

Requirement 1a Beg. Capital Ratio: Mallari Asuncion

P 85,000 120,000 P205,000


85,000/205,000 120,000/205,000

x x

P20,000 P20,000

= =

P 8,292.68 11,707.32 P20,000.00

17

Journal Entry Income & Expense Summary Mallari, Drawing Asuncion, Drawing

20,000 8,292.68 11,707.32

Requirement 1b Ending Capital Ratio: Mallari Asuncion

P100,000 95,000 P195,000

100,000/195,000 x P20,000 95,000/195,000 x P20,000

= =

P10,256.41 9,743.59 P20,000.00

Journal Entry Income & Expense Summary Mallari, Drawing Asuncion, Drawing

P20,000 P10,256.41 9,743.59

Requirement 2a: Mallari Debit

Credit

Jan.1 Mar.1

No. of Months Unchanged x 2 x 10 12

Balances 85,000 100,000

P15,000

.

Peso Unit 170,000 1,000,000 1,170,000 ÷ 12 97,500

Asuncion Debit Jan.1 Oct.1

Credit

P25,000

Mallari Asuncion

No. of Months Unchanged x 9 x 3 12

Balances 120,000 95,000

P 97,500 113,750 P211,250

.

97,500/211,250 x P30,000 113,750/211,250 x P30,000 Loss

= =

Peso Unit 1,080,000 285,000 1,365,000 ÷ 12 113,750 P(13,846.15) (16,153.85) P(30,000.00)

Journal Entry Mallari, Drawing Asuncion, Drawing Income & Expense Summary To distribute loss. Requirement 2b: Mallari Asuncion

- P30,000 x 4/5 - P30,000 x 1/5

= =

P13,846.15 16,153.85 P30,000

P(24,000) (6,000) P(30,000) Journal Entry

Mallari, Drawing Asuncion, Drawing Income & Expense Summary To distribute loss. 3-6

P24,000 6,000 P30,000

Esmeralda and Besino

Requirement 1 Total Salaries Interest on Beg. Capital Remainder (60%-40%)

60,000 82,500 142,500 65,500 208,000


Esmeralda

Besino

36,000 30,000

24,000 52,500

39,300 105,300

26,200 102,700

18

Requirement 2 Journal Entry Income & Expense Summary Esmeralda, Drawing Besino, Drawing 3-7

P208,000 P 105,300 102,700

Gabayan and Domingo

Requirement 1: Gabayan Palatino -

50,000 60,000 110,000

P150,000/P330,000 x P110,000 = P180,000/P330,000 x P110,000 =

Requirement 2: Total Salaries Remainder: 3/5 – 2/5

Gabayan

P 39,000 71,000 P110,000

Palatino

P 24,000 42,600 P 66,600

P 15,000 28,400 P 43,400

Requirement 3: Total 10% interest Remainder, Equally

3-8

Gabayan

P33,000 77,000 P110,000

Palatino

P 15,000 38,500 P 53,500

P 18,000 38,500 P 56,500

Cebu Vintage Car

Requirement A: Total Annual Salaries Interest on Beg. Capital Remainder, Equally

Deriquito

P 75,000 114,560 260,440 P450,000

P 45,000 60,160 130,220 P235,380

Searez P 30,000 54,400 130,220 P214,620

Requirement B: Interest based on Ending Capital Annual Salaries Remainder, Equally

Total

Deriquito

Searez

P288,400 70,000 91,600 P450,000

P146,400 50,000 45,800 P242,200

P142,000 20,000 45,800 P207,800

Total

Deriquito

P220,000 112,500 117,500 P450,000

P120,000.00 112,500.00 58,368.08 P242,200.00

Requirement C: Annual Salaries Bonus to Deriquito Remainder, Average Capital

Debit Jan.1 Oct.1 Dec.1

P70,000

Searez P100,000.00 59,131.92 P159,131.92

Average Capital - DERIQUITO No. of Months Credit Balances Unchanged P752,000 x 9 682,000 x 2 P50,000 732,000 x 1 12

Peso Unit P 6,768,000 1,364,000 732,000 P8,864,000 ÷ 12 P738,666.67

.

Average Capital - SEAREZ Debit Jan.1 Mar.1 Nov.1 Dec.1

Credit P80,000

P10,000 40,000

Balances P680,000 760,000 750,000 790,000

x x x x

No. of Months Unchanged 2 8 1 1 12 .

Average Capital Deriquito Searez

- P738,666.67 - P748,333.33

► ►

P738,666.67/1,487,000 x P117,500 = P748,333.33/1,487,000 x P117,500 =


Peso Unit P 1,360,000 6,080,000 750,000 790,000 P 8,980,000 ÷ 12 P 748,333.33

P 58,368.08 59,131.92 P117,500.00

19

3-9

Universal Dry Cleaning Services Requirements: Case A:

Total

Salaries Allowed 15% Interest Remainder, Equally

P110,000 45,000 5,000 P160,000

Case B:

Total Salaries Allowed 15% Interest Remainder, Equally

P110,000 45,000 (25,000) P130,000

Case C:

Total Salaries Allowed 15% Interest Remainder, Equally

P110,000 45,000 (185,000) P(30,000)

Español

Rosada

P60,000 30,000 2,500 P92,500

P50,000 15,000 2,500 P67,500

Español

Rosada

P60,000 30,000 (12,500) P77,500

P50,000 15,000 (12,500) P52,500

Español

Rosada

P60,000 30,000 (92,500) P(2,500)

P50,000 15,000 (92,500) P(27,500)

Case A: Journal Entry Income & Expense Summary Español, Drawing Rosada, Drawing

P160,000 P92,500 67,500 Journal Entry

Income & Expense Summary Español, Drawing Rosada, Drawing

P130,000 P77,500 52,500 Journal Entry

Español, Drawing Rosada, Drawing Income & Expense Summary 3-10

P30,000

Añana, Beltran and Ventic Total P 75,000 20,000 45,000 P140,000

Annual Salaries 20% Interest Remainder

3-11

P 2,500 27,500

Añana P 30,000

Beltran P 25,000

18,000 P 48,000

18,000 P 43,000

Ventic P 20,000 20,000 9,000 P 49,000

Matuguinas and Rovelero Annual Salaries 10% Bonus after Salaries 18% Interest based on Average Remainder, Equally

Total P 80,000 10,000 101,250 (11,250) P180,000

Matuguinas P 30,000 17,250 (5,625) P 41,625

Rovelero P 50,000 10,000 84,000 (5,625) P138,375

Matuguinas Debit Jan.1 June 1 Oct.1

Credit

P20,000 P30,000

Balances P100,000 80,000 110,000

x x x

No. of Months Unchanged 5 4 3 12 .

Peso Unit 500,000 320,000 330,000 1,150,000 ÷ 12 95,833.33

Rovelero Debit Jan.1 May 1 Nov.1

Credit P50,000

P10,000


Balances P150,000 200,000 190,000

x x x

No. of Months Unchanged 4 6 2 . 12

Peso Unit 600,000 1,020,000 3,800,000 5,600,000 ÷ 12 466,666.67

20

Matuguinas Rovelero

3-12

Robles, Saromines and Tiempo Total Bonus (20% of P250,000) Interest: 10% x P100,000 10% x P300,000 10% x P200,000 Salary Allowed Remainder: (2:3:5) As distributed

3-13

17,250 84,000 101,250

- P 95,833.33 x 18% = - P466,666.67 x 18% =

Robles

50,000

50,000

10,000 30,000 20,000 38,000 148,000 102,000 250,000

10,000

Saromines

Tiempo

30,000 20,000 38,000 98,000 20,400 118,400

30,000 30,600 60,600

20,000 51,000 71,000

Gadiano and Alisuag

Requirement A: Total Salary to Gadiano 10% bonus to Alisuag (10% x P60,000) Interest: 10% x P 85,000 10% x P150,000 Remainder: Equally (Less than P30,000) As distributed

Gadiano

Alisuag

P20,000 6,000

P20,000

8,500 15,000 P49,500 10,500 P60,000

8,500

6,000

15,000 P21,000 5,250 P26,250

P28,500 5,250 P33,750

Requirement B: Total Salary, Bonus and Interest (same as in Req. A) Remainders: P30,000 (equally) in excess of P30,000 (30%-70%) As distributed 3-14

Gadiano

Alisuag

P49,500

P28,500

P21,000

30,000 500 P80,000

15,000 150 P43,650

15,000 350 P36,350

Comval Supermarket Case 1: Separis Salary Allowance Bonus (5% of profit after bonus) Interest Allowed on Beg. Capital Remainder: (2:3) As distributed

P 50,000.00 21,428.00 45,000.00 97,428.80 P213,856.80

Barroga

Total

P 30,000.00

P 80,000 21,428 105,000 243,572 P450,000

60,000.00 146,143.20 P236,143.20

Bonus Computation: Profit before Bonus Profit after Bonus Bonus

P450,000 ÷ 105% P428,572 = 100% P 21,428

OR

B= = B + .05B = 1.05B = B=

5% (P - B) P22,500 - .05B P22,500 P22,500 P22,500

=

P21,428

1.2 Interest on Beginning Capital Balances Separis = Barroga =

Case 2: Bonus (20% Profit – P140,000-Bonus) Salaries Interest Allowed (10% of Ending Capital Balance Remainder: (4:3) As distributed Solution Manual in Partnership and Corporation 2014-2015

15% x P300,000 = 15% x P400,000 =

P 45,000 60,000 P105,000

Separis

Barroga

Total

P 81,666.00 60,000.00

P 30,000.00

P 80,000 21,428

28,000.00 194,476.57 P364,142.57

60,000.00 145,857.43 P265,587.43

105,000 340,334 P630,000

21

Profit before Bonus Less: Salaries (60,000 + 80,000) Profit after Bonus

Bonus Computation: P 630,000 140,000 P 490,000 ÷ 120% OR

Bonus

408,334 P 81,666

B= = =

.20 (630,000 - 140,000B) .20 (490,000 - B) P98,000 - .20B

=

P98,000 1.2

B=

P81,666

Interest on Beginning Capital Balances Separis = 10% x P280,000 = P 28,000 Barroga = 10% x P400,000 = 40,000 P 68,000

Case 3: Interest Allowed on Average Capital @ 10% Salaries Allowed Bonus Remainder: 50%-50% As distributed

Separis

Barroga

Total

P 30,667 80,000 33,636 132,432 P276,735

P 40,833 70,000

P 71,500 150,000 33,636 264,864 P520,000

132,432 P243,265

Separis Jan.1 May 1 Sept. 1

Barroga

P300,000 x 12 = P3,600,000 40,000 x 8 = 320,000 60,000 x 4 = (240,000) P3,680,000 ÷ 12 P 306,667 x 10% P 30,667

Jan.1 Sept. 1 Nov. 1

P400,000 x 12 = P4,800,000 50,000 x 8 = 200,000 50,000 x 2 = (100,000) P4,900,000 ÷ 12 P 408,333 x 10% P 40,833

Bonus Computation: Profit before Salaries & Bonus Less: Salaries (80,000 + 70,000) Profit after Salaries & Bonus

P 520,000 150,000 P 370,000 ÷ 110%

Bonus

336,364 = 100% P 33,636

OR

B= = = =

B=

10% (P – S – B) .10 (P520,000 – P150,000 - B) .10 (P370,000 – B) P370,000 - B P370,000 – 1.1

P33,636

Case 4: Separis Bonus (20% of Profit) Salaries Allowed Interest Allowed on Beg. Capital at 10% Remainder: (2:8) As distributed 3-15

P 80,000 50,000 30,000 48,000 P208,000

Barroga

Total

P192,000 P192,000

P 80,000 50,000 30,000 240,000 P400,000

Ceniza, Barredo and Labata Requirement 1: As 30% share is given to Labata, what is left is 70% which will be shared between Ceniza and Barredo based on their old P/L Ratios. Therefore: Old P/L Ratio

New P/L Ratio

Ceniza (3/5) = 60% x 70% Barredo (2/5)= 40% x 70% Labata Total

42% 28% 30% 100%

Requirement 2: Reported Profit Overstatement of Inventory End, overstates Profit Understatement of Prepaid Expense (asset) results to overstatement of Expenses (P10,000 - 1,000) Understatement of Accrued Expense (liability) results to understatement of Expenses (P8,000 - 5,000) Corrected Profit


P300,000 (30,000) 9,000 (3,000) P276,000

22

Ceniza = Barredo =

Schedule of Profit Distribution: 3/5 or 60% of P276,000 = P165,600 2/5 or 40% of P276,000 = 110,400 P276,000

3-16

Sorima and Magalso Requirement 1: Reported Profit

P150,000

1) Understatement of Inventory at the end results to Profit understatement 2) Non-recognition of Accrued Expense understates Expense and overstates Profit 3) Non-recognition of Supplies Expense overstates Profit Corrected Profit

20,000 (5,000) (8,000) P157,000

Requirement 2: Partners’ Equity – Jan. 1, 2009 Add: Net Interest in Equity Share in Profit

Sorima

Magalso

P450,000

P250,000

P200,000

157,000 P607,000 (50,000) P557,000

Less: Permanent Withdrawal Partners’ Equity – Dec. 31, 2009 3-17

Total

(40%)

62,800 P312,800 (20,000) P292,800

(60%)

94,200 P294,200 (30,000) P264,200

Dipolog Grocers Requirement 1: Closing Entries Merchandise Inventory, End Sales Purchase Return & Allowances Merchandise Inventory, Beg. Sales Discount Purchases Freight In Income & Expense Summary

480,000 960,000 6,000

Income & Expense Summary Salaries Expense Freight Out Taxes & Licenses Supplies Expense Depreciation

108,000

Income & Expense Summary Pugoy, Drawing Gargar, Drawing Anguit, Drawing

121,000

510,000 4,000 700,000 3,000 229,000

50,000 1,000 7,000 10,000 40,000

49,880 41,950 29,170

Requirement 2: Salaries to Partners 10% Bonus (P121,000 - P50,000) Remainder: Pugoy - 20% x P63,900 Gargar - 50% x P63,900 Anguit - 30% x P63,900 As distributed

Total P 50,000 7,100

Pugoy P 30,000 7,100

12,780 31,950 19,170 P121,000

12,780

Gargar P 10,000

Anguit P 10,000

31,950 P 49,880

P 41,950

19,170 P 29,170

Requirement 3: Statement of Changes in Partners’ Equity

Partners’ Equity –July 1, 2009 Add: Net Increase in Equity Remainder: Share in Profit Less: Drawing Partners’ Equity –June 30, 2010

Operating Expenses Income & Expense Summary Solution Manual in Partnership and Corporation 2014-2015

Total P215,000

Pugoy P 75,000

Gargar P 80,000

Anguit P 60,000

121,000 (30,000) P 91,000 P306,000

49,880 (15,000) P 38,880 P109,880

42,950 (5,000) P 36,950 P116,950

29,170 (10,000) P 19,170 P 79,170

211,000 284,000

23

** Multiple Choice Problems ** 3-I

Q-1. B

32,000/80,000 = 40%

3-II

Q-2. A

3/P = 75000 P = 75,000 x 5/3= 125,000 125,000 – 75,000 = P50,000

Q-3. A

125,000

Q-4. A

Kenneth Peras – 120,000 x 33/3 = 40,000

Q-5. A

Mark Peras – 60,000 + 40,000 = 100,000

Q-6. B

Jean Pila – 120,000 x 20% (40/200) = 24,000

3-IV

Q-7. A

Zamora - 150,000/450,000 = 33 1/3

3-V

Q-8 & 9

3-III

Torres Profit 100,000 x 10% 100,000 – 10,000 x 35% 100,000 – 10,000 x 65%

3-VI

Q-10. C

8-B

58,500

5,000 x 12 months = 60,000

Bonus (200,000 – 128,430 x 10%) Remainder

3-IV

Ardina 10,000

31,500

Q-11 to Q-13 Salaries Interest

3-VII

Un 9-B

Q-14. C

98,000 + 3,000 – 5,000 = P96,000

Q-15. B

15/35 x 96,000 = P41,143

Total 120,000 8,400 128,400 7,160 135,560 64,440 200,000

Diane 60,000 5,250 65,250 7,160 72,410 38,664 111,074

Ysabelle 60,000 3,150 (11 - A) 63,150 (12 – A) 63,150 25,776 88,926 (13 - A)

Q-16. A Partners Gregorio Jumawan Totals

Salaries P15,000 20,000 P35,000

Interest P20,000 45,000 P65,000

Balance P 6,000 14,000 P20,000

Total P 41,000 79,000 P120,000

Salaries P15,000 20,000 P35,000

Interest P20,000 45,000 P65,000

Balance ( 3,000) ( 7,000) (10,000)

Total P 32,000 58,000 P 90,000

Salaries P15,000 20,000 P35,000

Interest P20,000 45,000 P65,000

Balance ( 31,500) ( 73,500) (105,000)

Total P 3,500 ( 8,500) ( 5,000)

Q-17. D Partners Gregorio Jumawan Totals Q-18. A Partners Gregorio Jumawan Totals 3-V

Q-19. B P20,000 + 30% (86,000 – 60,000)

3-VI

Q-20. A Sales Inventory Cost of Sales Operating Expenses Profit

P1,250,000 100,000

P1,350,000 ( 685,000) ( 450,000) P 215,000

Q-21. A Partners Bidad Mondejar Sarceno

2/10 x 215,000 5/10 x 215,000 3/10 x 215,000

= = =

43,000 107,500 64,500 215,000


24

Q-22. D Partners Bidad Mondejar Sarceno Totals 3-VII

Salaries P 60,000 60,000 60,000 P180,000

Balance ( 4,000) ( 2,000) ( 4,000) ( 10,000)

Total P101,000 ( 58,000 56,000 P 215,000

Q-23. C B B B B B B

= = = = = =

Q-24. C Partners Carpeso Cabreros Totals 3-VIII

Interest P45,000 P65,000

20% 20% (240,000 – b) 48,000 - .28 .2B = P48,000 P48,000/1.2 P40,000

Bonus P 40,000 P 40,000

Balance P100,000 100,000 P200,000

Total P140,000 100,000 P240,000

Q-25. B Partners Zabalo Perez Delmonte

P/L Before .60 .18 .40 .12

New P/L .42 .28 .30

Q-26. B Understated inventories Accrued Expense Prepaid Expense Increase in Net Income

15,000 ( 5,000) 4,000 P14,000

Q-27. C Reported Net Income Increase in Net Income Corrected Net Income

P 450,000 14,000 P464,000

Q-28. C Partners Zabalo Perez Delmonte

3-IX

= = = = =

Q-30. A Salaries P 60,000 40,000 P100,000

Balance ( 70,000) ( 70,000) ( 70,000) (210,000)

Total P14,000 ( 58,000) ( 22,000) ( 66,000)

Q-31. C B B B B B

3-XII

Share in Net Income P194,880 129,920 139,200 P464,000

25% (NI – B) 25% (240,000 – B) 60,000 - .25B 60,000 / 1.25 P48,000

Partners Average Capital Linobo P24,000 Manansala 12,000 Aguillon 8,000 Totals P44,000 3-XI

Net Income P464,000 464,000 464,000

Q-29. B B B B B B

3-IX

P/L Ratio .42 .28 .30

= = = = =

20% (NI – B) 20% (240,000 – B) 48,000 - .2B 48,000 / 1.2 P40,000

Q-32. C Reported Net Income Understatement of Inventory End Unrecorded Expense Corrected Net Income


P105,000 50,000 ( 5,000) P150,000

25

3-XIII

Q-33. A Partners Old P/L New P/L Go .50 .10 .40 Adia .50 .10 .40 Pactana .20 Q-34. C 40% x P150,000 = P60,000

Chapter 4 Partnership Dissolution – Change in Ownership structure ** Exercises and Problems ** 4-1

4-2

Tan and Esparaguera Esparaguera, Capital Carreon, Capital

200,000 200,000

CSCV Cañete, Capital Saletrero, Capital Cajegas, Capital Villaplaza, Capital

4-3

4-4

62,500 87,500 112,500 262,500

Abuzo and Edulan 1. P187,500 2. Abuzo-Selling Partners 3. P12,500 personal gain 4. P187,500 5. P17,500 personal loss Book Value of Interest Sold Selling Price of Interest Sold Loss on Sale of Interest

P187,500 170,000 P 17,500

Total Partnership Interest Portion of Interest Sold Book Value of Interest Sold Selling Price of Interest Sold Gain on Sale of Interest Sold

P 300,000 25% P 75,000 85,000 P 10,000

Badoy and Yee

1. 2.

Badoy, Capital Yee, Capital Gatmaitan, Capital 4-5

3.

4-6

75,000

Hernandez and Gementiza

1. Hernandez, Capital Santos, Capital 2.

25,000 50,000

75,000 75,000

Gementiza, Capital Santos, Capital

112,500 112,500

Hernandez, Capital 150,000 Gementiza, Capital 150,000 Santos, Capital 300,000 (converted into a sole-proprietorship) JAR Partnership Contributed Capital: J A R Orbita

P 250,000 250,000 500,000 20,000 P1,200,000 x 20% = P240,000 – capital credit of Orbita Contribution of Orbita 200,000 Bonus to New partner P 40,000

Cash J A R Orbita, Capital Solution Manual in Partnership and Corporation 2014-2015

P200,000 10,000 10,000 20,000 P246,000

26

4-7

Ursua and Halangdon Requirement 1:

Ursua Halangdon Gondales Contributed Capital

P 80,000 100,000 70,000 P 250,000

Requirement 2: P250,000 x 40% = P100,000 – P70,000 = P30,000 bonus to new partner (Her capital credit is bigger than her capital contribution, so bonus is given to the new partner) Requirement 3: Journal Entry Cash Ursua, Capital Halangdon, Capital Gondales, Capital Requirement 4:

70,000 9,000 21,000 100,000

Ursua Halangdon Gondales Contributed Capital

P 80,000 100,000 150,000 P 330,000

P330,000 x 35% = P115,500 – P150,000 = P34,500 bonus to old partners (His capital credit is smaller than his capital contribution, so bonus is given to the old partners) Requirement 5: Journal Entry Cash 150,000 Ursua, Capital Halangdon, Capital Gondales, Capital 4-8

10,350 24,150 115,500

Beceira and Ytac Requirement 1: Casulla, Capital Ytac, Capital Sarno, Capital

120,000 130,000 250,000

Requirement 2: Casulla, Capital Ytac , Capital Sarno, Capital

180,000 195,000 375,000

Requirement 3: Casulla, Capital Ytac, Capital Sarno, Capital

48,000 52,000 100,000

Requirement 4: Casulla, Capital Sarno, Capital

60,000 60,000

Requirement 5: Casulla, Capital Sarno, Capital

80,000 80,000

Requirement 6: Casulla, Capital Sarno, Capital Requirement 7:

120,000 120,000 Casulla, Capital Ytac, Capital Sarno, Capital Contributed Capital

240,000 260,000 300,000 800,000

800,000 x 1/3 = 266,667 – 300,000 = 33,333 bonus to old partners (Her capital credit is lesser than her capital contribution, so bonus is given to the old partners) Solution Manual in Partnership and Corporation 2014-2015

27

Cash Casulla, Capital Ytac, Capital Sarno, Capital Requirement 8:

300,000 12,500 20,833 266,667

Contributed Capital - 800,000

800,000 x 1/4 = 200,000 – 300,000 = 100,000 bonus to old partners (Her capital credit is lesser than her capital contribution, so bonus is given to the old partners) Cash Casulla, Capital (3/8 x 100,000) Ytac, Capital (5/8 x 100,000) Sarno, Capital Requirement 9:

300,000 37,500 62,500 200,000

Contributed Capital - 800,000

800,000 x 40% = 320,000 – 300,000 = 20,000 bonus to new partners (Her capital credit is bigger than her capital contribution, so bonus is given to the new partner) Cash Casulla, Capital Ytac, Capital Sarno, Capital Requirement 10:

300,000 7,500 12,500 320,000 Casulla, Capital Ytac, Capital Sarno, Capital Contributed Capital

240,000 260,000 350,000 850,000

850,000 x 30% = 255,000 – 350,000 = 95,000 bonus to old partners (Her capital credit is lesser than her capital contribution, so bonus is given to the old partners) Cash Casulla, Capital Ytac, Capital Sarno, Capital 4-9

350,000 35,625 59,375 255,000

San Carlos Industries

Case 1:

Nemenzo Kwan Gimena Total Contributed Capital

200,000 100,000 100,000 400,000

400,000 x 1/4 = 100,000 – 100,000 = No bonus (His capital credit is equal to his capital contribution, so there’s no bonus to both)

Cash Gimena, Capital Case 2:

100,000 100,000


200,000 100,000 120,000 420,000

420,000 x 1/4 = 105,000 – 120,000 = 15,000 bonus to old partners (His capital credit is less than his capital contribution, so bonus is given to the old partners) Cash Nemenzo, Capital Kwan, Capital Gimena, Capital

Case 3:

120,000


9,000 6,000 105,000

200,000 100,000 100,000 400,000

400,000 x 30% = 120,000 – 100,000 = 20,000 bonus to new partner Solution Manual in Partnership and Corporation 2014-2015

28

(His capital credit of P120,000 is greater than his capital contribution of P100,000, so, bonus is given to the new partner) Cash Nemenzo, Capital Kwan, Capital Gimena, Capital Case 4:

Nemenzo Kwan

100,000 12,000 8,000 120,000 200,000 x 25% = 50,000 100,000 x 25% = 25,000

Nemenzo, Capital Kwan, Capital Gimena, Capital

50,000 25,000

Nemenzo, Capital Kwan, Capital Gimena, Capital

100,000 50,000

75,000

Case 5:

4-10

150,000

Carcar Ampao Factory

Assumption 1:

Lapu-lapu

180,000 x 1/3 = 60,000

Lapu-lapu, Capital Besario, Capital Assumption 2:

60,000 60,000 140,000 x 1/8 = 17,500

Lim

Lim, Capital Besario, Capital Assumption 3:

17,500 17,500

Lapu-lapu Lim Besario Total Contributed Capital

180,000 140,000 160,000 480,000

480,000 x 25% = 120,000 – 160,000 = 40,000 bonus to old partners (Her capital credit is lesser than her capital contribution of P100,000, so, bonus is given to the old partners) Cash Lapu-lapu, Capital Lim, Capital Besario, Capital Assumption 4:

160,000 24,000 16,000 120,000

Lapu-lapu, Capital Lim, Capital Besario, Capital Total Contributed Capital

180,000 140,000 72,000 392,000

392,000 x 25% = 98,000 – 72,000 = 26,000 bonus to new partner (Her capital credit is greater than her capital contribution of P100,000, so, bonus is given to the new partner) Cash Lapu-lapu, Capital Lim, Capital Besario, Capital 4-11

72,000 15,600 10,400 98,000

Cacdac, Lopez and Cruz

Requirement A: 1.

2.

3.

Capital Adjustments Allow. for Doubtful Accounts

6,000

Capital Adjustments Merchandise Inventory

7,000

Capital Adjustments Accumulated Depreciation

4,000

6,000

7,000


4,000

29

4.

Cacdac, Capital Lopez, Capital Capital Adjustments

6,800 10,200 17,000

(1) (2) (3)

Capital Adjustments 6,000 17,000 7,000 4,000 17,000 17,000

(4)

Requirement B: Post-Closing Trial Balances Debit Cash in Bank Accounts Receivable Allow. for Doubtful Accounts Merchandise Store Equipment Acc. Depreciation Accounts Payable Cacdac, Capital Lopez, Capital Total

Credit

40,000 50,000 10,000 63,000 80,000

233,000

20,000 40,000 93,200 69,800 233,000

Requirement C: a) Cruz is going to pay 40,750 Computed as follows: Refugio, Capital (P93,200 x 25%) Berhay, Capital (P69,800 x 25%)

b)

4-12

Cacdac, Capital Lopez, Capital Cruz, Capital

23,300 17,450 40,750

23,300 17,450 40,750

Jadulco, Mabad and Anghag

Instruction No. 1: a. b. c. d. e.

Capital Adjustments 20,000 Allowance for Doubtful Accounts

20,000

Capital Adjustments Merchandise

20,000 20,000


50,000

Capital Adjustments Accrued Expenses

10,000

Jadulco, Capital (30%) Mabad, Capital (20%) Anghag, Capital (50%) Capital Adjustments

30,000 20,000 50,000

50,000 10,000

100,000

Instruction No.2: New Capital of the Partnership Jadulco, Capital Mabad, Capital Anghag, Capital

(P400,000 – 30,000) = (P280,000 – 20,000) = (P150,000 – 50,000) =

370,000 260,000 100,000 730,000

a) P730,000 x 1/3 = P243,333 Jadulco, Capital Mabad, Capital Anghag, Capital Cañete, Capital

123,333


86,667 33,333 243,333

30

b)

Cash Jadulco, Capital Mabad, Capital Anghag, capital Cañete, Capital

200,000 9,250 6,500 16,250 232,500

Jadulco, Capital Mabad, Capital Anghag, Capital Cañete, Capital Total Contribution

370,000 260,000 100,000 200,000 930,000 x 25% 232,500 200,000 32,500

Capital Credit of New Partner Capital Contribution of New Partner Bonus to New Partner

c)

Cash Jadulco, Capital Mabad, capital Anghag, Capital Cañete, Capital

200,000 4,200 2,800 7,000 186,000

Jadulco, Capital Mabad, Capital Anghag, Capital Cañete, Capital Total Contribution

370,000 260,000 100,000 200,000 930,000 20% 186,000 200,000 14,000

Capital of New Partner Capital Contribution of New Partner Bonus to Old Partners 4-13

Bartolome, tan and de los Santos

Instruction No.1: 1.

Capital Adjustments Inventory

2. 3. 4.

10,000 10,000

Prepaid Insurance Capital Adjustments

7,000

Accumulated Depreciation Capital Adjustments

2,000

Bartolome, Capital (50%) Tan, Capital (40%) Delos Santos, Capital (10%) Capital Adjustments

500 400 100

(1)

7,000

Capital Adjustment 10,000 7,000 2,000 1,000 10,000 10,000

2,000

1,000

(2) (3) (4)

Instruction No.2: 2a)

Adjusted Capital Account of the old partners Bartolome (200,000 – 500) = 199,500 Tan (180,000 – 400) = 179,600 de los Santos ( 60,000 – 100) = 59,900 439,000 Bartolome, Capital Chua, Capital

49,875 49,875

(P199,500 x ¼ = P49,875 - Interest Purchased) 2b)

Bartolome Tan de los Santos Chua

199,500 179,600 59,900 80,000 519,000

519,000 x 30% = 155,700 – 80,000 = 75,700 bonus to new partner Solution Manual in Partnership and Corporation 2014-2015

31

(Her capital credit is bigger than her capital contribution so, bonus is given to the new partner) Journal Entry; Cash Bartolome, Capital Tan, Capital Delos Santos, Capital Chua, Capital 4-14

80,000 37,850 30,280 7,570 155,700

Davao Commodity Sales

Requirement 1: a) b) c) d) e) f) g)

Allowance for Doubtful Accounts Capital Adjustments

2,000


8,000


2,000

Accounts Payable Cash

7,000

Unused Supplies Capital Adjustments

5,000

2,000 8,000 2,000 7,000 5,000

Capital Adjustments Unearned Interest Income

100 100

Saburnido, Capital Cervantes, Capital Capital Adjustments

(b) (c) (f)

1,550 1,550 3,100

Capital Adjustments 8,000 2,000 2,000 5,000 100 3,100 10,100 10,100

(a) (e) (g)

Requirement 2: Statement of Financial Position Assets Current Assets: Cash in Bank Accounts Receivable Allow. for Doubtful Accounts Notes Receivable Merchandise Inventory Unused Supplies

Liabilities and Partners' Equity Liabilities Current Liabilities: Accounts Payable 33,000 Unearned Int. Income 100

233,000 30,000 3,000

Property And Equipment Furniture and Fixture Accu. Depreciation Total Assets

27,000 10,000 72,000 5,000

50,000 20,000

33,100

347,000

30,000 377,000

Partners' Equity Calimpusan, Capital 178,450 Sala, Capital 165,450 Total Liabilities and Partners' Equity

343,900

377,000

Requirement 3: Cash in Bank Banta, Capital Computed as follows: Saburnido, Capital (178,450 x 50%) Cervantes, Capital (165,450 x 50%)

4-15

171,950 171,950 89,225 82,725 171,950

Ruben, Lacierda and Ordoñez Requirement 1:

V. Ruben, Capital O. Lacierda, Capital B. Ordoñez, Capital Total Contributed Capital

80,000 40,000 30,000 150,000

150,000 x 30% = 50,000 – 30,000 = 20,000 bonus to new partner, Ordoñez


32

Requirement 2: The capital accounts of Ruben and Lacierda were decreased by P12,000 and 8,000 respectively because of the bonus they gave to Ordoñez. Requirement 3: Capital Bonus to Ordoñez Balance

Ruben

Lacierda

Ordoñez

80,000 ( 12,000) 68,000

40,000 ( 8,000) 32,000

30,000 20,000 50,000

Requirement 4: Cash Ruben, Capital Lacierda, Capital Ordoñez, Capital

4-16

30,000 12,000 8,000 50,000

Mendez, Tirol and Lupot Requirement 1:

Mendez Tirol Lupot Total Contributed Capital

200,000 100,000 125,000 425,000

425,000 x 20% = 85,000 – 125,000 = 40,000 bonus to old partners Mendez P 40,000 x .75 = 30,000 Tirol 40,000 x .25 = 10,000 Bonus as distributed 40,000 Requirement 2: Capital Mendez 200,000 Tirol 100,000 Capital Account balance after the bonus

Requirement 3: Mendez Tirol Lupot

200,000 100,000 125,000

+ + -

30,000 = 10,000 = (40,000) =

Requirement 4: Cash Mendez, Capital Tirol, Capital Lupot, Capital

4-17

+ +

Bonus 30,000 10,000

= =

Total 230,000 110,000 340,000

230,000 110,000 85,000 425,000

125,000 30,000 10,000 85,000

Jay, Mamaril and Chung Requirement 1:

Total Contributed Capital Jay Mamaril Chung Total Contributed Capital

120,000 100,000 80,000 300,000

300,000 x 1/3 = 100,000 – 80,000 = 20,000 bonus to Chung Requirement 2: Capital Bonus to Chung Balance

Jay 120,000 (12,000) 108,000

Mamaril 100,000 (8,000) 92,000

Chung 80,000 20,000 100,000

= 300,000

Requirement 3: Cash Jay, Capital Mamaril, Capital Chung, Capital

80,000 12,000 8,000


100,000

33

4-18

Butuan Internet Cafe Case 1:

Case 2:

Basarte, Capital Silverio, Capital Jostol, Capital Total (3/4 capital after admission) New capitalization after admission (610,000/.75) Required contribution of Balibay Basarte, Capital Silverio, Capital Jostol, Capital Bonus Total

813,333 203,333

Required contribution of Balibay

265,000 185,000 160,000 24,000 634,000 ÷ 75% 845,333 610,000 235,333

Case 3:

Basarte, Capital Silverio, Capital Jostol, Capital Bonus to new partner Total New capital after admission Share of new partner after bonus Less: Bonus to new partner Required contribution of Balibay

265,000 185,000 160,000 10,000 600,000 800,000 200,000 10,000 190,000

Case 4:

Basarte, Capital Silverio, Capital Jostol, Capital Asset Revaluation Total New capital after admission Share of new partner after bonus

265,000 185,000 160,000 80,000 690,000 920,000 230,000

Case 5:

Basarte, Capital Silverio, Capital Jostol, Capital Assets write down Bonus to new partner Total New capital after admission Share of the new partner after bonus Less: Bonus to new partner Contribution of new partner

265,000 185,000 160,000 (50,000) (40,000) 520,000 693,333 173,333 (40,000) 133,333

Share of New Partner after admission

4-19

265,000 185,000 160,000 610,000

Independents Cases

Case 1 Lopez Baya Maguid Total Contributed Capital

800,000 1,200,000 500,000 2,500,000

2,500,000 x 20% = 500,000 = 0 (No Bonus)

Cash Maguid, Capital

Journal Entry 500,000 500,000

Case 2 Solis Orbita Tangaro Total Contributed Capital

40,000 50,000 25,000 115,000

115,000 x 1/5 = 23,000 – 25,000 = 2,000 bonus to old partners


34

Journal Entry Cash Solis, Capital Orbita, Capital Tangaro, Capital

25,000 23,000 1,000 1,000

Case 3 Sison Laranjo Morales Total Contributed Capital

45,000 40000 35,000 120,000

120,000 x 30% = 36,000 – 35,000 = 1,000 bonus to new partners Journal Entry Cash P Laranjo, Capital Sison, Capital Morales, Capital

35,000 600 400 36,000

*** Multiple Choice Problems *** Admission of a Partner in an Existing Partnership 4-I

City Travel and Tours Q-1

P800,000 x 1/4 = P200,000 (A)

Q-2

to be distributed to the selling partners (D)

Q-3

Gevera Tropico Canque Aguilar

Q-4

210,000 x 25% = 52,500 - 210,000 = 157,500 (A)

4 - II

1/5 x 75% 2/5 x 75% 2/5 x 75% 1/4

= 15% = 30% (B) = 30% = 25% = 100%

Panganiban, Salisana and Berhay Q-5

414,375 (C)

Q-6

Panganiban and Salisana (C)

Q-7

1,835,000 (B)

Solutions a)

b)

c)

d)

Capital Adjustments Allow. for Doubtful Accounts

5,000 5,000


15,000

Accumulated Depreciation Capital Adjustments

15,000

15,000

15,000

Panganiban, Capital Salisana, Capital Capital Adjustments

2,500 2,500 5,000

Panganiban, Capital – 950,000 – 2,500 = 947,500 x .25 = 236,875 Salisana, Capital – 890,000 – 2,500 = 887,500 x .20 = 177,500 414,375 (C) 1,835,000

Capital after adjustments Acquired by Berhay

4 - III Q-8

Panganiban 947,500 (236,875) 710,625

Salisana 887,500 (177,500) P710,000

Berhay 414,375 414,375

= 1,835,000 (B)

Southwxpressway Merchandising 450,000 x 1/2 = 225,000 (B)


35

Q-9

Book Value of Igao’s interest sold to Estroso Cash proceeds from the sale Personal loss to Igao

225,000 220,000 5,000 (C)

Q-10

Estroso should be credited by P225,000 equal to the book value of interest she acquired. (B)

4 - IV Southwxpressway Merchandising Q-11

Espero Aduana Gelacio Total Contributed Capital

30,000 45,000 20,000 95,000

(B)

Q-12

95,000 x 1/5 = 19,000 – 20,000 = 1,000 bonus to old partners (B)

Q-13

Espero Aduana

4-V

1,000 x 40% = 400 1,000 x 60% = 600 (A) 1,000

Ligsay, Emperado and Balagot

Q-14

Ligsay 150,000 4,000 (2,400) 151,600

Capital Balances Understatement of Inventory Understatement of depreciation Adjusted Balance Q-15

Q-16

Selling Price of share sold Book Value of interest purchased Gain on sale of share sold

35,000 30,200 4,800

Emperado 100,000 4,000 (2,400) 101,600

Balagot 120,000 2,000 (1,200) 120,800

(A)

Balagot will share a capital credit of P30,200 (B)

4 - VI Galos and Villarido Q-17

Galos Villarido Villanueva

200,000 160,000 110,000 470,000

470,000 x 1/4 = 117,500 – 110,000 = 7,500 bonus to new partner (C) Q-18

Galos Villarido

7,500 x 60% 7,500 x 40%

= 4,500 = 3,000 (A) 7,500

** Exercise and Problems ** Retirement or Withdrawal/Death, Bankruptcy or Incapacity of a Partner 4-1

Lacson, Joe and Ajoc

Requirement 1: a) b)

c)

Joel Jo, Capital Alex Ajoc, Capital

85,000

Joel Jo, Capital Heginio Lacson, Capital Alex Ajoc, Capital

85,000

Joel Jo, Capital Marco Ocenar, Capital

85,000

85,000 63,750 21,250 85,000

Requirement 2: Heginio Lacson Alex Ajoc

60,000 140,000 200,000

Heginio Lacson Alex Ajoc

123,750 76,250 200,000

Heginio Lacson Alex Ajoc Marco Ocenar

60,000 55,000 85,000 200,000


36

4-2

Esparaguera, Supapo and Ceniza 1.

2.

4-3

Ceniza, Capital Cash Esparaguera, Capital (2/6 x P 50,000) Supapo, Capital (4/6 x P 50,000)

650,000

Ceniza, Capital Esparaguera, Capital Supapo, Capital Cash

650,000 16,667 33,333

600,000 16,667 33,333

700,000

Tea for Snack House

Requirement 1: Orcullo’s Withdrawal

Orcullo, Capital Reyes, Capital Lopez, Capital Cash

80,000 7,500 7,500 95,000 Capital Balances

Reyes, Capital Lopez, Capital

92,500 82,500 175,000

Requirement 2: Orcullo, Capital Cash Reyes, Capital Lopez, Capital

4-4

80,000 75,000 2,500 2,500

Long Live Enterprises

Requirement 1: Mr. Dimamatay’s interest, Dec. 31, 2009 Add: Share in Net Income from Jan. 1-Feb.29 (20,000 x ½)

50,000 10,000 60,000

Requirement 2: Dimamatay, Capital Cash

60,000 60,000

Requirement 3: Dimamatay, Capital Buhay, Capital

4-5

60,000 60,000

Walangbuhay and Maylangit

Requirement 1: Capital Adjustment Allow. for Doubtful Account

5,000 5,000

Inventories Capital Adjustment

15,000

Accumulated Depreciation Capital Adjustment

50,000

Capital Adjustment Accrued Expense

10,000

Capital Adjustment Walangbuhay, Capital (60%) Maylangit, Capital (40%)

50,000

15,000 50,000 10,000


30,000 20,000

37

Requirement 2: Effects of Adjustments: Decrease in Account Receivable Increase in Inventory Increase in Equipment Increase in Expense Total P/L Ratio of Walangbuhay Share of Walangbuhay on the adjustments Add: Feb. 14 balance of Walangbuhay Walangbuhay’s adjusted capital balance

(5,000) 15,000 50,000 (10,000) 50,000 x 60% 30,000 950,000 980,000

Requirement 3: Walangbuhay, Capital Cash

980,000 980,000

Requirement 4: Walangbuhay, Capital Maylangit, Capital Cash

4-6

980,000 20,000 1,000,000

Sianosa, Rosete and Facturan

Requirement 1: Non-Cash Assets Gatmaitan, Capital (25%) Barroga, Capital (25%) Dorado, Capital (50%)

56,000 14,000 14,000 28,000

Requirement 2: Gatmaitan, Capital Gatmaitan, Loan Cash Barroga, Capital Dorado, Capital

4-7

56,000 9,000 16,200 16,267 32,533

Lopez, Albios and Aguhob ERRATUM: Accounts Payable should be 90,000

Requirement 1: a)

b)

c)

Inventory Lopez, Capital Albios, capital Aguhob, Capital

30,000

Equipment Lopez, Capital Albios, capital Aguhob, Capital

20,000

Lopez, Capital Albios, capital Aguhob, Capital Accrued Salaries

9,000 5,000 6,000

13,500 7,500 9,000 9,000 5,000 6,000

20,000

Requirement 2: Lopez, Capital Cash in Bank Albios, Capital (25/55) Aguhob, Capital (30/55)

114,500 50,000 29,318 35,182

(Note: Since this only a retirement of a partner, a partner’s deficiency will be considered as his own loss and become the advantage of the remaining partners.)


38

Requirement 3: Statement of Financial Position Assets Inventory Equipment Total Assets

Liabilities & Partners’ Equity Accounts Payable 90,000 Accrued Salaries 20,000 Albios, Capital 116,818

180,000 200,000 380,000

Aguhob, Capital 154,182 Total Liabilities & Partners’ Equity 380,000

Chapter 5 Dissolution with Liquidation Test I – True or False 1. 2. 3. 4. 5. 6. 7. 8.

True False True True True True True True

9. 10. 11. 12. 13. 14. 15. 16.

True False False True True True True True

17. 18. 19. 20. 21. 22. 23. 24. 25.

False True True True False True True True True

Test II – Multiple Choice 1. 2. 3. 4. 5.

C B B A A

6. 7. 8. 9. 10.

B C C A A

** Exercises and Problems ** 5-1

Centerpoint Commercial Requirement A: Centerpoint Commercial Statement of Partnership Liquidation

Balance before realization Realization and Gain

Cash 30,000 350,000

Balances Payment of Liabilities

380,000 (49,000)

Balance Payment to Partners’ Loan

331,000 (20,000)

Balances Payment to Partners’ Capital

NonCash 340,000 (340,000)

Liabilities 49,000 -

Dizon, Loan 20,000 -

40% Dizon, Capital 95,000 4,000

20% Tamala, Capital 100,000 2,000

40% Dimalanta, Capital 106,000 4,000

49,000 (49,000)

20,000 -

99,000 -

102,000 -

110,000 -

20,000 (20,000)

99,000 -

102,000 -

110,000 -

99,000 (99,000)

102,000 (102,000)

110,000 (110,000)

311,000 (311,000)

Journal Entries a)

b) c) d)

Cash Non-Cash Assets Dizon, Capital Tamala, Capital Dimalanta, Capital

350,000 340,000 4,000 2,000 4,000

Liabilities Cash

49,000

Dizon, Loan Cash

20,000

Dizon, Capital Tamala, Capital Dimalanta, Capital Cash


49,000 20,000 99,000 102,000 110,000 311,000

39

Requirement B: Centerpoint Commercial Statement of Partnership Liquidation

Balance before r ealization Realization and Loss

Cash 30,000 200,000


230,000 (49,000)


181,000 (20,000)


NonCash 340,000 (340,000)



40% Dizon, Capital 95,000 (56,000)

49,000 (49,000)

20,000 -

39,000 -

72,000 -

50,000 -

20,000 (20,000)

39,000 -

72,000 -

50,000 -

39,000 (39,000)

72,000 (72,000)

50,000 (50,000)

20% Tamala, Capital 100,000 (50,000)

40% Dimalanta, Capital 106,000 (100,000)

161,000 (161,000)

20% Tamala, Capital 100,000 (28,000)


Journal Entries a)

b) c) d)

Cash Dizon, Capital Tamala, Capital Dimalanta, Capital Non-Cash Assets

200,000 56,000 28,000 56,000 340,000

Liabilities Cash

49,000

Dizon, Loan Cash

20,000

Dizon, Capital Tamala, Capital Dimalanta, Capital Cash

39,000 72,000 50,000

49,000 20,000

161,000

Requirement C: Centerpoint Commercial Statement of Partnership Liquidation



40% Dizon, Capital 95,000 (100,000)

49,000 (49,000)

20,000 -

(5,000) -

50,000 -

6,000 -

71,000 -

20,000 (5,000)

(5,000) 5,000

50,000 -

6,000 -


71,000 (15,000)

15,000 (15,000)


56,000 (56,000)

Balance before r ealization Realization and Loss Balances Payment of Liabilities Balance Right of Offset

Cash 30,000 90,000

NonCash 340,000 (340,000)

120,000 (49,000)

50,000 -

6,000 -

50,000 (50,000)

6,000 (6,000)

Journal Entries a)

b) c) d) e)

Cash Dizon, Capital Tamala, Capital Dimalanta, Capital Non-Cash Assets Liabilities Cash Dizon, Loan Dizon, Capital

90,000 100,000 50,000 100,000 340,000 49,000 49,000 5,000 5,000

Dizon, Loan Cash

15,000

Tamala, Capital Dimalanta, Capital Cash

50,000 6,000


15,000

56,000

40

Requirement D:

Balance before r ealization ealization Realization and Loss Balances Payment of Liabilities Liabilities

Cash 30,000 60,000

NonCash 340,000 (340,000)

90,000 (49,000)



40% Dizon, Capital 95,000 (112,000)

20% Tamala, Capital 100,000 (56,000)

49,000 (49,000)

20,000 -

(17,000) -

44,000 -

(6,000) -

(17,000) 17,000

44,000 -

(6,000) -

44,000 -

(6,000) -

44,000

(6,000)

(6,000)

6,000

Balance Right of Offset

41,000 -

20,000 (17,000)


41,000 (3,000)

3,000 (3,000)

Balances Deficiency of Dimalanta absorbed by Tamala

38,000


38,000 (38,000)


38,000 (38,000)

Journal Entries a)

b) c) d) e) f)


60,000 112,000 56,000 112,000 340,000

Liabilities Cash

49,000

Dizon, Loan Dizon, Capital

17,000

49,000 17,000

Dizon, Loan Cash

3,000

Tamala, Capital Dimalanta, Capital

6,000

3,000

Tamala, Capital Cash

6,000 38,000 38,000

Requirement E:

Balance before r ealization ealization Realization and Loss Balances Payment of Liabilities Liabilities

Cash 30,000 40,000

NonCash 340,000 (340,000)

70,000 (49,000)


21,000 -

Balance Deficiency of Dizon & Tamala absorbed by Dimalanta

21,000


21,000 (21,000)



40% Dizon, Capital 95,000 (120,000)

20% Tamala, Capital 100,000 (60,000)

49,000 (49,000)

20,000 -

(25,000) -

40,000 -

(14,000) -

20,000 (20,000)

(25,000) 20,000

40,000 -

(14,000) -

(5,000)

40,000

(14,000)

5,000

(19,000)

14,000

-


21,000 (21,000)

Journal Entries a)

b) c) d)

e)


40,000 120,000 60,000 120,000 340,000

Liabilities Cash

49,000

Dizon, Loan Dizon, Capital

20,000

Tamala, Capital Dimalanta, Capital Dizon, Capital

19,000

Tamala, Capital Cash

21,000


49,000 20,000 14,000 5,000 21,000

41

5-2

Watin – Veloso Partnership Requirement A1: (SOVENT) Watin – Veloso Partnership Statement of Partnership Liquidation

Balance before realization Realization and Loss Balances Payment of Liabilities

NonCash 180,000 (180,000)

Cash 20,000 85,000 105,000 (60,000)


45,000 -

Balances Additional Cash - Watin

45,000 7,000

Balances Payment to Veloso


Watin, Loan 10,000 -

60% Watin, Capital 40,000 (57,000)

40% Veloso, Capital 90,000 (38,000)

60,000 (60,000)

10,000 -

(17,000) -

52,000 -

10,000 (10,000)

(17,000) 10,000

52,000 -

(7,000) 7,000

52,000 -

52,000 (52,000)

52,000 (52,000)

Requirement A2: (INSOVENT)

Balance before realization Realization and Loss Balances Payment of Liabilities

NonCash 180,000 (180,000)

Cash 20,000 85,000 105,000 (60,000)


45,000 -

Balances Deficiency of Watin Absorbed by Veloso

45,000

Balances Payment to Veloso


Watin, Loan 10,000 -

60% Watin, Capital 40,000 (57,000)

40% Veloso, Capital 90,000 (38,000)

60,000 (60,000)

10,000 -

(17,000) -

52,000 -

10,000 (10,000)

(17,000) 10,000

52,000 -

(7,000)

52,000

7,000 45,000 (45,000)

(7,000) 45,000 (45,000)

Requirement B1: SOLVENT

Journal Entries a)

b) c) d) e)

Cash Watin, Capital Veloso, Capital Non-Cash Assets

85,000 57,000 38,000

Accounts payable Cash

60,000

Watin, Loan Watin, Capital

10,000

Cash Watin, Capital

7,000

Veloso, Capital Cash

180,000 60,000 10,000 7,000 52,000 52,000

Requirement B2: INSOLVENT

Journal Entries a)

b) c) d) e)

Cash Watin, Capital Veloso, Capital Non-Cash Assets

85,000 57,000 38,000

Accounts payable Cash

60,000

Watin, Loan Watin, Capital

10,000

Veloso, Capital Watin, Capital

7,000

Veloso, Capital Cash


180,000 60,000 10,000 7,000 45,000 45,000

42

5-3

Sanciangko Commercial Requirement 1:

Sanciangko Commercial Statement of Partnership Liquidation

Cash 45,000 50,000 95,000 59,500

Balance before r ealization ealization Customer’s Collection Balances Sale of Mdse. at a Loss Balances Payment of Liabilities Liabilities

NonCash 127,000 (57,000) 70,000 (70,000)

154,500 (62,000)

Balances Payment to Loan

92,500 (5,000)

Balance Payment to Partners

87,500 (87,500)

Accounts Payable 62,000 62,000 -

Pozon, Loan 5,000 5,000 -

30% Pozon, Capital 35,000 (2,100) 32,900 (3,150)

30% Selisana, Capital 35,000 (2,100) 32,900 (3,150)

40% Teque, Capital 35,000 (2,800) 32,200 (4,200)

62,000 (62,000)

5,000 -

29,750 -

29,750 -

28,000 -

5,000 (5,000)

29,750 -

29,750 -

28,000 -

29,750 (29,750)

29,750 (29,750)

28,000 (28,000)

Requirement 2:

1)

2)

3) 4) 5)

5-4

Cash Allowance for doubtful Accounts Pozon, Capital Selisana, Capital Teque, Capital Accounts Receivable To record collection from customer’s account and charged off the balance.

50,000 3,000 2,100 2,100 2,800

Cash Pozon, Capital Selisana, Capital Teque, Capital Merchandise

59,000 3,150 3,150 4,200


62,000

60,000

70,000 62,000

Pozon, Loan Cash

5,000 5,000

Pozon, Capital Selisana, Capital Teque, Capital Cash

29,750 29,750 28,000 87,500

RNJ Trading Requirement 1:

RNJ Trading Statement of Partnership Liquidation

Balance before r ealization ealization Realization on Loss Balances Payment of Liabilities Liabilities

Cash 5,000 60,000 65,000 (50,000)

Balances Right of Offset

15,000 -

Balances Deficiency of Suico is absorbed by Cabral and Lledo Lledo on the ratio of 2/5 – 3/5

15,000

Balance Payment to Partners

NonCash 80,000 (80,000)

Accounts Payable 50,000 -

Suico, Loan 4,000 -

50% Suico, Capital 5,000 (10,000)

20% Cabral, Capital 17,000 (4 ,000)

50,000 (50,000)

4,000 -

(5,000) -

13,000 -

3,000 -

4,000 (4,000)

(5,000) 4,000

13,000 -

3,000 -

(1,000)

13,000

3,000

(400)

(600)

12,600 (12,600)

2,400 (2,400)

1,000 15,000 (15,000)


30% Lledo, Capital 9,000 (6,000)

43

Requirement 2:

1)

2) 3) 4)

5)

5-5

Cash Suico, Capital Cabral, Capital Lledo, Capital Non-Cash Assets

60,000 10,000 4,000 6,000


50,000

Suico, Loan Suico, Capital

4,000

Cabral, Capital Lledo, Capital Suico, Capital

400, 600

80,000 50,000 4,000

1,000

Cabral, Capital Lledo, Capital Cash

12,600 2,400 15,000

Capreso – Tao Partnership Case 1: Carpeso – Tao Partnership Statement of Liquidation

Balance before realization Realization and Gain

Cash 130,000


130,000 (40,000)

Balances Payment to Capital

90,000 (90,000)

NonCash 120,000 (120,000)


40% Carpeso, Capital 60,000 4,000

60% Tao, Capital 20,000 6,000

40,000 (40,000)

64,000 -

26,000 -

64,000 (64,000)

26,000 (26,000)

Journal Entries 1)

2) 3)

Cash Non-Cash Carpeso, Capital Tao, Capital

130,000 120,000 4,000 6,000


40,000

Carpeso, Capital Tao, Capital Cash

64,000 26,000

40,000

90,000

Case 2: Carpeso – Tao Partnership Statement of Partnership Liquidation

Cash 70,000

Balance before realization Realization on Loss Balances Payment of Liabilities

NonCash 120,000 (120,000)

70,000 (40,000)


40% Carpeso, Capital 60,000 (20,000)

60% Tao, Capital 20,000 (30,000)

40,000 (40,000)

40,000 -

(10,000) (10,000) 10,000

Balances Contribution of Tao

30,000 10,000

40,000 -


40,000 (40,000)

40,000 (40,000)

Journal Entries 1)

2)

Cash Carpeso, Capital Tao, Capital Non-Cash

70,000 20,000 30,000


40,000


120,000 40,000

44

3) 4)

5-6

Cash Tao, Capital

10,000

Carpeso, Capital Cash

40,000

10,000 40,000

Sambag Refrigeration Services Requirement 1:

Sambag Refrigeration Services Statement of Partnership Liquidation

Balance before r ealization Sale of non-cash assets and Distribution of loss Balances Payment of Liabilities

Cash 20,000

NonCash 250,000

Accounts Payable 156,000

Delantar, Loan 4,000

20% Delantar, Capital (5,000)

50% Gabriel, Capital 65,000

30% Padul, Capital 50,000

200,000

(250,000)

-

-

(10,000)

(25,000)

(15,000)

156,000 (156,000)

4,000 -

(15,000) -

40,000 -

35,000 -

4,000 (4,000)

(15,000) 4,000

40,000 -

35,000 -

(11,000)

40,000

35,000

11,000

(6,875)

(4,125)

33,125 (33,125)

30,875

220,000 (156,000)


64,000 -

Balance Deficiency of Delantar Absorbed by Gabriel and Padul (5/8 – 3/8)

64,000

-

Balances Payment to Gabriel

64,000 (33,125)

Payment to Padul

(30,875)

(30,875)

Requirement 2: Journal Entries 1)

2) 3) 4)

5)

5-7

Cash Delantar, Capital Gabriel, Capital Padul, Capital Non-Cash Assets

200,000 10,000 25,000 15,000


156,000

250,000 156,000

Delantar, Loan Delantar, Capital

4,000 4,000

Gabriel, Capital 6,875 Padul, Capital 4,125 Delantar, Capital To record capital deficiency of Delantar absorbed by Gabriel and Padul. Gabriel, Capital Padul, Capital Cash To finally distribute cash to partners.

11,000

33,125 30,875 64,000

Saberon and Lopez Requirement 1: Statement of Partnership Liquidation

Balance before realization a) Realization and Loss

Cash 3,000 40,000 43,000 (20,000)

NonCash 55,000 (55,000)

Accounts Payable 20,000 20,000 (20,000)

80% Saberon, Capital 8,000 (12,00)

20% Lopez, Capital 25,000 (3,000)

5,000 -

(4,000) -

22,000 -

(4,000) 4,000

22,000 -

Saberon, Loan 5,000 -

b)


c)

Balances Right of Offset

23,000 -

5,000 (4,000)

d)

Balances Payment to Loan

23,000 (1,000)

1,000 (1,000)

e)


22,000 (22,000)

22,000 22,000 (22,000)

(Note: The balancing amount of P55,000 is non-cash assets) Solution Manual in Partnership and Corporation 2014-2015

45

Requirement 2: Journal Entries a)

b) c) d) e)

5-8

Cash Saberon, Capital Lopez, Capital Non-Cash Assets

40,000 12,000 3,000


20,000

55,000 20,000

Saberon, Loan Saberon, Capital

4,000

Saberon, Loan Cash

1,000

Lopez, Capital Cash

22,000

4,000 1,000 22,000

Badoy, Licayan and Bargayo Requirement 1:

Badoy, Licayan and Bargayo Statement of Partnership Liquidation NonCash 122,000 (122,000)


Badoy, Loan 20,000 -

40% Badoy, Capital 24,000 -

20% Licayan, Capital 16,000 (22,400)

40% Bargayo, Capital 37,000 (44,800)

5,000 (5,000)

20,000 -

24,000 -

(6,400) -

(7,800) -

(6,400) 6,400

(7,800) -

Balance before r ealization Realization and Loss

Cash 20,000 10,000

Balance Payment of Liability

30,000 (5,000)

Balance Right of Off-set

25,000 -

20,000 (4,800)

24,000 (6,400)

Balance after the rights of offset Deficiency of Gulane Absorbed by Badoy & Licayan

25,000

15,200

17,600

(7,800)

(5,200)

(2,600)

7,800

10,000 (10,000)

15,000 (15,000)

Balance Payment to Badoy and Licayan

25,000 (25,000)

Requirement 2a: Journal Entries a)

b)

c)

d)

e)

f)

Cash Allowance for Doubtful Accounts Accumulated Depreciation Gain or Loss on Realization Accounts Receivable Merchandise Inventory Equipment Sale on non-cash assets. Badoy, capital Licayan, Capital Bargayo, Capital Gain or Loss on Realization To distribute loss on realization.

10,000 40,000 5,000 112,000 42,000 30,000 95,000 44,800 22,400 44,800 112,000

Accounts Payable Cash Payment of liability.

5,000

Badoy, Loan Badoy, Capital Right of Off-set.

4,800

Licayan, Loan Licayan, Capital Right of Off-set.

6,400

Badoy, Loan Licayan, Loan Bargayo, Capital

5,200 2,600


5,000

4,800

6,400

7,800

46

Requirement 2b: (Bargayo is solvent and pays deficiency, same entry from a to f) g)

Cash Bargayo, Capital Cash payment of deficiency.

h)

Badoy, Loan Licayan, Loan Cash To distribute cash to partners.

7,800 7,800 10,000 15,000 25,000

To distribute cash to partners Badoy, Loan 15,200 (15,200)

Balance after right of Offset Cash payment to Bargayo Cash payment to partners

5-9

Licayan, Loan 17,600 (17,600)

Bargayo, Capital (7,800) 7,800 -0-

LJ Enterprises Assumption 1: LJ Enterprises Statement of Partnership Liquidation


Caminade, Loan 19,000 -

65% Caminade, Capital 59,000 (58,500)

91,000 (91,000)

19,000 -

500 -

(500) -

19,000 -

19,000 -

500 (500)

(500) 500

19,000 (19,000)

19,000 (19,000)

Balance before Liquidation Sale of Non-cash assets and distribution of Loss

Cash 110,000

Balance Payment of Liabilities

110,000 (91,000)

Balance Absorption of Tormis deficiency Balance Payment to Laguna, loan

Non-Cash 200,000 (200,000)

35% Tormis, Capital 31,000 (31,500)

Journal Entries a)

b) c) d)

Cash Caminade, Capital Tormis, Capital Non-Cash Assets

110,000 58,500 31,500 200,000

Liabilities Cash

91,000 91,000

Caminade, Capital Tormis, Capital

500 500

Caminade, Loan Cash

19,000 19,000

Assumption 2: LJ Enterprises Statement of Partnership Liquidation

Balance before Liquidation Sale of Non-cash assets and distribution of Loss

Cash 110,000

Balance Payment of Liabilities

110,000 (91,000)

Non-Cash 200,000 (200,000)


Caminade, Loan 19,000 -

80% Caminade, Capital 59,000 (72,000)

20% Tormis, Capital 31,000 (18,000)

91,000 (91,000)

19,000 -

(13,000) -

13,000 -

(13,000) 13,000

13,000 -

Balance Right of Off-set - Caminade

19,000 -

19,000 (13,000)

Balances Payment to Loan – Caminade

19,000 (6,000)

6,000 (6,000)

Payment to Capital - Tormis

(13,000)

13,000 (13,000)

Journal Entries a)

b)

Cash Caminade, Capital Tormis, Capital Non-Cash Assets Liabilities Cash


110,000 72,000 18,000 200,000 91,000 91,000

47

c) d)

Caminade, Loan Caminade, Capital

13,000

Caminade, Loan Tormis, Capital Cash

6,000 13,000

13,000

19,000

Payment of Loan to Caminade and capital to Tormis. 5 - 10 Digos Trading Requirement 1: Digos Trading Statement of Partnership Liquidation June 30, 20A 30% Apolinar, Capital 5,000

30% Guiamad, Capital 25,000

10,000 -

(6,000) (1,000) -

(6,000) 19,000 -

(8,000) 15,000 -

40,000 -

10,000 (1,000)

(1,000) 1,000

19,000 -

15,000 -

40,000 -

9,000 -

19,000 (3,000)

15,000 -

40,000

9,000

16,000

15,000

(6,00) 15,400 -

(800) 14,200 -

Cash 13,000

NonCash 70,000

Liabilities 20,000

Apolinar, Loan 10,000

10,000 23,000 (20,000)

(30,000) 40,000 -

20,000 (20,000)

Balances c) Right of Off-set

3,000 -

Balances d) Cash Payment (Sch.1)

3,000 (3,000)

Balances before liquidation st 1 Installment: a) Realization and Loss Balances b) Payment of Liabilities

Balances nd 2 Installment: e) Realization and Loss Balances f) Right of Off-set Balances g) Cash Payment (Sch.2) Balances rd 3 Installment: h) Realization and Loss

4,000 4,000 -

(6,000) 34,000 -

4,000 (4,000)

34,000 -

8,400 -

15,400 (4,000)

14,200 -

34,000

8,400

11,400

14,200

30,000

(600)

(34,000)

-

Balances i) Right of Off-set

30,000 -

8,400 (1,200)

Balances j) Payment to Loan

30,000 (7,200)

7,200 (7,200)

Balances k) Payment to Capital

22,800 (22,800)

Requirement 2:

(600) (600) 600

40% Paclijan, Capital 23,000

(1,200) (1,200) 1,200

(1,200)

(1,600)

10,200 -

12,600 -

10,200 -

12,600 -

10,200 (10,200)

12,600 (12,600)

(1) Schedule of Cash Payment Total

30% Apolinar

30% Guiamad

40% Paclijan

43,000 (40,000) 3,000

9,000 (12,000) (3,000)

19,000 (12,000) 7,000

15,000 (16,500) (1,000)

st

Balance after 1 Installment Capital and Loan Less: Theoretical Loss Cash for Distribution Deficiency of Apolinar and Paclijan absorbed by Guiamad

3,000

Cash payment to Guiamad

(4,000)

1,000

3,000

(2) Schedule of Cash Payment Total

30% Apolinar

30% Guiamad

40% Paclijan

38,000 (34,000) 4,000

8,400 (10,200) (1,800)

15,400 (10,200) 5,200

14,200 (13,600) 600

1,800

(771.43)

(1,028.57)

4,428.57 4,000.00

428.57 428.57

nd

Balance after 2 Installment Capital and Loan Less: Theoretical Loss Cash for Distribution Deficiency of Apolinar absorbed Guiamad and Paclijan (3/7 – 4/7)

by

Balance Deficiency of Paclijan absorbed by Guiamad


48

Requirement 3: Journal Entries a)

b) c) d) e)

f) g) h)

i) j) k)

Cash Apolinar, Capital Guiamad, Capital Paclijan, Capital Non-Cash Assets

10,000 6,000 6,000 8,000


20,000

30,000 20,000

Apolinar, Loan Apolinar, Capital

3,000

Guiamad, Loan Cash

3,000


4,000 600 600 800


1,200

Guiamad, Capital Cash

4,000

3,000 3,000

6,000 1,200 4,000


30,000 1,200 1,200 1,600


1,200

Apolinar, Loan Cash

7,200

34,000 1,200 7,200

Guiamad, Capital Paclijan, Capital Cash

10,200 12,600 22,800

Requirement 4: Digos Trading Cash Priority Program Loss Absorption Balance Apolinar Guiamad Paclijan Capital and Loan Balances before realization Profit and Loss ratio Loss absorption ability Excess of Guiamad over Paclijan Balances Excess of Guiamad and Paclijan over Apolinar Balances

15,000 30% 50,000 50,000

25,000 30% 83,333 (25,833) 57,500

57,500

50,000

(7,500) 50,000

(7,500) 50,000

Cash Payment Apolinar Guiamad

Total

Paclijan

23,000 40% 57,500 7,750

-

7,750

5,250 13,000

-

2,250 10,000

3,000 3,000

30%

40%

Cash available in excess of 13,000(P/L Ratio)

30%

-

5 - 11 Paramount Company Paramount Company

Case 1:

Balance before Liquidation Realization and Loss Balances Payment of Liability

Cash 8,000 74,000

NonCash 136,000 (136,000)

82,000 (44,800)

40% Clarin, Capital 24,000 (24,800)

40% Namoc, Capital 32,000 (24,800)

20% Martinez, Capital 38,000 (12,400)

3,200 -

(800) -

7,200 -

25,600 -

(800) 800

7,200 -

25,600 -

7,200 -

25,600 -


Clarin, Loan 2,000 -

Namoc, Loan 3,200 -

44,800 (44,800)

2,000 -

Balances Right of Off-set - Clarin

37,200 -

2,000 (800)

3,200 -

Balances Payment to Loan-Clarin & Namoc

37,200 (4,400)

1,200 (1,200)

3,200 (3,200)

Balances Payment to Capital-Namoc & Martinez

32,800

7,200

25,600

(32,800)

(7,200)

(25,600)


49

40%

40%

20%



Namoc, Loan 3,200 -

Clarin, Capital 24,000 (27,200)

Namoc, Capital 32,000 (27,200)

Martinez, Capital 38,000 (13,600)

44,800 (44,800)

2,000 -

3,200 -

(3,200) -

4,800 -

24,400 -

2,000 (2,000)

3,200 -

(3,200) 2,000

4,800 -

24,400 -

3,200

(1,200)

4,800

24,400

Case 2:


Cash 8,000 68,000 76,000 (44,800)

Balances Right of Off-set

31,200 -

Balances Cash contribution by Clarin to pay off deficiency

31,200

Balances Payment to Loan - Namoc

32,400 (3,200)

Payment to Capital-Namoc & Martinez

NonCash 136,000 (136,000)

1,200

-

1,200

(29,200)

Case 3:


Cash 8,000 68,000

NonCash 136,000 (136,000)

31,200 -

Balances Deficiency of Clarin absorbed by Namoc & Martinez on a 4/6 and 2/6 basis

31,200

Balances Payment to Loan - Namoc

31,200 (3,200)

-

4,800

24,400

(4,800)

(24,400)

40%

40%

20%

Namoc, Capital 32,000 (27,200)

Martinez, Capital 38,000 (13,600)



Namoc, Loan 3,200 -

Clarin, Capital 24,000 (27,200)

44,800 (44,800)

2,000 -

3,200 -

(3,200) -

4,800 -

24,400 -

2,000 (2,000)

3,200 -

(3,200) 2,000

4,800 -

24,400 -

3,200

(1,200)

4,800

24,400

76,000 (44,800)

Balances Right of Off-set

Payment to Capital-Namoc & Martinez

-

3,200 (3,200)

-

-

1,200

3,200 (3,200)

(28,000)

(800)

(400)

4,000

24,000

(4,000)

(24,000)

5 - 12 Star Hardware Requirement 1: Star Hardware Cash Priority Program Loss Absorption Balance Corpuz Cuidadano Luntao Capital and Loan Balances before realization Profit and Loss ratio Loss absorption ability Extinguishment: Excess of Luntao over Corpuz Balances Excess of Luntao and Corpuz over Cuidadano Balances

Total

Cash Payment Corpuz Cuidadano

Luntao

65,000 30% 216,667

80,000 40% 200,000

70,000 30% 233,333

216,667

200,000

(16,666) 216,667

5,000

-

-

5,000

(16,667) 200,000

200,000

(16,667) 200,000

10,000 15,000

5,000 5,000

-

5,000 10,000

Cash available in excess of 15,000 (P/L Ratio)

30%

40%

30%

Requirement 2: Computations:

30% Corpuz

Cash available for distribution – P8,000: st 1 cash available of P5,000 is given to Lunato Remainder of P3,000 (P/L Ratio) 3/6 or ½ to Corpuz 3/6 or ½ to Luntao

Computations: A per program Excess (P/L ratio) Cash available for distribution


Total 15,000 5,000 20,000

40% Cuidadano

30% Luntao 5,000

1,500 1,500

-0-

1,500 6,500

30% Corpuz 5,000 1,500 6,500

40% Cuidadano 2,000 2,000

30% Luntao 10,000 1,500 11,500

50

*** Multiple Choice Problems *** 5 – I

Ibañez, Langbid and Pedroño Q – 1

Ibañez Agreed share Capital balance before realization Share of realization gain of P50,000 Balance after effecting the gain

Q – 2

40% 80,000 20,000 100,000 Ibañez

Agreed share x Loss on realization Share of the realization loss 5 – II

40% 30,000 12,000

Langbid

Pedronio

35% 70,000 17,500 87,500

25% 50,000 12,500 62,500

Langbid

(A)

Pedronio

35% 30,000 10,500

25% 30,000 7,500

(A)

S&R trading Q – 3

Q – 4

Partners’ Equity Gabuya Cadeleña Total Less: Write-off New Partners’ Equity

P 105,000 120,000 P 225,000 4,000 P221,000

(B)

Cash Add: 90% collection Total Less: Payment of Liabilities Cash Balance

P 60,000 36,000 P 96,000 80,000 P 16,000

(A)

Total Partners’ Equity Add: Liabilities Total Assets

P105,000 145,000 P250,000

(B)

Book Value of Non-Cash Assets Proceeds from Sale Loss on Realization P/L Ratio Share of Torralba on the Realization Loss

P 250,000 180,000 P 70,000 x 70% P 49,000

(C)

Rosada, Capital Share of the Realization Loss of P70,000 (P70,000 x 30%) Share of cash distribution

P 50,000

5 – III Manila and Torralba Q – 5

Q – 6

Q – 7

21,000 P 29,000

(A)

P 490,000 ( 340,000) P150,000

(A)

5 – IV Ambrosio, Rada and Pateño Q –8

Q – 9

Non-Cash Assets Less: Realization Loss Realization of non-cash assets All accounts with credit balances: Liabilities Ambrosio, Capital Rada, Capital Pateño, Capital Less: Non-Cash Assets Cash balance before realization

P 105,000 180,000 150,000 120,000 P555,000 490,000 P 65,000

(B)

Q – 10

Ans. C - P3,000 capital contribution is equal to her capital deficiency.

Q – 11

Ans. A - Ambrosio, P2,000 and Rada P1,000.

5 – V

Southexpressway Hardware

Q – 12

Total partnership interest Less: Allow. for Doubtful Accounts Merchandise Store Furniture and Equipment Less: Accumulated Depreciation Book Value of non-cash assets


P 60,000 5,000 90,000 60,000

P 55,000 80,000 30,000 P165,000

(C)

51

Q – 13

Ans. A Cash Allowance for Doubtful Accounts Accumulated Depreciation Accounts Receivable Merchandise Store Furniture and Equipment Gain or Loss on Realization

P 186,000 5,000 60,000 P 60,000 80,000 90,000 21,000

Q – 14

Realization Value P 56,000 85,000 45,000 P 186,000

Accounts Receivable Merchandise Store Furniture and Equipment

Q – 15

Ans. A - P7,000 for Tao and P14,000 for Alegado

Q – 16

Ans. B Gain or Loss on Realization Arib, Capital Zaragoza, Capital

Q – 17

Book Value P 55,000 80,000 30,000 P 165,000

Gain (loss) P 1,000 5,000 15,000 P21,000

(B)

P 21,000 P

Ans. B Accounts Payable Cash

7,000 14,000

P 15,000 P 15,000

5 – VI Miranda and Leon Q – 18

Q – 19

Q – 20

Q – 21

Q – 22

5 – VII

Proceeds from sale of non-cash assets Non-cash assets Loss on Realization

P 140,000 ( 200,000) (P 60,000)

Loss on Realization x P/L ratio of Leon Share of Leon on the realization loss

P

60,000 x 40% P 24,000

Miranda, Capital Leon, Capital Gain on Realization

P P

36,000 24,000 60,000

(B)

Miranda, Capital Share of Miranda on realization loss Capital debit of Miranda

P 30,000 ( 36,000) (P 6,000)

(B)

(B)

Ans. C - The amount of Miranda, loan that is off-set against capital deficiency is P6,000.

Sabado, Gregori and Gadia

Capital balances Loan balances Combined Capital & loan balances Less: Theoretical Loss Q – 23 (A) Q – 24 (A) Total

Total 65,000 5,000 70,000 (20,000) 50,000

Deficiency of Sabado and Deriquito Absorbed by Gregori

40% Sabado (4,000) 5,000 1,000

20% Gregori 63,000

40% Dequito 6,000

63,000

6,000

(8,000) (7,000)

(4,000) 59,000

(8,000) (2,000)

7,000

(9,000)

2,000

Q – 25 (B)

5 – VIII

(C)

50,000

Espocia and Malquisto

Q – 26

Cash 450,000

Balances before realization Realization and Loss Balances Payment of Liabilities

450,000 (120,000)

Balance Payment of Capital

330,000 (330,000)


Non-cash 510,000 (510,000)


Espocia 240,000 (240,000)

Malquito 150,000 136,000

120,000 (120,000)

216,000 -

114,000 -

216,000 (216,000)

114,000 (114,000)

(A)

52

5 – IX

Java and Constantino

Q – 27

Q – 28

5 – X

Total Assets Less: Cash Non-cash assets

P 55,000 10,000 (P 45,000)

(C)

Realization Loss Add: Non-Cash Cash Proceeds from Sale

(P 15,000) 45,000 (P 30,000)

(A)

Patosa, Juinio and dela Cruz Q – 29 Balances before realization Realization and Loss Balances Payment of Liabilities Balances Absorption Loss of dela Cruz

5 – XI

Cash 60,000 400,000

Other Assets 540,000 (540,000)

460,000 (140,000)


50% Patosa 280,000 (70,000)

30% Juinio 160,000 (42,000)

20% dela Cruz 20,000 (28,000)

140,000 (140,000)

210,000 -

118,000 -

(8,000) -

210,000 (5,000)

118,000 (3,000)

(8,000) 8,000

205,000

115,000

50% Villacampa 95,000 (40,000) 55,000 -

25% Kudemus 80,000 (20,000) 60,000 -

25% Puno 70,000 (20,000) 50,000 -

60,000

50,000

320,000

(D)

Villacampa, Kudemus and Puno

Q – 30 Balances before realization st 1 Installment Realization and Loss Balances Payment of Liabilities Balances

Cash 28,000 70,000 98,000 (48,000)

Other Assets 265,000 (150,000) 115,000 -

50,000

115,000

SCHEDULE 1:

55,000

50% Villacampa 55,000 (57,500) (2,500)

Total 165,000 (115,000) 50,000

Balances before realization Less: Theoretical Loss Cash Distribution

Liabilities 48,000 48,000 (48,000)

Deficiency of Villacampa absorbed by Trinidad and Puno

2,500

Cash Payment to Trinidad and Puno

25% Kudemus 60,000 (28,750) 31,250

25% Puno 50,000 (28,750) 21,250

(1,250)

(1,250)

30,000

20,000

Chapter 6 Corporation (Definition, Nature and Formation) Test I – True or False 1. 2. 3. 4. 5. 6. 7.

true true true false false true true

8. 9. 10. 11. 12. 13. 14.

false true false true false true true

15. 16. 17. 18. 19. 20. 21.

true false true true true true true

22. 23. 24. 25. 26. 27. 28.

False true true false true true true

4. 5. 6.

A D A

7. 8. 9.

A C B

10. A 11. B 12. A

29. true

Test I – Multiple Choice 1. D 2. C 3. B

Chapter 7 Accounting for Share Capital Transactions Test I – True or False 1. 2. 3. 4. 5. 6.

false false false true false true

7. 8. 9. 10. 11. 12.

true true true true true true


13. 14. 15. 16. 17. 18.

true false false true true true

19. 20. 21. 22. 23. 24.

true true true false false true

25. true 26. false

53

Test I – Multiple Choice 1. A 2. A 3. D

4. A 5. A 6. C

7. 8. 9.

A A D

10. A 11. C

*** EXERCISES and PROBLEMS *** 7 – 1

Sarangani Marketing Corporation Journal Entry

Memorandum Entry

July 2 Unissued Ordinary Share Authorized Ordinary Share

P1,000,000

Subscription Receivable Subscribed Ordinary Share

P 250,000

Cash Subscription Receivable

P

P1,000,000

Ordinary Share Capital Authorized shares at

to issue 10,000 P100 par value


P250,000

P 250,000


P 62,500

P

Organization Cost

P 15,000

62,500 62,500

P250,000

P 62,500

July 15 Organization Cost

P

15,000

Cash

P 15,000

Cash

P 15,000

July 16 Subscription Receivable Subscribed Ordinary Share Share Premium

P


P

10,500 P

10,000 500

P

4,500

4,500

Subscription Receivable Subscribed Ordinary Share Share Premium

P 10,500


P

P 11,000

P 10,000 500 4,500 P

4,500

July 18 Subscription Receivable Subscribed Ordinary Share Share Premium

P

11,000 P

10,000 1,000


15,000

Cash Ordinary Share

P 15,000

P

P 15,000

15,000


P 20,000

20,000

Subscribed Ordinary Share Ordinary Share

Land Ordinary Share Share Premium

P 40,000

30,000 10,000

P 35,000

30,000 5,000

Share Premium (Organization Cost) Ordinary Share Share Premium

P 10,000 1,000

July 20 Cash Unissued Ordinary Share

P

15,000

P 15,000

July 25 Cash Subscription Receivable

P

Subscribed Ordinary Share Unissued Ordinary Share

P

15,000 P 20,000 P

P 15,000

P 20,000

July 27 Land P 40,000 Unissued Ordinary Share P Share Premium (fair market value of land is given) July 29 Organization Expense

P

35,000

Unissued Ordinary Share Share Premium (par value is used)

P

P 30,000 10,000

P 30,000 5,000


P 35,000

P 35,000



P 35,000 P 35,000

54


P

P 6,000

6,000


P10,000

P 10,000


P


7 – 2

6,000

10,000

P 6,000

P 10,000

Dadiangas canning Corporation

Requirement 1: Memorandum Entry

Journal Entry

Sept. 1 . Ordinary Share Authorized to issue 30,000 Ordinary shares at P100 par value share


Unissued Ordinary Share Authorized Ordinary Share

P3,000,000

P 750,000

P 750,000



P 187,500

P 187,500

P 750,000

P3,000,000

P 750,000

Sept. 2 Cash Subscription Receivable

P 187,500

P 187,500

Sept. 5 Organization Expense Cash

P

20,000


P

22,000


P

P

20,000


P

22,000


P

4,400

P 148,500

P 148,500



P 198,000

P 198,000

P

20,000

P

20,000 2,000

P

Organization Expense Cash

P

20,000

P

20,000 2,000

P

4,400

Sept. 10

4,400

4,400

Sept. 14 Cash Subscription Receivable 1,980 x 100 per share Partial Payment Balance Collected Subscribed Ordinary Share Share Capital

P 148,500

P 148,500

P198,000 49,500 P148,500 P 198,000

P 198,000

Sept. 19 Cash in Bank Ordinary Share

P

50,000

Cash in Bank Unissued Ordinary Share

P

50,000

P

50,000

94,000 1,000

Land Unissued Ordinary Share Share Premium

P

P

P

17,600


P 20, 000

20,000


P

50,000

P

94,000 1,000

P

17,600

P

20,000

Sept. 24 Land Ordinary Share Share Premium

P

95,000

95,000

Sept. 30 Cash Subscription Receivable

P

17,600


P 20, 000

P

P


17,600

55

Requirement 2-1: Shareholder’s Equity (Memorandum Entry)

Contributed Capital: Share Capital Ordinary Share, P100 par value, 3,620 shares issued Subscribed Ordinary Share Less: Subscription Receivable Share Premium Issued and Subscribed Ordinary Shares

362,000 552,000 414,000

138,000 3,000 503,000

Shareholder’s Equity (Journal Entry)

Contributed Capital: Share Capital Ordinary Shares authorized, 30,000 shares at P100 Less: Unissued ordinary shares Issued Ordinary Shares Subscribed Ordinary Shares Less: Subscription Receivable Share Premium Issued and Subscribed Ordinary Shares

3,000,000 2,638,000 362,000 552,000 414,000

138,000 3,000 503,000

Requirement 2-2: Aug. 5

Unissued Preference Share Unissued Ordinary Share Authorized Preference Share Authorized Ordinary Share

P

Subscription Receivable – Preference (14,000 x 30) Subscription Receivable – Ordinary (27,000 x 100) Subscribed Preference Share Subscribed Ordinary Share

P

Cash

P

1,500,000 10,000,000 P 1,500,000 10,000,000 420,000 2,700,000

Aug. 10

Aug. 15

P

Subscribed Preference Share Subscribed Ordinary Share Unissued Preference Share Unissued Ordinary Share

P

Subscription Receivable – Preference Subscription Receivable – Ordinary Subscribed Preference Share Subscribed Ordinary Share Share Premium – Preference Share Premium – Ordinary

P

Cash

P

Land

P

Subscription Receivable – Preference Subscribed Preference Share Share Premium – Preference

P

Cash

P


P

P

20,000 5,000

P

420,000 2,700,000

P

6,000 100,000 1,000 5,000

P

1,400 21,000

P

300,000 15,000

P

60,000 4,000

P

64,000

P

60,000

7,000 105,000

22,400

315,000

64,000

64,000

Subscription Receivable Subscribed Preference Share Unissued Preference Share

420,000 2,700,000

420,000 2,700,000

Unissued Ordinary Share Share Premium – Ordinary Aug. 28

P

25,000

Subscription Receivable – Preference Subscription Receivable – Ordinary Aug. 20

420,000 2,700,000

3,120,000

Subscription Receivable – Preference Subscription Receivable – Ordinary Organization Expense Unissued Ordinary Share Share Premium – Ordinary

P

60,000

56

Aug. 29

Cash (105,000 – 21,000) Subscription Receivable – Ordinary

P


P

Share Premium-Preference 15) 1,000 28) 4,000 5,000

84,000 P

84,000

P

100,000

100,000

Share Premium-Ordinary 15) 5,000 20) 15,000 20,000

Share Premium: Share Premium – Preference Total Shareholder’s Equity

P 5,000 P 3,705,400 Details

Unissued – Preference 1,500,000 420,000 60,000 1,020,000

Unissued - Ordinary 10,000,000 20,000 2,700,000 300,000 6,980,000

Authorized - Preference 1,500,000

Authorized - Ordinary 10,000,000

Subscribed Share - Preference 420,000 60,000

Subscribed Share - Ordinary

420,000 6,000 60,000 6,000

Subscription Receivable –Preference 420,000 420,000 7,000 6,000 64,000 60,000 5,600

2,700,000

Subscription Receivable - Ordinary 2,700,000 2,700,000 105,000 21,000 84,000

Share Premium - Preference 1,000 4,000 5,000

7 – 3

2,700,000 100,000 100,000

Share Premium - Ordinary 5,000 15,000 20,000

Cebu Centennial Hotel

Requirement 1 and 2: Aug. 5

Aug. 10

Unissued preference Share Unissued Ordinary Share Authorized preference Share Authorized Ordinary Share

P

Subscription Receivable – Preference (14,000 x P300) Subscription Receivable – Ordinary (27,000 x P100) Subscribed Share Capital – Preference Subscribed Share Capital – Ordinary

P

Cash Subscription Receivable – Preference Subscription Receivable – Ordinary

P

Organization Expense Unissued Ordinary Share Share Premium – Ordinary

P

Subscribed Share Capital – Preference Subscribed Share Capital – Ordinary Unissued Preference Share Unissued Ordinary Share

P


1,500,000 10,000,000 P

1,500,000 10,000,000

P

420,000 2,700,000

P

420,000 2,700,000

P

20,000 5,000

P

420,000 2,700,000

420,000 2,700,000

3,120,000

25,000

420,000 2,700,000

57

Aug. 15

Aug. 20

Aug. 28

Aug. 29

Subscription Receivable – Preference Subscription Receivable – Ordinary Subscribed Share Capital – Preference Subscribed Share Capital – Ordinary Share Premium – Preference Share Premium – Ordinary

P

Cash Subscription Receivable – Preference Subscription Receivable – Ordinary

P

Land Unissued Ordinary Share Share Premium – Ordinary

P

Subscription Receivable – Preference Subscribed Share Capital – Preference Share Premium – Preference

P

Cash Subscription Receivable – Preference

P

Subscribed Share Capital – Preference Unissued Preference Share

P

Cash (105,000 – 21,000) Subscription Receivable – Ordinary

P

Subscribed Share Capital – Ordinary Unissued Ordinary Share

P

7,000 105,000 P

6,000 100,000 1,000 5,000

P

1,400 21,000

P

300,000 15,000

P

60,000 4,000

P

64,000

P

60,000

P

84,000

P

100,000

22,400

315,000

64,000

64,000

60,000

84,000

100,000

Requirement 3: Shareholders’ Equity (Memo Entry)

Contributed Capital: Share Capital 10% Preference Share, P30 par, 50,000 shares authorized, 16,000 shares were issued Subscribed Share Capital – Preference Less: Subscription Receivable – Preference Issued and Subscribed – Preference Ordinary Share, P100 par, 100,000 shares authorized 30,200 shares were issued Subscribed Share Capital – Ordinary Issued and Subscribed – Ordinary Total Issued and Subscribed – Preference and Ordinary Share Premium – Preference Share Premium – Ordinary Total Shareholders’ Equity

P

480,000

P

400 480,400

P 6,000 5,600

P 3,020,000 100,000 P 3,120,000 P 3,600,400 P 5,000 20,000

25,000 P 3,625,400

Shareholders’ Equity ( Journal Entry)

Contributed Capital: Share Capital 10% Preference Share, 50,000 shares at 30 par value Less: Unissued Preference share, 34,000 shares Issued Share Capital – Preference Less: Subscription Receivable – Preference Issued and Subscribed – Preference Ordinary Share – Authorized 100,000 shares at P100 par value Less: Unissued Ordinary Shares, 69,800 shares Issued Share Capital, 30,200 shares Subscribed Share capital – Ordinary Issued and Subscribed – Ordinary Total Issued and Subscribed – Ordinary Share Premium – Preference Share Premium – Ordinary Total Shareholders’ Equity


P 1,500,000 1,020,000 P 6,000 5,600 P

400 480,400

P10,000,000 6,980,000 P 3,020,000 100,000 P 3,120,000 P 3,600,400 P 5,000 20,000

25,000 P 3,625,400

58

7 – 5

Color Quick Corporation Error: 500 shares issued instead of 50 shares Requirement 1:

Requirement 2:

Land Discount on Ordinary Share Ordinary Share

P 45,000 5,000

Cash Discount on Ordinary Share

P

P 50,000 5,000 P

5,000

7 – 6 Shareholders’ Equity (Memorandum Entry)

Contributed Capital: Share Capital 10% Preference Share at P100 par value, 10,000 shares authorized and 3,600 shares issued Subscribed Preference Share Issued and Subscribed – Preference Ordinary Shares at P100 par value, 30,000 shares authorized and 8,500 shares issued Subscribed Ordinary Shares Issued and Subscribed – Ordinary Total Issued and Subscribed – Preference and Ordinary Share Premium: Share Premium – Preference Share Premium – Ordinary Accumulated Profits (Losses) Total Shareholders’ Equity

7 – 7

Assumption 2

Assumption 3

P

850,000 100,000 P 950,000 P 1,810,000 P 58,000 5,000

63,000 85,000 P 1,958,000

Organization Cost Ordinary Share Share Premium – Ordinary 250,000 shares x P200 = P 60,000 – P 50,000 = Organization Cost Ordinary Share Share Premium – Ordinary 250 shares x P250 = 250 shares x P200 = 250 shares x P50 = Organization Cost Ordinary Share

P

60,000 P

50,000 10,000

P

50,000 12,500

P

50,000

P

500,000 50,000

P

500,000 50,000

P

500,000

P

45,000 5,000

P

28,000 2,000

50,000 10,000 P

62,500

62,500 50,000 12,500 P

50,000

Monte Alegre Development Corporation Assumption 1

Assumption 2

Assumption 3

7 – 9

P

360,000 500,000 860,000

Farmingstone, Inc. Assumption 1

7 – 8

P

Land P Preference Share (5,000 x P100) Share Premium – Preference (P550,000 – P500,000)

550,000

Land (5,000 x P110) Preference Share Share Premium – Preference

P

550,000

Land Preference Share

P

Land Ordinary Share Share Premium – Ordinary

P

Organization Expense Ordinary Share Share premium – Ordinary

P

500,000

Mandarin Corporation Instruction 1


50,000

30,000

59

Cash Discount on Ordinary Share Ordinary Share Instruction 2

Ordinary Share ÷ par value

P

P 97,000 P100

=

20,000 4,000 P

24,000

P

10,000 5,000

P

10,000

P

10,000

P

15,000

P

8,000

P

10,000

P

500,000

P

200,000

P

300,000

P

21,000

P

321,000

P

500,000

P

321,000

P

500,000

P

500,000

P

125,000

970 shares

7 – 10 Assumption A 1)

2)

3)

Cash Ordinary Share Capital in Excess of Stated Value – Ordinary

P

Cash Discount on Ordinary Share Ordinary Share

P

Cash Ordinary Share

P

Cash Ordinary Share

P

Cash Ordinary Share

P

Cash Ordinary Share

P

15,000

8,000 2,000 10,000

Assumption B 1) 2) 3)

15,000 8,000 10,000

7 – 11 Diamond Corporation Requirement 1 -

Froilan Ampil

Requirement 2 -

100,000 shares

Requirement 3 -


P


P

Receivable from Highest Bidder Subscription Receivable

P

Receivable from Highest Bidder Cash

P

Cash Receivable from Highest Bidder

P


P

500,000 200,000 300,000 21,000 321,000 500,000

40,000 shares for Ampil 60,000 shares for Lopez 100,000 shares ====== Requirement 4 -

Treasury Shares Receivable from Highest Bidder

P

Subscribed Ordinary Share Ordinary Share (for 100,000 shares)

P

321,000 500,000

7 – 12 Raja Buayan Marketing Corporation Requirement 1 Ordinary Share Authorized to issue 2,000 shares at par value of P1,000. .

March 20A 3

-


P

Cash Subscription Receivable (500 x P1,000)

P


500,000 125,000

60

-

5


Tano 200 x 1,000 Santos 100 x 1,000

6

August 15

16

20

21

-

-

-

-

-

Requirement 2 -

= =

Subscription P 200,000 100,000 P 300,000

P

-

Payment 50,000 25,000 75,000

= = =

225,000 P

225,000

P

300,000

P

30,000

P

6,000

P

24,000

P

5,000

P

29,000

P

30,000

P

29,000

P

30,000

P

10,000

P

3,000

P

7,000

P

500

P

7,500

P

10,000

P

7,000

P

500

P

7,500

P

10,000

Balance P150,000 75,000 P 225,000


P


P


P


P


P


P

Subscribed Ordinary Share Ordinary Share Baugbog 25 Yao 5 30 shares

P


P


P


P


P


P


P


P


P

300,000 30,000 6,000

24,000

5,000

29,000

30,000

29,000 30,000

7 – 13 Duhat Corporation Requirement 1 a) b) c) d) e) f)

Sabado Esparaguera

10,000 3,000 7,000 500 7,500 10,000

- 120 shares - 80 shares (balance) 200 shares

Requirement 2 Receivable from Highest Bidder Subscription Receivable

P


P


P

Subscribed Ordinary Share Ordinary Share (100 shares are issued to the corporation)

P


7,000

500 7,500 10,000

61

7 – 14 Yummy Cakes and Pastries a)

Accumulated Depreciation Accounts Payable Receivable from Corporation Cash Merchandise Furniture and Equipment To transfer the net assets of the Partnership to the corporation.

P 20,000 40,000 150,000 P 40,000 70,000 100,000

No entry

b) No entry

c) No entry

Unissued Share Capital Authorized Share Capital To record authorization 5,000 shares at P50 par Value per share.

P250,000

Subscription Receivable Subscribed Share Capital To record subscription at par value of the following incorporators.

P175,000

Share Subscribed Casulla Landicho Supapo Beltran Eno

d) d)

Casulla, Capital Landicho, Cpital Supapo, Capital Receivable from Corporation To finally close the partnership book.

P 50,000 60,000 40,000 P150,000

Cash Merchandise Furniture and Equipment Accounts Payable Subscription Receivable To record receipts of assets and assumption Of liabilities of the partnership. Casulla Landicho Supapo

e)

f)

1,000 1,200 800 250 250 3,500

Amount P 50,000 60,000 40,000 12,500 12,500 P 175,000

P 40,000 70,000 80,000 P 40,000 150,000

P 25,000 P 25,000

P 12,500 12,500 P 25,000

Subscribed Ordinary Share Unissued Ordinary Share To record issuance of Certificate to the following incorporators/ shareholders.

Shares Casulla 1,000 Landicho 1,200 Supapo 800 Beltran 250 Eno 250


P175,000

P 50,000 60,000 40,000 P150,000

Cash Subscription Receivable To record collection from subscription of the ff: Beltran Eno

P250,000

P175,000 P175,000

Paid-up Amount P 50,000 60,000 40,000 12,500 12,500 P 3,500

62

7 – 15 Kalahi Store Book of Partnership a)

b)

c)

d)

Corpuz, Capital Ciudadano, Capital Salazar, Capital Income and Expense Summary.

P21,000 21,000 21,000

Salazar, Capital Corpuz, Capital Ciudadano, Capital Allowance for Doubtful Accounts Merchandise Accumulated Depreciation

P48,467 48,467 48,466

P63,000

P30,000 95,400 20,000

Receivable from Corporation Allowance for Doubtful Accounts Accumulated Depreciation Accounts Payable Corpuz, Loan Cash Accounts Receivable Merchandise Furniture and Fixtures

P521,600 60,000 40,000 400,000 30,000

Share of Stock-Corporation Receivable from Corporation

P521,600

P170,000 300,000 381,000 200,000

P521,600

Book of the Corporation a) b)

c)


P521,600

Cash Accounts Receivable Merchandise Furniture and Fixtures Allowance for Doubtful Accounts Accounts Payable Corpuz, Loan Subscription Receivable

P170,000 300,000 381,600 160,000


P521,600

P521,600

P60,000 400,000 30,000 521,600 P521,600

*** Multiple Choice *** 7 – I Negros Sugar planters, Inc. Q-1

Q-2

8% Preference Share Subscribed Preference Share Less: Subscription Receivable-Preference Ordinary Share Subscribed Ordinary Share Subscription Receivable-Ordinary Legal Capital Contributed Capital: Share Capital 8% Preference Share Subscribed Preference Share Less: Subscription Receivable-Preference Ordinary Share Subscribed Ordinary Share Less: Subscription Receivable-Ordinary Share Premium Discount on Preference Share Share Premium-Ordinary Accumulated Profits and Losses Other Components of Equity Revaluation Increment of Property Total Shareholders’ Equity

Q-3

P400,000 P300,000 75,000 P100,000 50,000

225,000 700,000 50,000 P1,375,000

(A)

P400,000 P300,000 75,000

225,000 700,000

P100,000 50,000 ( 2,000) 40,000

50,000

38,000 1,835,000 15,000 P3,263,000

(A)

Same as in Q-1, P1,375,000 (A)


63

7 – II Davao Metro Stars Corporation Answer (A) Preference, 2,000 shares x P100 = P200,000

Q-4

Ordinary Share, 5,000 x P150 = P750,000

Answer (A) Preference,2,000 x 25% = 500 shares

Q-5

Ordinary Share, 5,000 x 25% = 1,250 shares

Answer (A) Preference P2,000 x 25% x 25% = P12,500 Ordinary Share, P750,000 x 25% x 25% = P46,875

Q-6

7 – III Madraza Corporation Q-7 to Q-8 Debit Credits Cash Land Discount on Ordinary Organization Expense Share Capital Share Capital Share Premium 1) P11,040 P 960 P12,000 2) 50,000 38,000 P12,000 3) 25,000 20,000 5,000 Q – 7 (B) P70,000 P17,000 Q – 8 (A)

7 – IV Dumaguete Jewelry Corporation Q-9 20,000 Shares x P100 par value = P2,000,000 (B) Q-10

P300,000 (B)

Q-11

P1,200,000 x P100 = 12,000 shares (C)

7 – V Davao Metro Sales Corporation Q-12

Number of shares authorized to issue x par value per share Authorized Share Capital

400 P 100 P400,000 (C)

Q-13

Authorized Ordinary Share x Subscription Requirement

Q-14

100,000 x 25% = 25,000 (A)

Q-15

Equivalent to the subscribed Share Capital of P100,000 ÷ par value of P100 = 1,000 shares (A)

Q-16

1,000 shares were issued - 970 shares outstanding 30 shares in the treasury (A)

P 400,000 25% P 100,000 (A)

7 – VI Dadiangas Farmingtown Corporation Q-17

10% Preference Share authorized to issue ÷ par value of No. of preference share authorized to issue

P1,000,000 P 100 10,000 shares (A)

Q-18 Authorized Ordinary Share x par value Authorized Share Capital - Ordinary

15,000 100 P1,500,000

Q-19

Preference – 10,000 shares x 25% = 2,500 shares Ordinary - 15,000 shares x 2 5% = 3,750 shares

(A)

Q-20

Preference – 2,500 shares x P100 par value = P62,500 Ordinary – 3,750 shares x P100 par value = 93,750

(A)

Q-21

Share Subscribed - 100 shares x P105 P10,500 Share Subscribed at par -100 shares x P100 10,000 Credited to share premium P 500

(A)

Shares Subscribed – 100 shares x P105 Less: Share Premium Credited to share capital

(B)

Q-22


P10,500 500 P10,000

shares (B)

64

7 – VII Valencia Fruit Processing Corporation Q-23

300 shares were declared delinquent (C)

Q-24

Dagohoy (C)

Q-25

Subscription of Monta (300 x P150) = P45,000 Subscription balance (unpaid) = 27,000 Payment made by Monta on her subscribed shares P18,000

(A)

Due from Highest Bidder Subscription Receivable

(A)

Q-26

P27,000 P27,000

Q-27

130 for Monta and 170 for Dagohoy (A)

Q-28

Treasury Shares Due from Highest Bidder

P27,560 P27,560

(A)

7 – VIII Davao Grains, Inc. Q-29

March 10 (25,000 x P20) March 25 (1,000 x P40) Sept. 17 5,000 x P60) Share Premium at Dec. 31, 20A

P500,000 40,000 300,000 P840,000

7 – IX Q-30

Land Ordinary Shares Share Premium

P350,000 P300,000 50,000

(B)

7 – X Q-31

Since the cost of the service is not known, the fair value of the share is used, P130,000 (1,000 x P130)

(B)

7 – XI Q-32

7 – XII Q-33

Q-34

Authorized Ordinary Share Less: Unissued Ordinary Share Issued Subscribed Ordinary Share Less: Subscription Receivable Share Premium Accumulated Profits and Losses-Unappropriated Accumulated Profits and Losses-Appropriated Total Less: Treasury Shares Total Shareholders’ Equity

Preference Share, P100 par Ordinary Share P10 par Subscribed Ordinary Share Legal Capital

P5,000,000 2,000,000 P3,000,000 P1,000,000 400,000 P 600,000 300,000

600,000 500,000 900,000 P5,000,000 ( 100,000 ) P4,900,000 A)

P 2,300,000 5,250,000 50,000 P7,600,000 (B)

Answer A Preference Share, P2,550,000 ÷ P15 par Ordinary Share 3,000 ÷ P50 par

= 170,000 shares = 60,000 shares

Chapter 8 Accumulated Profits (Losses) Dividends and Treasury Shares Test I – True or False 1. 2. 3. 4. 5.

True False True True True

6. 7. 8. 9. 10.


11. False 12. False 13. True 14. False 15. True

16. 17. 18. 19. 20.

True False True True False

5. B 6. B

7. A 8. D

21. 22. 23. 24. 25.


26. False 27. True 28. True 29. False 30. True

Test II – Multiple Choice 1. D 2. C

3. D 4. C


9. B 10. D

11. B 12. D

65

*** EXERCISES/PROBLEMS *** 8 – 1 Requirement 1: Accumulated Profits and Losses balance – Jan. 1, 20B a) accrued salaries not recorded, understate expenses and overstates Profit b) understatement of ending inventory, understates profit c) overstatement of depreciation, understates profit d) expense portion of prepaid insurance not recorded, understates expense and overstates profit Corrected Acc. Profits and Loss-Jan. 1, 20B

165,000 (15,000) 4,000 2,000 (5,000) 151,000

Requirement 2: a) Accumulated Profits and Losses Accrued Salaries

P 15,000

b) Merchandise Inventory Accumulated Profits and Losses

P 4,000

c) Accumulated Depreciation Accumulated Profits and Losses

P 2,000

d) Accumulated Profits and Losses Prepaid Insurance

P 5,000

8 – 2

P 15,000 P

4,000

P

2,000

P

5,000

Bacolod Sugarland Corporation

Requirement 1: Income and Expense Summary Accumulated Profits and Losses

P

170,000 P

170,000

P

260,000 90,000

P

100,000

P

100,000

Requirement 2: Accumulated Profits and Losses Acc. Profits and Losses Appropriated for Plant Expenses Acc. Profits and Losses Appropriated for Treasury Shares

P

350,000

Requirement 3: Declaration: Accumulated Profits and Losses Cash Dividends Payable

P

Payment: Cash Dividend Payable Cash

P

100,000

100,000

Requirement 4: Bacolod Sugarland Corporation Statement of Accumulated Profits and Losses For the year ended 31 December 20A Accumulated Profits and Losses Add: Profit for the year Total Less: Cash Dividends Declared and Paid Current year’s appropriation: For Plant Expansion For Treasury Shares Acc. Profits and Losses Unappropriated or Free, Dec. 31 Acc. Profits and Losses Appropriated: For Plant Expansion For Treasury Shares Accumulated Profits and Losses, Dec. 31, 20A

P 950,000 170,000 P1,010,000 P 100,000 P 260,000 90,000

350,000

P 260,000 290,000

450,000 P 670,000

350,000 P1,020,000

Requirement 5: Acc. Profits and Losses Appropriated for Plant Expansion Accumulated Profits and Losses


P

260,000 P

260,000

66

8 – 3

Marco Polo Corporation a)

b)

c)

d)

8 – 4

5,000 200 P 4,800 200 P 960,000

Accumulated Profits and Losses Cash Dividends Payable

P

Cash Dividends Payable Cash

P

Issued and Outstanding Less: Treasury Shares Issued and Outstanding after treasury shares x cash dividend per share Amount of Dividends Declared

960,000 P

960,000

P

960,000

960,000

5,000 200 4,800 P 25.00 P 120,000

Accumulated Profits and Losses Cash Dividends Payable

P


P

Issued and Outstanding Less: Treasury Shares Issued and Outstanding after Treasury Shares 10% x P1,200 Amount of Dividends Declared P

Share Dividends Distributable Share Capital

P

Issued and Outstanding Less: Treasury Shares Issued and Outstanding after Treasury Shares 20% x P1,000 Amount of Dividends Declared

P

120,000

P

120,000

120,000

P

Share Dividends Distributable Share Capital

P

shares

576,000 P

576,000

P

576,000

576,000

5,000 200 4,800 P 200 P 960,000

Accumulated Profits and Losses Share Dividends Distributable

shares

120,000

5,000 200 4,800 P 120 P 576,000

Accumulated Profits and Losses Share Dividends Distributable

shares

shares

960,000 P

960,000

P

960,000

P

18,000

P

18,000

P

19,500

P

19,500

960,000

Casablaca, Inc. Aug. 1

Sept. 1

Dec. 1

8 – 5

Issued and Outstanding Shares Less: Treasury Shares Issued and Outstanding after treasury shares P1,000 x 20% Amount of Dividends Declared

Acc. Profits and Losses Cash Dividends Payable

P

Cash Dividend Payable Cash (1,500 x P12)

P

Acc. Profits and Losses Share Dividend Distributable

P

Share Dividends Distributable Share Capital (P130 x 10% x 1,500 shares)

P

18,000

18,000

19,500

19,500

Negros Grains, Incorporated

Requirement 1: Upon Declaration: Acc. Profits and Losses Cash Dividends Payable-Preference Cash Dividends Payable-Ordinary


Pxx Pxx xx

67

Upon Payment: Cash Dividends Payable-Preference Cash Dividends Payable-Ordinary Cash

Pxx xx Pxx

Requirement 2: a) Preference Shares are Non-Cumulative and Non-Participating Total Preference Dividends: Current year: P100,000 x 7% x 1year Ordinary Dividends: Balance, all to ordinary Dividends as distributed

7,000 73,000 80,000

÷ Shares issued Dividends per share

Preference

Ordinary

7,000

7,000

73,000 73,000

2,000 3.50

3,000 24.33

b) Preference Shares are Cumulative and Non-Participating Total Preference Dividends: Arrears: P100,000 x 7% x 2 Current: P100,000 x 7% x 1 Ordinary Dividends: Balance, all to ordinary Dividends as distributed

Preference

Ordinary

14,000 7,000

14,000 7,000

59,000 80,000

21.000

59,000 59,000

2.000 10.50

3,000 19.67

÷ Shares issued Dividends per share c) Preference Shares are Non-Cumulative and Fully-Participating Total Preference Dividends: Current year: P100,000 x 7% x 1 Ordinary Dividends: Current year: P300,000 x 7% x1 Balance for Participating, P52,000 Preference – P100,000/P400,000 x P52,000 Ordinary – P300,000/P400,000 x P52,000 Dividends as distributed

7,000

Preference 7,000

21,000 13,000 39,000 80,000


Ordinary

21,000 13,000 20,000

39,000 60,000

2,000 10,000

3,000 20,000

d) Preference Shares are Cumulative and Fully-Participating Total Preference Dividends: Arrears: P100,000 x 7% x 2 Current: P100,000 x 7% x 1 Ordinary Dividends: Current year: P300,000 x 7% x1 Balance for Participating, P52,000 Preference – P100,000/P400,000 x P38,000 Ordinary – P300,000/P400,000 x P38,000 Dividends as distributed

14,000 7,000

9,500 28,500 80,000

Ordinary

14,000 7,000

21,000


8 – 6

Preference

21,000 9,500 30,500

28,500 49,500

2,000 15.25

3,000 16.50

Cagayan de Oro Motorama, Incorporated Requirement A – Preference Share is Non-Cumulative and Non-Participating Total Preference Share Dividends: Current: P90,000 x 10% x 1 yr. Ordinary Dividends: Balance, all to ordinary As distributed


9,000 61,000 70,000

Preference

Ordinary

9,000

9,000

61,000 61,000

68

Requirement B – Preference Share is Cumulative and Non-Participating Total Preference Share Dividends: Arrears: P90,000 x 10% x 1 yr. Current: P90,000 x 10% x 1 Ordinary Dividends: Balance all to Ordinary Share (70,000-P18,00) As distributed

Preference

9,000 9,000

Ordinary

9,000 9,000

52,000 70,000

18,000

52,000 52,000

Requirement C – Preference Share is Non-Cumulative and Fully -Participating Total Preference Share Dividends: Current: P90,000 x 10% x 1 Ordinary Dividends: Current Year: P100,000 x 10% x 1 Balance all to Ordinary Share, P51,000 Preference – P90,000/190,000 x P51,000 Ordinary – 100,000/190,000 x P51,000 As distributed

Preference

9,000

Ordinary

9,000

10,000

10,000

24,158 26,842 70,000

24,158 33,158

26,842 36,842

Requirement D – Preference Share is Cumulative and Fully-Participating Total Preference Share Dividends: Arrears: P90,000 x 10% x 1 yr. Current: P90,000 x 10% x 1yr. Ordinary Dividends: Current Year: P100,000 x 10% x 1yr. Balance for Participation, P42,000 Preference – P90,000/190,000 x P42,000 Ordinary – 100,000/190,000 x P42,000 As distributed

8 – 7

Preference

9,000 9,000

Ordinary

9,000 9,000

10,000

10,000

19,895 22,105 70,000

19,895 37,895

22,105 32,105

Musuan Agro-Industrial Corporation Requirement 1: No. of Shares issued and outstanding x Par Value per share Par Value of issued and outstanding shares x Rate of Dividends declared Dividends Declared ÷ Par Value Equivalent Share to be issued

8,000 shares P 100 P 800,000 10% P 80,000 P 100 800 shares

Requirement 2: Dividends ÷ No. of shares issued and outstanding Dividends per share

P 80,000 8,000 P 10

Requirement 3: Upon Declaration: Acc. Profits and Losses Share Dividends Distributable

P

80,000 P

80,000

P

80,000

P

5,500

P

5,500

P

5,500 500

Upon Distribution: Share Dividends Distributable Ordinary Share 8 – 8

P

80,000

Valencia Frutti Corporation Requirement 1: Treasury Share Cash

P

Cash Treasury Share

P

Cash Treasury Share Share Premium-Treasury Share

P

5,500

Requirement 2: a) b)


5,500 6,000

69

c)

8 – 9

Cash Share Premium-Treasury Share Treasury Shares

P

5,000 500 P

5,500

P

36,000

P

21,600 5,400

Macopa Corporation Requirement 1: Treasury Share (1,500 x P24) Cash

P

Cash (900 x P30) Treasury Shares (900 x P24) Share Premium-Treasury Shares

P

36,000

27,000

*** MULTIPLE CHOICE PROBLEM *** 8 – I

Cabana Corporation

Q – 1

Income and Expense Summary, credit Income and Expense Summary, debit Profit

Q – 2

Income and Expense Summary Acc. Profits and Losses

Q – 3

8 – II

P 1,800,000 1,050,000 P 750,000 (B) P 750,000 (B)

P 750,000

Acc. Profits and Losses Balance, Jan. 1, 20A Add: Profit of 20A Acc. Profits and Losses Balance, Dec. 31, 20A

P P

100,000 750,000 850,000 (C)

Misamis Oriental Ferries, Incorporated

Q – 4

5,000 shares x P100 Dividends to be declared Amount of dividends declared

Q – 5

Acc. Profits and Losses Cash Dividends Payable

P 500,000 (Share Capital) 10% P 50,000 (C) P 50,000

Q – 6

Prepare a list of shareholders on record (A)

Q – 7


Q – 8

Current Liability (B)

Q – 9

Cash Dividend ÷ Share Outstanding Cash Dividend per share

Q – 10

P 50,000

(C)

P 50,000

(B)

P 50,000

P 50,000 5,000 P 10.00

(B)

1,000 shares x P10,000 dividend per share = P 10,000 (A)

8 – III Metro Cebu Central, Incorporated Q – 11

Q – 12

Authorized Share - Issued Share Unissued Share

3,000 1,000 2,000

Issued Share Less: Treasury Share Outstanding Share

1,000 200 800

shares (C) shares (A)

Q – 13

The free or Unappropriated portion of Accumulated Profits and Losses – P60,000 (B)

Q – 14

1,000 issued shares less 200 treasury = 800 shares outstanding x 10% = 80 shares (A)

Q – 15

Shares to be issued as share dividends x Par Value (par value is to be used because the market value is not given) Amount of Acc. Profits and Losses to be capitalized

Q – 16

Total Shareholders’ Equity before share dividends Less: Decrease in Acc. Profits and Losses upon declaration of Share Dividends Total Add: Increase in capital upon distribution of share dividends Total Shareholders’ Equity after share dividends (No effect on Shareholders’ Equity)


80 P 100 P8,000

(A)

P 160,000 8,000 P 152,000 8,000 P 160,000

(B)

70

Q – 17

8 – IV

P 21,000 20,000 P 1,000

Dapitan Motors Corporation

Q – 18

8 – V

Proceeds from the sale of Treasury Share (200 x P105) Cost of Treasury Share acquired Gains to be credited

Revenue Expense Profit

P 4,500,000 3,800,000 P 700,000

Acc. Profits & Losses Profit Total Dividends Declared and Paid Acc. Profits and Losses

650,000 700,000 P 1,350,000 ( 500,000) P 850,000 (A)

Visayan Corporation

Q – 19

Under Cost Method of Accounting for treasury s hare, the re issuances would result in a credit to: Cash

P190,000 Treasury Share Share Premium-Treasury Share

8 – VI

Gazebo Corporation

Q – 20 8 – VII

P120,000 70,000 (D)

Market Value (8,000 x 6% x P500) = 240,000 (C)

Dreamboy Corporation

Q – 21

4,000 shares/20,000 = 20% share dividends Acc. Profits and Losses before share dividends Less: Share Dividends (4,000 x 100) Acc. Profits and Losses after share dividends

P1,500,000 400,000 P1,100,000 (A)

To record the declaration of share dividend: Accumulated Profits and Losses Share Dividends Distributable

P400,000

To record the issuance of share dividend: Share Dividends Distributable Ordinary Share

P400,000

P400,000

P400,000

8 – VIII Dreamboy Corporation Q – 22

30,000 x 15% = 4,500 x P120,000 = 540,000 (B) (When a corporation declaring stock dividend is with listed share, we used the market value when the declaration is less than 20%, and if the declaration is more than 20%, we used the par value.)

Q – 23

30,000 x 25% = P7,500 x P100 = P750,000 (A)

Chapter 9 Corporate Financial Statements 9 – 1

Beleleng Corporation Requirement 1: Beleleng Corporation Shareholders’ Equity December 31, 20A Contributed Capital: Share Capital Preference Share, 3,000 shares issued at par, P50 Ordinary Share, 7,000 shares at par, P100 Share Premium Share premium – Preference Share premium – Ordinary Accumulated Profits and Losses Other Components of Equity Revaluation Increment on Property Total Shareholders’ Equity


P

150,000 700,000 2,000 5,000 400,000

10,000 P 1,267,000

71

Requirement 2: Beleleng Corporation Statement of Changes in Shareholders’ Equity For the year ended 31 December 20A Share Capital Preference Ordinary P 150,000 P 700,000

Jan. 1 Balance Add: Profit for the year Dec. 31 - Balance

9 – 2

P 150,000

Share Premium Preference Ordinary 2,000 5,000

P 700,000

2,000

Accu. P&L 150,000

Revaluation Increment 10,000

250,000 400,000

5,000

10,000

Total P1,017,000 250,000 10,000

New Era Corporation New Era Corporation Shareholders’ Equity December 31, 20A Contributed Capital: Share Capital 10% Preference Share, P50 par value, 6,000 shares issued Subscribed Share Capital – Preference Less: Subscription Receivable – Preference Ordinary Shares, P75 par value, 4,000 shares issued Subscribed Share Capital – Ordinary Less: Subscription Receivable – Ordinary

P P 100,000 60,000

40,000 300,000

P 37,500 10,000

27, 500

4,000 8,000

12,000

Share Premium: Share Premium – Preference Share Premium – Ordinary Accumulated Profits and Losses Revaluation Increment on Property Total Contributed Capital and Retained Earnings Less: Treasury Shares at Cost Total Shareholders’ Equity

9 – 5

300,000

520,000 30,000 P 1,229,500 8,000 P 1,221,500

Iligan Water Spring Resort Corporation Requirement 1 Ordinary Shares at par value, P100, 4,000 shares are issued Share Premium Accumulated Profits and Losses Less: Treasury Shares at cost Total Shareholders’ Equity ÷ Shares Outstanding Book Value per Share

P 400,000 10,000 180,000 (10,000) P 580,000 3,900 P 148.72

shares

Requirement 2 Profit ÷ Shares Outstanding Earnings per Share 9 – 6

P100,000 3,900 shares P 25.64

Surigao Bus Line Corporation Requirement 1: Ordinary Shares, par value of P100, issued share 6,000: Subscribed Share Capital Less: Subscription Receivable Share Premium Accumulated Profits and Losses Total Shareholders’ Equity ÷ Shares Outstanding Book Value per Share

P600,000 P100,000 50,000

50,000 4,000 250,000 P904,000 6,000 P 150.67

Requirement 2: Profit (P250,000 – P150,000) = P100,000 ÷ Shares Outstanding 6,000 = P16.67 Solution Manual in Partnership and Corporation 2014-2015

72

9 – 7

Metropolitan Corporation Requirement 1: Preference Shares Equity: Liquidation Value, P200 x 2,400 shares Dividends in Arrears, 6% x P360,000 x 3 Current year dividends, 6% x P360,000 x 1 Preference Shareholders’ Equity

P480,000 64,800 21,600 P566,400

Requirement 2: Ordinary Shares Equity: Total Shareholders’ Equity Less: Preference Shares Equity Ordinary Shareholders’ Equity

P883,000 566,400 P316,600

Requirement 3: Book Value per Preference Share Preference Share: P566,400 ÷ 2,400 = P236.00 Ordinary Share: P316,600 ÷ 2,350 = 134.72

9 –8

Metro Cebu Corporation Requirement 1: Preference Shares: Liquidation Value, P180 x 5,000 shares Current year dividend, 10% x P500,000 Preference Shareholders’ Equity ÷ Shares Outstanding = Book Value per Preference Share

P900,000 50,000 P950,000 ÷ 5,000 P190.00

Ordinary Shares: Total Shareholders’ Equity Less: Preference Shareholders’ Equity Ordinary Shareholders’ Equity ÷ Shares Outstanding = Book Value per Ordinary Share

P1,330,000 950,000 P 380,000 ÷ 5,000 P76.00

Requirement 2: Preference Shares: Liquidation Value, P100 x 5,000 shares Current year dividend, 10% x P500,000 Preference Shareholders’ Equity ÷ Shares Outstanding = Book Value per Preference Share

P 500,000 50,000 P 550,000 5,000 P 110.00

Ordinary Shares Equity: Total Shareholders’ Equity Less: Preference Shares Equity Ordinary Shareholders’ Equity ÷ Shares Outstanding = Book Value per Preference Share

P1,300,000 550,000 P 780,000 3,000 P 260.00

Chapter 10 Presentation and Analysis of Financial Statements 10 – 1

RFM Corporation

Requirement 1a: Current Assets Less: Current Liabilities Working Capital

507,000 130,000 377,000

Requirement 1b: Current Assets Current Liabilities

=

507,000 130,000

Current or Banker’s Ratio

=

3.9:1


73

Requirement 1c: Quick Assets Current Liabilities

=

265,000 130,000

Acid-Test Ratio

=

2.04:1

(Mdse. Inventory is excluded because it takes time to sell and collect account sales. Prepaid expense is also excluded because when it expires it becomes expense.)

Requirement 2: For every one peso of obligation, it has P3.90 of current asset to pay. The same interpretation as in acid-test ratio.

10 – 2

R. Kudemus Co. and Baligala Co.

Requirement 1: Kudamus Co. Working Capital Current Assets Less: Current Liabilities Working Capital

Baligala Co.

320,000 50,000 270,000

Requirement 2: Banker’s Ratio Current Assets ÷ Current Liabilities Banker’s Ratio

= =

Requirement 3: Acid Test Ratio Quick Assets ÷ Current Liabilities Acid Test Ratio

= =

320,000 50,000 6.4:1

185,000 50,000 3.7:1

234,000 40,000 194,000

= =

= =

234,000 40,000 5.8:1

160,000 40,000 4:1

(Merchandise Inventory is excluded because it takes time to sell and collect the receivable. Prepaid expense is also excluded because when it expires it becomes expense.)

10 – 3

Reyes Corporation Reyes Corporation Common-Size Statement of Comprehensive Income For the year ended December 31, 20A Sales Less: Sales Returns and Allowances Net Sales Less: Cost of Sales Gross Profit Less: Operation Expense Profit

10 – 4

105% 5% 100% 75% 25% 20% 5%

Vismin Jewelry Store, Inc. Vismin Jewelry Store Comparative Statement of Comprehensive Income For the months ended 30 November and 31 December

Sales Sales Return & allowances Sales Discounts Net Sales Cost of Sales Gross Profit Operating Expenses Profit


December

November

100,000 1,000 500 1,500 98,500 45,000 53,500 19,000 34,500

90,000 2,000 2,000 88,000 50,000 38,000 20,000 18,000

Amount of Increase (Decrease) 10,000 (1,000) 500 (500) 10,500 (5,000) 15,500 (1,000) 16,500

% of increase (Decrease) 11 (50) 100 (25) 12 (10) 41 (5) 92

74

10 – 5

S. Bolivar Enterprises

Requirement A: Receivable Turnover

=

Credit Sales

=

Average Capital Requirement B: Average Collection Period

=

200,000

=

4 times

=

91.25 days

50,000

365 days

=

Receivable Turnover

365

4 times

Requirement C: Inventory Turnover

=

Cost of Sales Average Inventory

=

210,000 70,000

=

3 times

Requirement D: Average Age of Inventory

=

365 days Inventory Turnover

=

365 3

=

121.66 days

10 – 6

Dreamworld Corporation

Requirement 1: Dreamworld Company Statement of Financial Position As of December 31, 20B and 20A

Cash Accounts Receivable Inventories Plant and Equipment (Net)

Accounts Payable 5% Bonds Payable Share Capital (P10 par) Accumulated Profit

20B P 150,000 120,000 90,000 360,000 P 720,000

20A P 130,000 80,000 70,000 300,000 P 580,000

Amount of Increase (Decrease) P 20,000 40,000 20,000 60,000 P 140,000

P 100,000 200,000 260,000 160,000 P 720,000

P

P

80,000 200,000 200,000 100,000 P 580,000

% of Increase (Decrease) 15.38% 50.00% 28.57 20.00% 24.14%

20,000 -060,000 60,000 P 140,000

25.00% .00% 30.00% 60.00% 24.00%

Requirement 2: Dreamworld Company Statement of Financial Position As of December 31, 20B and 20A Sales Cost of Goods Sold Gross Profit Operating and Non-Operating Expense Profit before Income Tax

100.00% 55.56% 44.44% 27.78% 16.1%

100.00% 58.33% 41.67% 25.00% 16.67%

Requirement 3A: Current Ratio

=

Credit Assets Current Liabilities

=

360,000 100,000

=

3.60

=

Quick Assets Current Liabilities

=

270,000 100,000

=

2.70

=

Credit Sales Average Receivable

=

360,000 100,000

=

3.60 times

=

No. of days in a year Receivable Turnover

=

365 days 3.60

=

101.39 days

=

Cost of Sales Average Inventory

=

200,000 80,000

=

2.50 times

Requirement 3B: Acid Test Ratio

Requirement 3C: Receivable Turnover

Requirement 3D: Average Collection Period

Requirement 3E: Inventory Turnover


75

10 – 7

Bluemoon Trading Corporation

Requirement 1: 20A Sales and Cost of Sales Sales

= = =

Accounts Receivable Turnover x Average Receivable 8 x P 80,000 P 640,000

Cost of Sales

= = =

Inventory Turnover x Average Inventory 6 x P 100,000 P 600,000

Requirement 2: Expected Sales and Cost of Sales for 20B Sales

= = =

Average Receivable x Receivable Turnover P 130,000 x 12 times P 1,560.00

Average Collection Period

=

365 days Receivable Turnover

30 days

=

365 days ?

Receivable Turnover

=

365 days 30

Cost of Sales

= = =

Average Inventory x Inventory Turnover P 100,000 x 9 P 900,000

=

365 days Inventory Turnover

=

365 days ?

COMPUTATION:

=

12 times

COMPUTATION: No. of days Sales in Inventory

Inventory Turnover

=

9 times

10 – 8 D&T Shafer Corporation Requirement 1: a)

b)

c)

d)

e)

20B

20A

Gross Profit Percentage Gross Profit Net Sales

610,000 1,460,000

=

41.78%

320,000 1,100,000

=

29.09%

Rate of Return on Sales Profit Net Sales

360,000 1,460,000

=

24.65%

20,000 1,100,000

=

.01%

Rate of Return on Investment Profit Ave. Investment

360,000 1,200,000

=

30%

20,000 1,500,000

=

.01%

850,000 210,000

=

4.04 tomes

780,000 195,000

=

4 times

1,460,000 290,000

=

5.03 times

1,100,000 190,000

=

5.78 times

Inventory Turnover Cost of Sale Ave. Inventory Accounts Receivable Turnover Credit Sales Ave. Receivable


76

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