P2 – 01
Practical Accounti ng 2 JONATHAN JONATHAN M. TIPAY, CPA
Partnership Accounting Formation 1.) On April 1, 2015, A. Colomo and C. Paul Paulino ino formed a partnership ith ith each contri!uting the folloing assets" A. Colomo C. Paulino Cash 120,000 #0,000 $achiner% and &'uipment 100,000 (00,000 uilding *00,000 Furniture and Fi+tures 0,000 -he !uilding is su!ec% to a mortgage loan loan of P(20,000, hich is to assumed !% the the partnership. On April 1, 2015, the !alance of Paulino/s capital account should !e A. . C. .
*0,000 1,02 ,020,00 0,000 0 1,05 ,05,00 ,000 0 1,2# 1,2#0, 0,00 000 0
2.) $. aid and 3. &strella are forming forming a partnership !% com!ining com!ining their !usinesses. !usinesses. -heir !oo4s sho the folloing" $. aid 3. &strella Cash 2,000 (0,000 Accounts 6eceia!le 150,000 10#,000 $erchandise 7nentor% 20,000 15,000 Furniture and Fi+tures ((0,000 102,000 Prepaid &+penses (,000 21,000 Accounts Pa%a!le (,000 1,000 $. aid, Capital #*,000 3. &strella, Capital 2(,000 7t has !een agreed to proide for uncollecti!le accounts e'ual to 58 of the receia!les of each part% and that the Furniture and Fi+tures of &strella are oerdepreciated !% P*,000. 7f each partner/s share in e'uit% is to !e e'ual to the net assets inested the capital accounts of aid and &strella ould !e A. . C. .
P#*,000 P#*,000 and P2(,000, P2(,000, respect respectiel% iel% P#1,500 P#1,500 and P2,00, P2,00, respect respectiel% iel% P#1,500 P#1,500 and and P25#, P25#,00, 00, respe respectie ctiel% l% P#55,000 P#55,000 and and P1,000, P1,000, respe respectie ctiel% l%
(.) A !usiness oned !% Francesca Francesca 9arcia 9arcia as short of cash and 9arcia decided decided to form a partnership partnership ith 7sa!el :ocson, ho as a!le to contri!ute cash tice the interest of 9arcia in the ne partnership. -he assets contri!uted !% 9arcia appeared as follos in the ;tatement of Financial Position of her !usiness" Cash, P*,000< Accounts 6eceia!le, 1 of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
Practical Accounti ng 2
P2 – 01
JONATHAN M. TIPAY, CPA
P1#*,000 ith alloanced for uncollecti!le accounts of P,000< $erchandise 7nentor%, P20,000< and ;tore &'uipment, P150,000 ith accumulated depreciation of P15,000. 9arcia and :ocson agreed that the alloanced for uncollecti!le accounts ere inade'uate and should !e P10,000. -he% also agreed that the fair alue for the inentor% is P0,000 and for the store e'uipment is P10,000. -he cash contri!uted !% :ocson into the partnership as A. . C. .
2,000 20,000 #0#,000 1,5,000
.) F. 3icolas and 9. aBam are com!ining their separate !usinesses to form a partnership. Cash and noncash assets are to !e contri!uted for a total capital of P00,000. -he noncash assets to !e contri!uted and the lia!ilities to !e assumed are as follos" 3icolas Accounts 6eceia!le $erchandise 7nentor% &'uipment Accounts Pa%a!le
aBam
0,000
F$ 0,000
F$
0,000
100,000
0,000
50,000
120,000 (0,000
*0,000 (0,000
#0,000 20,000
100,000 20,000
-he partners/ capital accounts are to !e e'ual after all the contri!ution of assets and the assumptions of lia!ilities. -he amount of cash to !e contri!uted !% 3icolas is A. . C. .
(00,000 210,000 200,000 100,000
5.) Dsing the information in num!er , the total assets of the partnership is A. 50,000 . (0,000 C. (0,000 . (0,000 .) 6. elton and ;. Claret entered into a partnership on Fe!ruar% 1, 200 !% inesting the folloing assets" 6. elton Cash $erchandise 7nentor% and
;. Claret 0,000
2 of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
*0,000 1(0,000
Practical Accounti ng 2
P2 – 01
JONATHAN M. TIPAY, CPA
&'uipment Furniture and Fi+tures
(0,000 200,000
-he agreement !eteen elton and Claret proides that proEts and losses are to !e diided 08 and 08 to elton and Claret, respectiel%, and that the partnership is to assume the P100,000 mortgage on the land. 7f claret is to receie capital credit e'ual to his proEt and loss ratio, ho much cash must he inest A. 10,000 . 150,000 C. 10,000 . 00,000 .) Dsing the information in num!er , and assuming that Claret inests P100,000 cash and each partner is to !e credited for the full amount of the net assets inested, the total capital of the partnership is A. 20,000 . 250,000 C. *0,000 . 5*0,000 #.) Dsing the information in num!er , and assuming that the capital of the partners is proportionate to their proEt and loss ratio, the capital of the elton and Claret upon formation are" A. 25,000 and 25,000, respectiel% . 2(,000 and 15,000, respectiel% C. 15,000 and 2(,000, respectiel% . 2*,000 and 1*,000, respectiel% Operation 1.) $r. ana%o and his er% close friend, $r. uendia formed a partnership on :anuar% 1, 200 ith ana%o contri!uting P10,000 cash and uendia contri!uting e'uipment ith a !oo4 alue of P,000 and a fair alue of P#,000, and inentor% ith a !oo4 alue of P2,000 and a fair alue of P(2,000. uring 200, uendia made additional inestment of P1,000 on April 1, and P1,000 on :une 1. On ;eptem!er, he ithdre P0,000. ana%o had no additional inestment nor ithdraals during the %ear. -he aerage capital !alance at the end of the Escal %ear 200 for uendia is" A. . C. .
*,000 ##,000 #0,000 2,000
2.) On :anuar% 1, 200, a%ani and onifacio decided to form a partnership. At the end of the %ear, the partnership made a proEt of P20,000. -he capital accounts of the partnership sho the folloing transactions" ( of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
Practical Accounti ng 2
P2 – 01
JONATHAN M. TIPAY, CPA
e!it :anuar% 1 April 1 :une 1 August 1 ;eptem!er 1 Octo!er 1 ecem!er 1
A. . C. .
a%ani, Capital Credit #0,000
e!it
onifacio, Capital Credit 50,000
10,000 20,000 20,000 10,000 #,000
,000 2,000 10,000
Assuming that the proEt of the partnership is diided on the !asis of aerage capital ratio, a%ani/s share of the proEt is" 100,000 10,000 1,000 1,*2
(.) Dsing the information in num!er 2, and assuming an interest of 208 per annum on aerage capital is gien, and the !alance of the proEts is diided e'uall%, the sharing of the proEt shall !e Gcompute for onifacio/s share) A. 11,00 . 115,200 C. 2(,00 . 2(5,200 .) olano, aler, and ensan are partners in an accounting Erm. -heir capital account !alances at %ear=end ere P1#0,000, P220,000, and P100,000, respectiel%. -he% share proEts and losses on a ""2 ratio, after considering the folloing terms" a. enson is to receie a !onus of 108 proEt after !onus !. 7nterest of 108 shall !e paid on that portion of a partner/s capital in e+cess of P200,000 c. ;alaries of P20,000 and P2,000 shall !e paid to partners olano and ensan, respectiel%
A. . C. .
Assuming a proEt of P220,000 for the %ear, the total proEt share of ensan as 50,#00 5,#00 (#,#00 ,#00
5.) anta, er!a, and ora formed a partnership on :anuar% 1, 200. -he% had the folloing initial inestments" anta – P200,000< er!a – P(00,000< ora – P50,000. -he partnership agreement states that the proEts and losses are to !e shared e'uall% !% the partners after consideration is made for the folloing" a. ;alar% alloance of P120,000 for anta, P*,000 for er!a and P2,000 for ora !. Aerage partners/ capital !alances during the %ear shall !e alloed 108 interest.
of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
P2 – 01
Practical Accounti ng 2 JONATHAN M. TIPAY, CPA
Additional 7nformation" a. On :une (0, 200, anta inested an additional P120,000 !. er!a ithdre P10,000 from the partnership on ;eptem!er (0, 200. c. ;hare on the remaining partnership proEt as P10,000 for each partner. Ho much is the total interest on aerage capital !alances of the partners A. *,500 . 10,500 C. 115,250 . *5,000 .) Dsing the information in num!er 5, partnership proEt at ecem!er (1, 200 !efore salaries, interest and partners/ share in the remainder is A. (**,500 . 15,500 C. 2(,250 . (*5,500 .) Dsing the information in num!er 5, the total partnership capital on ecem!er (1, 200 is A. *50,000 . *0,000 C. 1,(5,500 . 1,(5,500 #.) On :anuar% 1, 200, alagtas, altimor, altaBar and alara formed the A -rading, a partnership ith capital contri!utions as follos" alagtas – P150,000< altimor – P5,000< altaBar – P5,000< and alara – P0,000. -he partnership agreement stipulates that each partner shall receie a 58 interest on capital contri!uted and that alagtas and altimor shall receie salaries Gchargea!le as e+penses of the !usiness) of P15,000 and P*,000, respectiel%. -he agreement further proides that altaBar shall receie a minimum of P,500 per annum and alara a minimum of P1#,000, hich is inclusie of amounts representing interest and their respectie share in the partnership proEts. -he !alance of the proEts shall !e distri!uted among the partners in the ratio of ("("2"2. ?hat amount must !e earned !% the partnership in Escal %ear 200, !efore an% charge for interest and partners/ salaries, in order that alagtas ma% receie an aggregate of P(,500 including interest, salar% and share of proEts. A. . C. .
*2,000 *,000 50,000 *0,000
issolution 1.) ;. Cali!o and ;. Camo are partners ith capital !alances of P(0,000 and P0,000 and sharing proEts and losses 08 and 08, respectiel%. 7f ;. Cao is admitted as partner 5 of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
Practical Accounti ng 2
P2 – 01
JONATHAN M. TIPAY, CPA
pa%ing P20,000 in e+change for 508 of Cali!o/s e'uit%, the entr% in the partnership !oo4s should !e as follos" A. ;. Cali!o, Capital ;. Cao, Capital . Cash ;. Cao, Capital C. Cash 9oodill ;. Cao, Capital . Cash ;. Cali!o, Capital ;. Cao, Capital
15,000 15,000 20,000 20,000 15,000 5,000 20,000 20,000 5,000 15,000
2.) ?. Cheng, I. ChaeB, and J. Cher are partners sharing proEts and losses in the ratio of "("(, respectiel%. -he condensed ;tatement of Financial Position of ?IJ Partnership as of ecem!er 1, 200 is as follos" Assets Cash Other Assets
-otal Assets
ia!ilites and &'uities 50,000 ia!ilities 1(0,000 ?. Cheng, Capital I. ChaeB, Capital J. Cher, Capital 1#0,000 -otal ia!ilities and &'uities
0,000 0,000 0,000 0,000 1#0,000
All the partners agree to admit K. Co as 1L5 partner in the partnership ithout an% goodill nor !onus. Co shall contri!ute assets amounting to A. . C. .
2#,000 10,000 (5,000 0,000
(.) $oon!its Partnership had a net income of P#,000 for the month ended ;eptem!er (0, 200. P. Chiu purchased an interest in the $oon!its Partnership of 6. Calo and C. Calma !% pa%ing Calo P(2,000 for half of his capital and half of his 508 proEt sharing interest. At this time, the capital !alance of Calo as P2,000 and the capital !alance of Calma as P5,000. Chiu should receie a credit to his capital account of A. 12,000 . 1,000 C. 20,000 . 2, .) emiglio, a partner in an accounting Erm decided to ithdra from the partnership. emigilio/s share of the partnership proEts and losses as (08. Dpon ithdraing from the partnership, he as paid P,000 in Enal settlement of his interest. -he total of the partners/ capital accounts !efore the recognition of partnership goodill prior to of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
P2 – 01
Practical Accounti ng 2 JONATHAN M. TIPAY, CPA
emigilio/s ithdraal as P210,000. After his ithdraal, the remaining partners/ capital accounts, e+cluding their share of goodill, totalled P10,000. -he total goodill of the Erm recogniBed as A. #0,000 . *,000 C. 120,000 . 10,000 5.) -he partnership of A. e Claro, . e 9uia, and C. aBa has reached an impasse as aBa is no longer illing to contri!ute the amount of time and eMort to the partnership that he has preiousl% gien. -he partners share proEts and losses in the ratio of ("(", respectiel%. -he partners hae the folloing capital !alances ust prior to aBa/s ithdraal from the partnership. e Claro e 9uia aBa 7f e 9uia purchases aBa/s interest from aBa for (2,000 and no goodill is recorded, the !alance of e 9uia capital account immediatel% after the ithdraal of aBa is A. ,000 . 1,000 C. 0,250 . 55,000 .) Dsing the information in num!er 5, and assuming that the partners agree that the partnership ill purchase aBa/s interest for (2,0000 and no goodill is to !e recorded, the !alance of e Claro/s capital account immediate after the ithdraal of aBa is A. 1,00 . (*,00 C. (*,000 . (#,250 .) Dsing the information in num!er 5, and assuming that the partners agree that the partnership ill purchase aBa/s interest for P(2,000, and ill record goodill to the e+tent paid to aBa, the !alance of e 9uia/s capital account immediatel% after the ithdraal of aBa is A. (5,000 . (#,000 C. (*,200 . 1,000 #.) Dsing the information in num!er 5, and assuming that the partners agree that the partnership ill purchase aBa/s interest for P(2,000 and ill realue the partnership !ased on the price aBa is illing to accept for his interest in the partnership, the !alance of e 9uia/s capital account immediatel% after the ithdraal of aBa is A. (*,000 of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
5,000 (5,000 20,000
Practical Accounti ng 2
P2 – 01
JONATHAN M. TIPAY, CPA
. ,000 C. (,000 . 2,000
i'uidation 1.) -he folloing condensed ;tatement of Financial Position is presented for the partnership of A. &choB, . &ga%a and C. &ndalo, ho share proEts and losses in the ratio of "2"2, respectiel%. Assets Cash Other Assets
ia!ilities and &'uities 0,000 10,000
ia!ilities A.&choB, Capital .&ga%a, Capital C.&ndalo, Capital 1#0,000 -otal ia!ilities and &'uit%
-otal Assets
0,000 50,000 50,000 10,000 1#0,000
-he partners agreed to li'uidate the partnership after selling the other assets. 7f the other assets are sold for P#0,000, ho much should &choB receie upon li'uidation, assuming all the partners are solent A. . C. .
12,500 1(,000 1,000 50,000
2.) -he folloing ;tatement of Financial Position as prepared for the &laine, Flor, and 9inia Partnership on $arch (1, 200" Assets Cash Other Assets
ia!ilities and &'uities 25,000 1#0,000
-otal Assets
ia!ilities &laine, Capital G08) Flor, Capital G08) 9inia, Capital G208) -otal ia!ilities and &'uit%
52,000 0,000 5,000 #,000 205,000
205,000 -he partnership is !eing li'uidated !% the sale of assets in instalments. -he Erst sale of noncash assets haing a !oo4 alue of P*0,000 realiBes P50,000. -he amount of cash each partner should receie in the Erst instalment is
A.
&laine 0
Flor 5,000
# of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
9inia 1#,000
Practical Accounti ng 2
P2 – 01
JONATHAN M. TIPAY, CPA
. C. .
12,000 2,000 3one of these
1(,000 5,000
22,000 1#,000
(.) Dsing the information in num!er 2, and if P(,000 cash is ithheld for possi!le li'uidation e+penses, ho much cash should 9inia receie A. 21,000 . 1,000 C. (,000 . 3one of the a!oe
.) Aguas, ernal, and Coral are partners. On :anuar% (, 200, their capital !alances and proEt and loss ratio are as follos" Capital Aguas ernal Coral
ProEt and oss 6atio 25,000 50,000 0,000
08 258 158
Coral ithdre P10,000 during the %ear. 3et loss on ecem!er (1, 200 totaled P20,000. Hence, the partners decided to li'uidate the partnership. 7t is uncertain ho much of the assets ill ultimatel% %ield !ut faoura!le realiBation is e+pected. 7t is, therefore agreed to distri!ute cash as it !ecomes aaila!le. -here are unpaid lia!ilities of P5,000 and cash on hand of P00. -he amount of noncash assets !efore li'uidation is A. . C. .
110,000 10,(00 10*,(00 105,000
5.) Dsing the information in num!er , the amount to !e realiBed !% the partnership on the sale of its assets so that Aguas ill receie a total of P1*,000 in the Enal settlement of his interest is" A. 10(,(00 . *,(00 C. 11*,(00 . ,000 .) Dsing the information in num!er and if Coral receied a total of P((,000, the amount that ernal ould hae receied at this point is" A. 3one . 2,000 C. 5,000 . 21,
* of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
Practical Accounti ng 2
P2 – 01
JONATHAN M. TIPAY, CPA
.) -he PA partnership is !eing dissoled. All lia!ilities hae !een paid and the remaining assets are !eing realiBed graduall%. -he e'uit% of the partners is as follos" Partners/ Accounts PureBa Altura egarda
oans to Gfrom) partnership
2,000 (,000 0,000
ProEt and oss 6atio
,000 0 G10,000)
-he second cash pa%ment to an% partnerLpartners under the program of priorities shall !e made thus A. -o P2,000 . -o A P,000 C. -o P#,000 . -o A P,000 and to P#,000
10 of Pampanga CPA 6eie = Octo!er 201 CPA &+am 10 >Producing ?orld Class CPAs@
( (
