Solution Manual - Partnership & Corporation, 2014-2015.pdf

7/24/2019 Solution Manual - Partnership & Corporation, 2014-2015.pdf

1/77

Solution Manual in Partnership and Corporation 2014-2015 1

Partnership and Corporation

Solution Manual

2014-2015

Chapter 1

Review of the Accounting Process

** Quizzers

Problems **

I. B 25,000 B100,000

II. Maria Julieta Lopez Allera-Alegrado

Assets = Liabilities + Capital

Cash A/RAccruedIncome =

=

AccountsPayable

AccruedExpense +

+

AlegadoCapital Revenue Expenses

Beg. Bal. 150,000 80,000 48,000 100,000 122,000 (40,000)

AJE#1

5,000 (5,000)

(6,000) (6,000)#2 (3,000) (3,000)

#3 15,000 (15,000)

8,000 8,000149,000 72,000 8,000 42,000 15,000 100,000 130,000 (58,000)

A - 229,000 = 57,000 + 172,000

III. P. Amandoron Company

Current Assets 350,000Property and Equipment 1,200,000 1,550,000

Less: Current Liabilities 125,000Long Term Liabilities 575,000 700,000

Owners Equity 850,000 - D

IV. Ruben Realty Co.

36,000 = P3,000 x 5 = P15,000 - A

12

36,000 = P3,000 x 7 = P21,000 - B

12

V. Evelyn T. Alegre

Assets = Liability + Owners Equity

Cash in Bank 850,000 + 30,000

Office Equipment 300,000 1,150,000 + 30,000

Office Furniture 60,000 = 60,000

1,240,000 = 60,000 + 1,180,000 - D

VI. Raul Langbid Co.

truck P18,000 = P1,500 x 3 = P4,500

12

building P15,000 = P1,250 x 3 = 3,750

12 P 8,250 -A

VII. Blas Sardido Co.

Sales (250,000 x P 15) 3,750,000

Cost of Sales:

Beg. Inventory -

Purchases (400,000 x P11) 4,400,000

Available for Sale 4,400,000

Less: Ending Inventory (150,000 x P11) 1,650,000 2,750,000

Gross Profit 1,000,000 - none of the choices

VIII. Alfredo Yao Co.

ERRATUM: Available for Sale P26,000 instead of P6,000

Beg. Inventory 15,000 - D

Purchases 10,000

Freight In 1,000

Available for Sale 26,000

Ending Inventory 5,000 - D

Cost of Sales 21,000


2/77


IX. Rolando Ibaez Enterprises

Accounts Payable Accounts Receivable

P35,000 BB BB 350,000 5,000 Write-off

Payment 25,000 20,000 On acct. Billing 100,000 145,000 - A

30,000 - A 300,000

X. Vicente Chotangco, Jr.

Accounts ReceivableBB 50,000 36,000

60,000 4,000 - A

110,000 40,000

70,000

XI. E. Detoya & Sons

Accounts Receivable

BB 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

XII. L. Caminade Enterprises

Accounts Payable

20,000 70,000 BB

50,000 Account Purchases

80,000 Cash Purchases

130,000 Total Purchases - B

XIII. Laureano Cacho Trading

1,240,000100,000 = 1,140,000 = 228,000

5 years 5

Cost of Machine P1,240,000

Less: Acc. Depn. 228,000

Net Book Value P1,012,000

Sold at 960,000

Loss on disposal (P 52,000) - A

XIV. Santos Advertising Agency

130 days 3160 days 61 days and over

Gomezano 10,000 20,000

SM Marketing 15,000 30,000 20,000

Yu and Sons 35,000 45,000 5,000

60,000 95,000 25,000x 5% x 8% x 10%

3,000 7,600 2,500 = 13,1008,000 = 5,100 - A

XV. Leopoldo Medina Trading

250 units x P31 = P7,750 P27,605 835 x 315 = P10,413.86 Average

65 x 33 = 2,145 - 9,895.00

FIFO P9,895 - C P 518.86 bigger - B

XVI. Lucky Strike Co.

Beg. Inventory P 3,450,000

Purchases 2,740,000

Freight In 20,000

Purchase Ret. & Allow. ( 25,000)

Available for Sale P 6,185,000

Cost of Goods Sold:

Sales P4,500,000

Less: Gross Profit (40%) 1,800,000 2,700,000

Estimated Inventory, end P3,485,000 - A

Less: Actual Inventory after fire 2,948,000

Damaged by fire P 537,000 - C


3/77


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 1,250

Accrued Interest Expense 1,250

** Quizzers **

Test III

Manufacturing Income Statement Balance Sheet

Dr. Cr. Dr. Cr. Dr. Cr.

1) Finished Goods, Beg.

2) Finished Goods, End

3) Goods in Process, Beg.

4) Goods in Process, End

5) Raw Materials, Beg.

6) Raw Materials, End

7) Factory Supplies Inventory

8) Factory Supplies Used

9) Salaries - Office

10) Salaries - Factory

11) Repair - Office Equipment

12) Repairs - Factory Equipment

13) Light and Water - Office

14) Light and Water - Factory

15) Tools Used

16) Patents

17) Amortization of Patents

18) Purchases, Raw Materials 19) Freight In

20) Sales

Test IVMultiple Choice (Problem)

1. Raw Materials, Beg. P 120,000

Purchases, Raw Materials 110,000

Freight In 5,000

Available for Sale P 235,000

Less: Raw Materials, End 105,000

Direct Materials P 130,000 (B)

2. Direct Materials P 130,000Direct Labor 308,000

Prime Cost P 438,000 (A)

3. Manufacturing Overhead:

Indirect Labor P 45,000

Indirect Materials 65,000

Amortization of Trademark 50,000

Real Expense - Factory 25,000

Depreciation - Factory 40,000

Factory Overhead P 225,000 (A)

4. Conversion Cost:

Direct Labor P 308,000

Manufacturing Overhead 225,000

P 533,000 (A)

5. Factory Cost:

Direct Materials P 130,000

Direct Labor 308,000


P 663,000 (C)


4/77


6. Cost of Goods Manufactured:

Direct Materials P 130,000

Direct Labor 308,000


Factory Cost P 663,000

Add: Work in Process, Beg. 250,000

Total cost placed in process P 913,000

Less: Work in Process, End 275,000

Cost of Goods Manufactured P 638,000 (A)

7. Cost of Goods Manufactured P 638,000

Finished Goods, Inventory 170,000

Goods Available for Sale P 808,000

Less: Finished Goods, End 290,000

Cost of Goods Manufactured and sold P 518,000 (A)

Chapter 2

PartnershipNature and Information

** Exercises/Problems **

2-1. Sanada and Estrebilla

Requirement 1: Cash 250,000

Merchandise Inventory 160,000

Saada, Capital 410,000

Cash 380,000

Delivery Car 950,000

Estrebilla, Capital 1,330,000

Requirement 2:

Current Assets: Partners Equity

Cash P 630,000

Merchandise 160,000 P 790,000 Saada, Capital P 410,000

Estrebilla, Capital 1,330,000

Non-Current Assets:

Delivery Equipment 950,000

Total Assets P1,740,000 P1,740,000

2-2. Maula, Montecina and Maceda

Requirement 1a: Cash P200,000

Furniture and Fixtures 120,000

Transportation Equipment 850,000

Accounts Payable P 100,000

Maula, Capital 270,000

Montecina, Capital 800,000

Jeremy Maceda was admitted in the partnership as anindustrial partner with a 15% share in profit.

Requirement 1b: Cash P200,000



Maula, Capital 270,000

Montecina, Capital 900,000

** (Same notation for Maceda)

Requirement 2:

Assets Current Liabilities

Current Assets Accounts Payable 100,000

Cash 200,000

Non-Current Assets Partners Equity

Furniture & Fixtures 120,000 Maula, Capital 270,000

Transportation Equipment 850,000 970,00 Montecina, Capital 800,000

Maceda, Capital -

Total Partners Equity 1,070,000

Total Assets 1,170,000

Total Liability &

Partners Equity 1,170,000


5/77


2-3. Malquisto and Rocabo

Requirement 1: Debits:

Cash P 375,000

Accounts Receivable 90,000

Merchandise 420,000

Equipment 250,000 P1,135,000

Credits:

Estimated Uncollectible P 1,000Accumulated Depreciation 50,000

Accounts Payable 75,000 126,00

Account balance of Malquisto P1,009,000

Requirement 2: a) Malquisto, Capital 4,000

Estimated Uncollectible Account 4,000

b) Malquisto, Capital 30,000

Merchandise 30,000

c) Malquisto, Capital 20,000

Accumulated Depreciation 20,000

d) Malquisto, Capital 1,500

Accrued Utilities 1,500

Requirement 3: Est. Uncollectible Accounts 5,000


Accounts Payable 75,000

Accrued Utilities Expense 1,500

Malquisto, Capital 953500

Cash 375,000


Merchandise 390,000

Equipment 250,000

Requirement 4: Malquisto and Rocabo

Statement of Financial Position

As of _________

Assets Liabilities

Current Assets: Accounts Payable 75,000

Cash 851,750 Accrued Utilities Expense 1,500 76,500


Est. Uncollectible Account 5,000 85,000 Partners Equity

Merchandise 390,000 Malquisto, capital 953,500

Non-Current Assets: Rocabo, Capital 476,750 1,430,750

Equipment (Net) 180,000

Total Liabilities & Owners Equity 1,506,750Total Assets 1,506,750

(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 Beringuel Alemanza

1) Malquisto, Capital 4,000 Est. Uncoll. Acct. 500 Alemanza, Capital 1,500

Est. Uncoll. Acct. 4,000 Beringuel, Capital 500 Est. Uncoll. Acct. 1,500

2) Malquisto, Capital 42,000 Beringuel, Capital 60,000 Alemanza, Capital 45,000

Merchandise 42,000 Merchandise 60,000 Merchandise 45,000

3) Malquisto, Capital 5,000 Beringuel, Capital 100,000 Alemanza, Capital 5,000Acc. Depn. 5,000 Acc. Depn. 100,000 Acc. Depn. 5,000

4) Cash 50,000 Cash 150,000 Cash 250,000

Malquisto, Capital 50,000 Beringuel, Capital 150,000 Alemanza, Capital 250,000


6/77


Requirement 2: Closing Entries in their respective sole proprietorship book.

Malquisto Beringuel Alemanza

Est. Uncoll. Acct. 7,000 Est. Uncoll. Acct. 4,500 Est. Uncoll. Acct. 3,500

Acc. Depn. 185,000 Acc. Depn. 330,000 Acc. Depn. 180,000

Malquisto, Capital 1,556,000 Beringuel, Capital 1,625,500 Alemanza, Capital 1,246,500

Cash 950,000 Cash 850,000 Cash 750,000

A/R 70,00 A/R 90,000 A/R 25,000

Merchandise 378,000 Merchandise 540,000 Merchandise 405,000Equipment 350,000 Equipment 480,000 Equipment 250,000

Requirement 3: Compound Opening Journal Entry

Cash 3,000,000


Merchandise 1,323,000

Equipment 358,000


Malquisto, Capital 1,606,000

Beringuel, Capital 1,775,500

Alemanza, Capital 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 Auditor

Accounts Payable 50,000 Accounts Payable 75,000

Notes Payable 20,000 Allow. for Doubtful Accounts 12,000

Interest Payable 500 Acc. Depn. Equipment 40,000

Allow. for Doubtful Accounts 10,000 Auditor, Capital 389,000

Accumulated Depreciation 15,000 Cash 186,000

Laureto, Capital 275,500 Accounts Receivable 120,000Cash 125,000 Merchandise 150,000

Accounts Receivable 80,000 Equipment 60,000

Notes Receivable 50,000

Interest Receivable 1,000

Merchandise 75,000

Equipment 40,000

Requirement 2: Journal Entries to record investment in the Partnership Book

Laureto Auditor

Cash 125,000 Cash 186,000

Accounts Receivable 80,000 Accounts Receivable 120,000

Notes Receivable 50,000 Merchandise 150,000

Interest Receivable 1,000 Equipment 20,000Merchandise 75,000 Accounts Payable 75,000

Equipment 25,000 Allowance for Doubtful Accounts 12,000

Allowance for Doubtful Accounts 10,000 Auditor, Capital 389,000


Notes Payable 20,000

Interest Payable 500

Laureto, Capital 275,000

Assumption 2

Requirement 1: Adjusting Entries

Book of Laureto Book of Auditor

Laureto, Capital 6,000 Auditor, Capital 12,000

Allowance for Doubtful Acct. 6,000 Allowance for Doubtful Acct. 12,000


Merchandise 3,750 Merchandise 7,500


Acc. Depn. Equipment 17,000 Acc. Depn. Equipment 8,000


7/77


Closing Entries in their Respective Sole Proprietorship Book

Book of Laureto Book of Auditor

Allowance for Doubtful Acct. 16,000 Allowance for Doubtful Acct. 24,000

Acc. Depn. Equipment 32,000 Acc. Depn. Equipment 48,000

Accounts Payable 50,000 Accounts Payable 75,000

Notes Payable 20,000 Auditor, Capital 361,500

Interest Payable 500 Cash 186,000

Laureto, Capital 248,750 Accounts Receivable 120,000

Cash 125,000 Merchandise 142,500

Accounts Receivable 80,000 Equipment 60,000

Notes Receivable 50,000

Interest Receivable 1,000

Merchandise 71,250

Equipment 40,000

Requirement 2: Journal Entries to record investment in the Partnership Book

Laureto Auditor

Cash 125,000 Cash 186,000

Accounts Receivable 80,000 Accounts Receivable 120,000

Notes Receivable 50,000 Merchandise 142,000

Interest Receivable 1,000 Equipment 12,000

Merchandise 71,250 Allowance for Doubtful Accts. 24,000Equipment 8,000 Accounts Payable 75,000

Allowance for Doubtful Accts. 16,000 Auditor, Capital 361,500


Notes Payable 20,000

Interest Payable 500

Laureto, Capital 248,750

2-6. Mendez and Salazar

ERRATUM: P300,000 cost of building was Salazars investment

Requirement 1a: Cash 300,000

Building 300,000

Furniture 70,000Mendez, Capital 140,000

Salazar, Capital 530,000

Requirement 1b: Cash 300,000


Building 300,000

Furniture 70,000


Mendez, Capital 170,000

Salazar, Capital 510,000

2-7. Dabucol and Miranda

Compound Journal Entry

Cash 220,000

Computer 550,000

Furniture & Fixtures 200,000

Prepaid Rental 6,000 566,000

Dabucol, Capital 410,000

Miranda, Capital

Computations:

Dabucol Miranda Total

Cash 100,000 120,000 220,000

Computer 300,000 250,000 550,000

Furniture & Fixtures 160,000 40,000 200,000

Prepaid Rental 6,000 - 6,000

566,000 410,000 976,000


8/77


2-8. Torralba and Rosada

Requirement 1:

Debits:

Cash 85,000


Merchandise 120,000

Equipment 150,000 415,000

Credits:Allow. For Doubtful Accounts 4,000

Acc. Depreciation 30,000

Accounts Payable 80,000 114,000

Torralba, Capital 301,000

Requirement 2:

Allow. for Doubtful Accounts 3,000



Merchandise 15,000





Requirement 3:





Cash 85,000


Merchandise 105,000

Equipment 150,000

Requirement 4:

Cash (85,000+1/2 of P278,000) 224,000


Merchandise 105,000

Equipment 105,000




Rosada, Capital (1/2 of P278,000) 139,000

Requirement 5:

Torralba and Rosada PartnershipStatement of Financial Position

As of _________

Assets Liabilities

Cash 224,000 Accounts Payable 76,000


Less: Allow. For Doubtful Accounts 1,000 59,000 Partners Equity

Merchandise 105,000 Torralba, Capital 278,000

Current Assets 338,000 Rosada, Capital 139,000 417,000

Non-Current Assets:

Equipment 105,000 Total Liability & Partners Equity 493,000

Total Assets 493,00

2-9. Galbog and Torrequemada

Requirement 1:

Glabog, Capital 15,000



Merchandise 30,000




9/77


Requirement 2: Journal Entries to close the books of Glabog





Cash 320,000


Merchandise 220,000

Equipment 150,000

Requirement 3:

Assets Liability

Current Assets:

Cash (P320,000 + P500,000) 820,000 Accounts Payable 60,000


Allow. for Doubtful Accounts 15,000 60,000 Partners Equity

Merchandise 220,000 Glabog, Capital 670,000

Non-Current Asset: Torrequemada, Capital 500,000 1,170,000

Equipment 130,000 Total Liability &

Total Assets 1,230,000 Partners Equity 1,230,000

2-10. Angie Aguilon Company

Requirement 1: Capital Contribution of Zulueta

Unadjusted capital of Aguilon 267,000

Accounts Receivable to be derecognized ( 25,000 )

Recognized prepaid expenses 13,000

Revaluation of Equipment 25,000

Adjusted Aguilon Capital 280,000

Capital contribution of Zulueta is equal to P280,000,Matching the adjusted capital of Aguilon.

Requirement 2:

Angie Aguilon Company


As of June 30 __________

Assets Liability


Cash 35,000 Accrued Expenses 18,000

Merchandise 185,000 Total Liabilities 63,000

Prepaid Expense 13,000 233,000

Non-Current Asset:

Equipment 120,000 Partners Equity

Acc. Depreciation 10,000 110,000 A. Aguilon, Capital 280,000

Total Assets 343,000 Total Liability & Partners Equity 343,000

2-11. Misamis Construction Supply

Requirement A: Hingcos Capital Balance

Debits:Cash in Bank 420,000



Equipment 130,000

Total Debit 732,000

Credits:



Total Credit 23,500

Hingco's Capital Balance 708,500

Barillo's Capital Balance

Debits:Cash in Bank 450,000



Total Debit 760,000

Credits:


Barillo's Capital Balance 752,500


10/77


Requirement B: a) Allow. for Doubtful Accounts 8,500

Hingco, Capital 73,500



Barillo, Capital 52,500


b) Hingco, Capital 10,000

Merchandidse 10,000


Merchandidse 20,000

c) Acc. Depreciation 5,000


Requirement C: Cash in Bank 420,000


Equipment 120,000


Cash in Bank 450,000



Requirement D: Hingco and Barillo


As of July 31 20__

Assets Partners Equity

Cash in Bank 870,000 Hingco, Capital 630,000

Merchandise Inventory 320,000 Barillo, Capital 680,000

Equipment 120,000

Total 1,310,000 Total 1,310,000

2-12. Janulgue and Rota

Requirement 1:

Janulque's Book:

Janulgue, Capital 30,000




Rota's Book:

Rota, Capital 30,000

Merchandise 30,000



Requirement 2:

To record the contribution of Janulgue

Cash 180,000


Merchandise 500,000

Prepaid Insurance 6,000

Equipment 70,000



To record the contribution of Rota

Cash 150,000Accounts Receivable 100,000

Merchandise 620,000




11/77


2-13. Medina and Loqueloque

Adjusting Entries in the books of Medina

Requirement 1: a) Medina, Capital 4,750


b) Medina, Capital 25,000

Merchandise 25,000

c) Acc. Depreciation 90,000Medina, Capital 90,000

d) Medina, Capital 60,000

Accrued Rental Expense 60,000

e) Prepaid Expenses 25,000

Medina, Capital 25,000

Requirement 2: Loqueloque should contribute cash of P3,795,250 equal to the capital balance of Medina

computed as follows:

Capital balance of Medina before adjustment 3,770,000

Add: Adjustment 25,250

3,795,250

Journal Entries to open the book of the Partnership:

Requirement 3: Cash 4,845,250


Merchandise 2,325,000

Prepaid Expenses 25,000

Store Equipment 850,000



Accrued Rental Expense 60,000

Medina, Capital 3,795,250

Loqueloque, Capital 3,795,250

2-14. Pamulagan and Salec-Amer

Requirement 1: a) Amer, Capital 10,000


b) Amer, Capital 2,000

Accrued Expense Payable 2,000

c) Amer, Capital 10,000

Merchandise P10,000

Requirement 2: Cash in Bank 543,000

Pamulagan, Capital 543,000






Accrued Expense 2,000


Amer, Capital 543,000

Requirement 3:

Assets Liabilities

Cash in Bank 793,000 Accounts Payable 2,000

Accounts Receivable 100,000 Accrued Expense 20,000

Allow. for Doubtful Account 10,000 90,000 Total Liabilities 22,000


Furniture and Fixtures 130,000 Partners Equity

Total Assets 1,108,000 Amer, Capital 543,000

Pamulagan, Capital 543,000

Total Partners Equity 1,086,000

Total Liabilities and

Partners Equity 1,108,000


12/77


2-15. Degracia and Mascarias

Mascarias offered Investment:

Cash 200,000

Equipment 80,000

Total 280,000

Degracia's Adjusted Capital Balance:

Cash 80,000

Merchandise 175,000

Total 255,000

1/2 of P280,000 140,000

Degracia's adjusted investment 255,000

Reduction from Degracia's Investment 115,000

Composed of:

Cash 80,000

Merchandise 35,000

115,000

Requirement 1: 1/2 of Mascarias offered Investment of P280,000 140,000

Degracia's Investment 255,000

Reduction from Degracia's Investment 115,000

Cash 80,000

Merchandise 35,000

115,000

Requirement 2: Estimated Uncollectible Accounts 15,000

Degracia, Capital 85,000




Degracia, Capital 115,000Cash 80,000

Merchandise 35,000

Requirement 3: To record contribution of Degracia:

Merchandise (175,000-35,000) 140,000


To record contribution of Mascarias:

Cash 200,000

Equipment 80,000

Mascarias, Capital 280,000

2-16. Estalilla, Fortuna and Sonsona

Requirement A:

Capital balance prior to formation of the partnership:

Estalilla Fortuna Sonsona

Cash 30,000 70,000 40,000

Accounts Receivable 105,000 90,000 70,000

Allow. of Accounts Receivable (6,000) (4,000) (15,000)

Merchandise 150,000 280,000 120,000


Acc. Depreciation (80,000)

Building 650,000


Land 800,000Accounts Payable (40,000) (50,000) (45,000)

Capital balances prior to formation 789,000 1,186,000 440,000

Just to complywith the

requirements,

these adjustingentries were

prepared. The

receivable and

payable accountsremain in the sole

proprietors

records.


13/77


Requirement B:

The new Capital balance after the revaluation of non-cash assets:

Estalilla Fortuna Sonsona

Cash 30,000 70,000 40,000

Accounts Receivable 105,000 90,000 70,000

Allow. of Accounts Receivable (10,000) (9,000) (10,500)

Merchandise 130,000 220,000 100,000


Acc. Depreciation (100,000)Building 650,000


Land 850,000

Accounts Payable (40,000) (50,000) (45,000)

Capital balances prior to formation 815,000 1,171,000 404,500

Requirement C: a) Estalilla, Capital 4,000


Fortuna, Capital 5,000



Sonsona, Capital 4,500

b) Estalilla, Capital 20,000

Merchandise 20,000


Merchandise 60,000


Merchandise 20,000

c) Sonsona, Capital 20,000

Acc. Depn.-Transportation Equipment 20,000

d) Acc. Depreciation.- Building 50,000

Estalilla, Capital 50,000

e) Land 50,000


Requirement D: Cash 140,000


Merchandise 450,000


Building 650,000

Land 850,000


Acc. Depn.Transportation Equipment 100,000

Acc. Depreciation.Building 50,000



Fortuna, Capital 1,171,000


Requirement E: Estalilla, Fortuna, Sonsona


As of 31 March 20A

Assets

Cash 140,000

Accounts Receivable 265,000Allow. for Doubtful Accounts 29,500 235,500

Merchandise 450,000


Acc. Depreciation - Transportation Equip. 100,000 250,000

Building 650,000

Acc. Depreciation - Building 50,000 600,000

Land 850,000

Total 2,252,000


14/77


Liabilities and Partners Equity

Liabilities


Partners Equity


Fortuna, Capital 1,171,000

Sonsona, Capital 404,500 2,390,500

Total Liabilities & Partners Equity 2,252,000

** Multiple Choice (Problem) **

2-I. JJ Pawnshop

Q1 B

Q2 A

Solution:

Assets 100% - 800,000 P480,000 60% = P800,000 (B)

Liabilities 40% - 320,000 P800,000 - P480,000 = P320,000 (A)

Owner's Equity 60% - 480,000

2-II. Edulan, Tabarranza and Labasan

Q3 C

Q4 C

Solution:

75,000 1/5 = 375,000 (C) - equal to total capitalization of the partnership

- 75,000 - contribution of Tabaranza300,000

2

150,000 (C) - each contribution of Labasan and Edulan

2-III. Santos and Bombeo

Q5 C 350,000 - the cost of land when sold in that date is considered the fair market value

of the land

Q6 200,000 cash

120,000 fair market value of equipment

320,000 (C)

2-IV. Kudemus and Rendon

Q7 Kudemus Rendon

Cash 400,000 600,000


Allowance for Doubtful Accounts (1,200)

Merchandise 50,000 60,000

Building 1,050,000

Accounts Payable ( 300,000)

Total 558,000 + 1,410,000 = 1,968,000 (A)

Q8 Rendon

Rendon, Capital 1,410,000

Add: Liability 120000

1,710,000 (B)

2-V. Dolor and Aleman

Q9 The land should be valued in the partnership book at P200,000 (C)

Q10 Alemans capital account should be credited in the amount of P187,500 (B)

Q11 The capital account balances of Dolors capital account during the partnership formation would be P250,000 (D)

2-VI. Awayan and Nadua

Q12 Awayan Nadua

Accounts Receivable 80,000 95,000

Allowance 8,000 14,250

72,000 80,750 (A)


15/77


Q13 Awayan

Cash 150,000


Merchandise 125,000

Prepaid Expense 15,000

362,000 (A)

Q14 Nadua

Cash 120,000Accounts Receivable 80,750


Prepaid Expense (10,000)

360,750 (A)

2-VII. Beceira and Obeso

Q15 Capital contribution of Obeso:

2 units Altis taxi 1,950,000

Less: Liability assumed by partnership 200,000

Obeso, capital 1,750,000

required additional contribution of Beceira x 20%

additional cash that Beceira should contribute350,000 (C)

Q16 Cost of 2 units Altis 1,950,000

Less: Liability assumed by the partnership 200,000

Capital contribution of Obeso 1,750,000 (B)

Q17 Partners Capital Balances:

Cash (P350,000 + P350,000 700,000

2 units Corolla 1,340,000

2 units Altis 1,950,000

Accounts Payable (P250,000 + P200,000) 450,000

Beceira, Capital 1,790,000

Obeso, Capital 1,750,000

Beceira, Capital 1,790,000

Obeso, Capital 1,750,000

3,540,000 (D)

2-VIII. Rada and Besinan

Q18 Accounts Receivable 40,000

x Probability of Collection 70%

Estimated Realizable Value 28,000

Original balance of Allowance 3,000

Increased by 9,000 (A)

New balance of Allowance 12,000

Q19 At fair market value of P100,000 (B)

Q20 Cash 65,000


Laundry Equipment 100,000

Accounts Payable (15,000)

Net Assets 178,000 (A)The amount of cash to be contributed by Besinan

2-IX. Basa and Alfeche

Q21 429,000(C)

Q22 390,000(B)

Basa Alfeche

Cash 145,000 160,000

Accounts Receivable 64,000 45,000

Merchandise 200,000 190,000


Accrued Expense (5,000)

(C) 429,000 390,000 (B)

390,000

(39,000) Amount of cash to be deducted from Basa


16/77


Q23

Cash Balance of Basa 145,000

Excess Capital Contribution of Alfeche -39,000

Cash Balance of Basa 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 = 36,000

Bernacer 20% x 120,000 = 24,000

Selisana 50% x 120,000 = 60,000

Profit distributed 120,000

Requirement 2

Proportional RatioMatero 60/160 x 120,000 = 45,000

Bernacer 80/160 x 120,000 = 60,000

Selisana 20/160 x 120,000 = 15,000

120,000

Requirement 3

Income and Expense Summary 120,000

Matero, Drawing 36,000

Bernacer, Drawing 24,000

Selisana, Drawing 60,000

3-2 Cotabato Micro-Appliance Center

Cogollo Eruela PedrosaP/L Ratio ( in proportion to capital) 62.5% 37.5%

Profit P80,000

Share of Pedrosa (80,000 x 8%) (2) 6,400 (1)

Share of Cogollo (80,0006,400 x 62.5%) 46,000

Share of Eruela (80,0006,400 x 37.5%) 27,600

Profit distributed 46,000 + 27,600 + 6,400 = 80,000 (3)

3-3 Steve and Raymund

Income & Expense Summary P450,000

Steve, Drawing P229,500

Raymund, Drawing 220,500

Steve Raymund

Bonus to Raymund P67,500

Balance:

Steve (P450,000 - 67,500 x 3/5) = P229,500

Raymund (P450,00067,500 x 2/5) = 153,000

Total P229,500 P220,000

3-4 Musuan Supermarket

Requirement 1a

800,000x 279,500 = 149,066.67

1,500

700,000x 279,500 = 130,433.33

1,500

279,500.00

Journal Entry

Income & Expense Summary 279,500

Japad, Drawing 149,066.67

Ayuban, Drawing 130,433.33


17/77


Requirement 1b:

810,000x 279,500 = 149,435.64

1,515

705,000x 279,500 = 130,064.36

1,515

279,500.00

Journal Entry

Income & Expense Summary P279,000Japad, Drawing 149,435.64


Requirement 1c:

No. of Months

Debit Credit Balances Unchanged Peso Unit

Jan. 1 800,000 x 3 2,400,000

Apr.1 820,000 x 6 4,920,000

Oct.1 10,000 810,000 x 3 . 2,430,000

12 9,750,000

12

Average Capital of Japad 812,500

No. of Months


Jan. 1 700,000 x 3 2,100,000

Apr.1 20,000 680,000 x 7 4,760,000

Nov.1 25,000 705,000 x 2 . 1,410,000

12 8,270,000

12

Average Capital of Ayuban 689,166.67

P 812,500x P279,500 = 151,227.80

1,501.6667

P689,166.67

x P279,500 = 128,272.201,501.6667

279,500.00

Journal Entry


Japad, Drawing 151,227.80


Requirement 1d:

Japad - P279,500 x 3/5 = 167,700

Ayuban - P279,500 x 2/5 = 111,800

279,500

Journal Entry


Japad, Drawing 167,700

Ayuban, Drawing 111,800

Requirement 1e:

Japad - P279,500 x = 139,750

Ayuban - P279,500 x = 139,750279,500

Journal Entry


Japad, Drawing 139,750

Ayuban, Drawing 139,750

3-5 Mallari and Asuncion

Requirement 1a

Beg. Capital Ratio:

Mallari P 85,000 85,000/205,000 x P20,000 = P 8,292.68

Asuncion 120,000 120,000/205,000 x P20,000 = 11,707.32

P205,000 P20,000.00


18/77


Journal Entry


Mallari, Drawing 8,292.68

Asuncion, Drawing 11,707.32

Requirement 1b

Ending Capital Ratio:

Mallari P100,000 100,000/195,000 x P20,000 = P10,256.41Asuncion 95,000 95,000/195,000 x P20,000 = 9,743.59

P195,000 P20,000.00

Journal Entry


Mallari, Drawing P10,256.41


Requirement 2a:

Mallari

No. of Months


Jan.1 85,000 x 2 170,000

Mar.1 P15,000 100,000 x 10 . 1,000,000

12 1,170,000

12

97,500

Asuncion

No. of Months


Jan.1 120,000 x 9 1,080,000

Oct.1 P25,000 95,000 x 3 . 285,000

12 1,365,000

12

113,750

Mallari P 97,500 97,500/211,250 x P30,000 = P(13,846.15)

Asuncion 113,750 113,750/211,250 x P30,000 = (16,153.85)

P211,250 Loss P(30,000.00)

Journal Entry

Mallari, Drawing P13,846.15



To distribute loss.

Requirement 2b:Mallari - P30,000 x 4/5 = P(24,000)

Asuncion - P30,000 x 1/5 = (6,000)

P(30,000)

Journal Entry

Mallari, Drawing P24,000

Asuncion, Drawing 6,000


To distribute loss.

3-6 Esmeralda and Besino

Requirement 1Total Esmeralda Besino

Salaries 60,000 36,000 24,000

Interest on Beg. Capital 82,500 30,000 52,500

142,500

Remainder (60%-40%) 65,500 39,300 26,200

208,000 105,300 102,700


19/77


Requirement 2

Journal Entry


Esmeralda, Drawing P 105,300

Besino, Drawing 102,700

3-7 Gabayan and Domingo

Requirement 1:Gabayan - P150,000/P330,000 x P110,000 = 50,000

Palatino - P180,000/P330,000 x P110,000 = 60,000

110,000

Requirement 2:

Total Gabayan Palatino

Salaries P 39,000 P 24,000 P 15,000

Remainder: 3/52/5 71,000 42,600 28,400

P110,000 P 66,600 P 43,400

Requirement 3:

Total Gabayan Palatino

10% interest P33,000 P 15,000 P 18,000Remainder, Equally 77,000 38,500 38,500

P110,000 P 53,500 P 56,500

3-8 Cebu Vintage Car

Requirement A:

Total Deriquito Searez

Annual Salaries P 75,000 P 45,000 P 30,000

Interest on Beg. Capital 114,560 60,160 54,400

Remainder, Equally 260,440 130,220 130,220

P450,000 P235,380 P214,620

Requirement B:

Total Deriquito SearezInterest based on Ending Capital P288,400 P146,400 P142,000

Annual Salaries 70,000 50,000 20,000


P450,000 P242,200 P207,800

Requirement C:

Total Deriquito Searez

Annual Salaries P220,000 P120,000.00 P100,000.00

Bonus to Deriquito 112,500 112,500.00

Remainder, Average Capital 117,500 58,368.08 59,131.92

P450,000 P242,200.00 P159,131.92

Average Capital - DERIQUITONo. of Months


Jan.1 P752,000 x 9 P 6,768,000

Oct.1 P70,000 682,000 x 2 1,364,000

Dec.1 P50,000 732,000 x 1 . 732,000

12 P8,864,000

12

P738,666.67

Average Capital - SEAREZ

No. of Months


Jan.1 P680,000 x 2 P 1,360,000

Mar.1 P80,000 760,000 x 8 6,080,000Nov.1 P10,000 750,000 x 1 750,000

Dec.1 40,000 790,000 x 1 . 790,000

12 P 8,980,000

12

Average Capital P 748,333.33

Deriquito - P738,666.67 P738,666.67/1,487,000 x P117,500 = P 58,368.08

Searez - P748,333.33 P748,333.33/1,487,000 x P117,500 = 59,131.92

P117,500.00


20/77


3-9 Universal Dry Cleaning Services

Requirements:

Case A: Total Espaol Rosada

Salaries Allowed P110,000 P60,000 P50,000

15% Interest 45,000 30,000 15,000


P160,000 P92,500 P67,500

Case B: Total Espaol Rosada


15% Interest 45,000 30,000 15,000

Remainder, Equally (25,000) (12,500) (12,500)

P130,000 P77,500 P52,500

Case C: Total Espaol Rosada


15% Interest 45,000 30,000 15,000

Remainder, Equally (185,000) (92,500) (92,500)

P(30,000) P(2,500) P(27,500)

Case A:

Journal Entry


Espaol, Drawing P92,500

Rosada, Drawing 67,500

Journal Entry


Espaol, Drawing P77,500


Journal Entry

Espaol, Drawing P 2,500



3-10 Aana, Beltran and Ventic

Total Aana Beltran Ventic

Annual Salaries P 75,000 P 30,000 P 25,000 P 20,000

20% Interest 20,000 20,000

Remainder 45,000 18,000 18,000 9,000

P140,000 P 48,000 P 43,000 P 49,000

3-11 Matuguinas and Rovelero

Total Matuguinas Rovelero

Annual Salaries P 80,000 P 30,000 P 50,000

10% Bonus after Salaries 10,000 10,000

18% Interest based on Average 101,250 17,250 84,000Remainder, Equally (11,250) (5,625) (5,625)

P180,000 P 41,625 P138,375

Matuguinas

No. of Months


Jan.1 P100,000 x 5 500,000

June 1 P20,000 80,000 x 4 320,000

Oct.1 P30,000 110,000 x 3 . 330,000

12 1,150,000

12

95,833.33

RoveleroNo. of Months


Jan.1 P150,000 x 4 600,000

May 1 P50,000 200,000 x 6 1,020,000

Nov.1 P10,000 190,000 x 2 . 3,800,000

12 5,600,000

12

466,666.67


21/77


Matuguinas - P 95,833.33 x 18% = 17,250

Rovelero - P466,666.67 x 18% = 84,000

101,250

3-12 Robles, Saromines and Tiempo

Total Robles Saromines Tiempo

Bonus (20% of P250,000) 50,000 50,000

Interest:

10% x P100,000 10,000 10,00010% x P300,000 30,000 30,000

10% x P200,000 20,000 20,000

Salary Allowed 38,000 38,000

148,000 98,000 30,000 20,000

Remainder: (2:3:5) 102,000 20,400 30,600 51,000

As distributed 250,000 118,400 60,600 71,000

3-13 Gadiano and Alisuag

Requirement A:

Total Gadiano Alisuag

Salary to Gadiano P20,000 P20,000

10% bonus to Alisuag (10% x P60,000) 6,000 6,000

Interest:10% x P 85,000 8,500 8,500

10% x P150,000 15,000 15,000

Remainder: P49,500 P28,500 P21,000

Equally (Less than P30,000) 10,500 5,250 5,250

As distributed P60,000 P33,750 P26,250

Requirement B:

Total Gadiano Alisuag

Salary, Bonus and Interest

(same as in Req. A) P49,500 P28,500 P21,000

Remainders:

P30,000 (equally) 30,000 15,000 15,000

in excess of P30,000 (30%-70%) 500 150 350


3-14 Comval Supermarket

Case 1:

Separis Barroga Total

Salary Allowance P 50,000.00 P 30,000.00 P 80,000

Bonus (5% of profit after bonus) 21,428.00 21,428

Interest Allowed on Beg. Capital 45,000.00 60,000.00 105,000

Remainder: (2:3) 97,428.80 146,143.20 243,572

As distributed P213,856.80 P236,143.20 P450,000

Bonus Computation:

Profit before Bonus P450,000 105% OR B = 5% (P - B)Profit after Bonus P428,572 = 100%

Bonus P 21,428 = P22,500 - .05B

B + .05B = P22,500

1.05B = P22,500

B = P22,500 = P21,428

1.2

Interest on Beginning Capital Balances

Separis = 15% x P300,000 = P 45,000

Barroga = 15% x P400,000 = 60,000

P105,000

Case 2: Separis Barroga Total

Bonus (20% ProfitP140,000-Bonus) P 81,666.00 P 30,000.00 P 80,000

Salaries 60,000.00 21,428

Interest Allowed (10% of Ending

Capital Balance 28,000.00 60,000.00 105,000

Remainder: (4:3) 194,476.57 145,857.43 340,334

As distributed P364,142.57 P265,587.43 P630,000


22/77


Bonus Computation:

Profit before Bonus P 630,000 B = .20 (630,000 - 140,000B)

Less: Salaries (60,000 + 80,000) 140,000 = .20 (490,000 - B)

Profit after Bonus P 490,000 120% OR = P98,000 - .20B

408,334 = P98,000

Bonus P 81,666 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% P 30,667 P 40,833 P 71,500

Salaries Allowed 80,000 70,000 150,000

Bonus 33,636 33,636

Remainder: 50%-50% 132,432 132,432 264,864


Separis Barroga

Jan.1 P300,000 x 12 = P3,600,000 Jan.1 P400,000 x 12 = P4,800,000

May 1 40,000 x 8 = 320,000 Sept. 1 50,000 x 8 = 200,000

Sept. 1 60,000 x 4 = (240,000) Nov. 1 50,000 x 2 = (100,000)

P3,680,000 P4,900,000

12 12

P 306,667 P 408,333

x 10% x 10%

P 30,667 P 40,833

Bonus Computation:

Profit before Salaries & Bonus P 520,000 B = 10% (PSB)

Less: Salaries (80,000 + 70,000) 150,000 = .10 (P520,000P150,000 - B)Profit after Salaries & Bonus P 370,000 110% OR = .10 (P370,000B)

336,364 = 100% = P370,000 - B

Bonus P 33,636 P370,0001.1

B = P33,636

Case 4:


Bonus (20% of Profit) P 80,000 P 80,000

Salaries Allowed 50,000 50,000

Interest Allowed on Beg. Capital at 10% 30,000 30,000

Remainder: (2:8) 48,000 P192,000 240,000


3-15 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% 42%

Barredo (2/5)= 40% x 70% 28%

Labata 30%

Total 100%

Requirement 2:

Reported Profit P300,000

Overstatement of Inventory End, overstates Profit (30,000)

Understatement of Prepaid Expense (asset) results to

overstatement of Expenses (P10,000 - 1,000) 9,000

Understatement of Accrued Expense (liability) results to

understatement of Expenses (P8,000 - 5,000) (3,000)

Corrected Profit P276,000


23/77


Schedule of Profit Distribution:

Ceniza = 3/5 or 60% of P276,000 = P165,600

Barredo = 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 20,000

2) Non-recognition of Accrued Expense understates Expense and overstates Profit (5,000)

3) Non-recognition of Supplies Expense overstates Profit (8,000)

Corrected Profit P157,000

Requirement 2:

Total Sorima Magalso

PartnersEquityJan. 1, 2009 P450,000 P250,000 P200,000

Add: Net Interest in Equity

Share in Profit 157,000 (40%) 62,800 (60%) 94,200

P607,000 P312,800 P294,200

Less: Permanent Withdrawal (50,000) (20,000) (30,000)

Partners Equity Dec. 31, 2009 P557,000 P292,800 P264,200

3-17 Dipolog Grocers

Requirement 1:

Closing Entries

Merchandise Inventory, End 480,000

Sales 960,000

Purchase Return & Allowances 6,000

Merchandise Inventory, Beg. 510,000

Sales Discount 4,000

Purchases 700,000

Freight In 3,000



Salaries Expense 50,000

Freight Out 1,000

Taxes & Licenses 7,000

Supplies Expense 10,000

Depreciation 40,000


Pugoy, Drawing 49,880

Gargar, Drawing 41,950

Anguit, Drawing 29,170

Requirement 2:

Total Pugoy Gargar Anguit

Salaries to Partners P 50,000 P 30,000 P 10,000 P 10,000

10% Bonus (P121,000 - P50,000) 7,100 7,100

Remainder:

Pugoy - 20% x P63,900 12,780 12,780

Gargar - 50% x P63,900 31,950 31,950

Anguit - 30% x P63,900 19,170 19,170

As distributed P121,000 P 49,880 P 41,950 P 29,170

Requirement 3:

Statement of Changes in Partners Equity

Total Pugoy Gargar Anguit

Partners Equity July 1, 2009 P215,000 P 75,000 P 80,000 P 60,000

Add: Net Increase in EquityRemainder:

Share in Profit 121,000 49,880 42,950 29,170

Less: Drawing (30,000) (15,000) (5,000) (10,000)

P 91,000 P 38,880 P 36,950 P 19,170

Partners Equity June 30, 2010 P306,000 P109,880 P116,950 P 79,170

Operating Expenses 211,000



24/77


** 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

125,00075,000 = P50,000

Q-3. A 125,000

3-III Q-4. A Kenneth Peras120,000 x 33/3 = 40,000

Q-5. A Mark Peras60,000 + 40,000 = 100,000

Q-6. B Jean Pila120,000 x 20% (40/200) = 24,000

3-IV Q-7. A Zamora - 150,000/450,000 = 33 1/3

3-V Q-8 & 9 Torres Un Ardina

Profit 100,000 x 10% 9-B 10,000 8-B

100,00010,000 x 35% 31,500

100,00010,000 x 65% 58,500

3-VI Q-10. C 5,000 x 12 months = 60,000

Q-11 to Q-13 Total Diane Ysabelle

Salaries 120,000 60,000 60,000

Interest 8,400 5,250 3,150 (11 - A)

128,400 65,250 63,150

Bonus (200,000128,430 x 10%) 7,160 7,160 (12A)

135,560 72,410 63,150

Remainder 64,440 38,664 25,776

200,000 111,074 88,926 (13 - A)

3-VII Q-14. C 98,000 + 3,0005,000 = P96,000

Q-15. B 15/35 x 96,000 = P41,143

3-IV Q-16. A

Partners Salaries Interest Balance Total

Gregorio P15,000 P20,000 P 6,000 P 41,000

Jumawan 20,000 45,000 14,000 79,000

Totals P35,000 P65,000 P20,000 P120,000

Q-17. D


Gregorio P15,000 P20,000 ( 3,000) P 32,000

Jumawan 20,000 45,000 ( 7,000) 58,000

Totals P35,000 P65,000 (10,000) P 90,000

Q-18. A


Gregorio P15,000 P20,000 ( 31,500) P 3,500

Jumawan 20,000 45,000 ( 73,500) ( 8,500)

Totals P35,000 P65,000 (105,000) ( 5,000)

3-V Q-19. B

P20,000 + 30% (86,00060,000)

3-VI Q-20. A

Sales P1,250,000

Inventory 100,000 P1,350,000

Cost of Sales ( 685,000)

Operating Expenses ( 450,000)Profit P 215,000

Q-21. A

Partners

Bidad 2/10 x 215,000 = 43,000

Mondejar 5/10 x 215,000 = 107,500

Sarceno 3/10 x 215,000 = 64,500

215,000


25/77


Q-22. D


Bidad P 60,000 P45,000 ( 4,000) P101,000

Mondejar 60,000 - ( 2,000) ( 58,000

Sarceno 60,000 - ( 4,000) 56,000

Totals P180,000 P65,000 ( 10,000) P 215,000

3-VII Q-23. C

B = 20%

B = 20% (240,000b)

B = 48,000 - .28

B = .2B = P48,000

B = P48,000/1.2

B = P40,000

Q-24. C

Partners Bonus Balance Total

Carpeso P 40,000 P100,000 P140,000

Cabreros - 100,000 100,000

Totals P 40,000 P200,000 P240,000

3-VIII Q-25. B

Partners P/L Before New P/L

Zabalo .60 .18 .42

Perez .40 .12 .28

Delmonte .30

Q-26. B

Understated inventories 15,000

Accrued Expense ( 5,000)


Increase in Net Income P14,000

Q-27. C

Reported Net Income P 450,000

Increase in Net Income 14,000

Corrected Net Income P464,000

Q-28. C

Partners P/L Ratio Net Income Share in Net Income

Zabalo .42 P464,000 P194,880

Perez .28 464,000 129,920

Delmonte .30 464,000 139,200

P464,000

3-IX Q-29. B

B = 25% (NIB)

B = 25% (240,000B)B = 60,000 - .25B

B = 60,000 / 1.25

B = P48,000

3-IX Q-30. A

Partners Average Capital Salaries Balance Total

Linobo P24,000 P 60,000 ( 70,000) P14,000

Manansala 12,000 - ( 70,000) ( 58,000)

Aguillon 8,000 40,000 ( 70,000) ( 22,000)

Totals P44,000 P100,000 (210,000) ( 66,000)

3-XI Q-31. C

B = 20% (NIB)

B = 20% (240,000B)

B = 48,000 - .2B

B = 48,000 / 1.2

B = P40,000

3-XII Q-32. C

Reported Net Income P105,000

Understatement of Inventory End 50,000

Unrecorded Expense ( 5,000)

Corrected Net Income P150,000


26/77


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 4Partnership DissolutionChange in Ownership structure

** Exercises and Problems **

4-1 Tan and Esparaguera

Esparaguera, Capital 200,000

Carreon, Capital 200,000

4-2 CSCV

Caete, Capital 62,500

Saletrero, Capital 87,500

Cajegas, Capital 112,500

Villaplaza, Capital 262,500

4-3 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 P187,500

Selling Price of Interest Sold 170,000

Loss on Sale of Interest P 17,500

4-4 Badoy and Yee

Total Partnership Interest P 300,000

Portion of Interest Sold 25%

1. Book Value of Interest Sold P 75,000

Selling Price of Interest Sold 85,000

2. Gain on Sale of Interest Sold P 10,000

Badoy, Capital 25,000

Yee, Capital 50,000

Gatmaitan, Capital 75,000

4-5 Hernandez and Gementiza

1. Hernandez, Capital 75,000

Santos, Capital 75,000

2. Gementiza, Capital 112,500Santos, Capital 112,500

3. Hernandez, Capital 150,000

Gementiza, Capital 150,000

Santos, Capital 300,000

(converted into a sole-proprietorship)

4-6 JAR Partnership

Contributed Capital:

J P 250,000

A 250,000

R 500,000

Orbita 20,000

P1,200,000 x 20% = P240,000capital credit of Orbita

Contribution of Orbita 200,000

Bonus to New partner P 40,000

Cash P200,000

J 10,000

A 10,000

R 20,000

Orbita, Capital P246,000


27/77


4-7 Ursua and Halangdon

Requirement 1: Ursua P 80,000

Halangdon 100,000

Gondales 70,000

Contributed Capital P 250,000

Requirement 2:

P250,000 x 40% = P100,000P70,000 = 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 70,000

Ursua, Capital 9,000

Halangdon, Capital 21,000

Gondales, Capital 100,000

Requirement 4: Ursua P 80,000

Halangdon 100,000

Gondales 150,000

Contributed Capital P 330,000

P330,000 x 35% = P115,500P150,000 = 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 10,350

Halangdon, Capital 24,150

Gondales, Capital 115,500

4-8 Beceira and Ytac

Requirement 1:

Casulla, Capital 120,000

Ytac, Capital 130,000

Sarno, Capital 250,000

Requirement 2:


Ytac , Capital 195,000


Requirement 3:




Requirement 4:



Requirement 5:



Requirement 6:



Requirement 7: Casulla, Capital 240,000



Contributed Capital 800,000

800,000 x 1/3 = 266,667300,000 = 33,333 bonus to old partners

(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)


28/77


Cash 300,000




Requirement 8: Contributed Capital - 800,000



Cash 300,000

Casulla, Capital (3/8 x 100,000) 37,500

Ytac, Capital (5/8 x 100,000) 62,500


Requirement 9: Contributed Capital - 800,000

800,000 x 40% = 320,000300,000 = 20,000 bonus to new partners

(Her capital credit is bigger than her capital contribution, so bonus is given to the new partner)

Cash 300,000

Casulla, Capital 7,500Ytac, Capital 12,500


Requirement 10: Casulla, Capital 240,000



Contributed Capital 850,000

850,000 x 30% = 255,000350,000 = 95,000 bonus to old partners


Cash 350,000

Casulla, Capital 35,625Ytac, Capital 59,375


4-9 San Carlos Industries

Case 1: Nemenzo 200,000

Kwan 100,000

Gimena 100,000

Total Contributed Capital 400,000

400,000 x 1/4 = 100,000100,000 = No bonus

(His capital credit is equal to his capital contribution, so theres no bonus to both)

Cash 100,000

Gimena, Capital 100,000


Kwan 100,000

Gimena 120,000



(His capital credit is less than his capital contribution, so bonus is given to the old partners)

Cash 120,000

Nemenzo, Capital 9,000

Kwan, Capital 6,000



Kwan 100,000

Gimena 100,000


400,000 x 30% = 120,000100,000 = 20,000 bonus to new partner


29/77


(His capital credit of P120,000 is greater than his capital contribution of P100,000, so, bonus is

given to the new partner)

Cash 100,000


Kwan, Capital 8,000


Case 4: Nemenzo 200,000 x 25% = 50,000Kwan 100,000 x 25% = 25,000


Kwan, Capital 25,000


Case 5:


Kwan, Capital 50,000


4-10 Carcar Ampao Factory

Assumption 1: Lapu-lapu 180,000 x 1/3 = 60,000

Lapu-lapu, Capital 60,000

Besario, Capital 60,000

Assumption 2: Lim 140,000 x 1/8 = 17,500

Lim, Capital 17,500


Assumption 3: Lapu-lapu 180,000

Lim 140,000

Besario 160,000



(Her capital credit is lesser than her capital contribution of P100,000, so, bonus is given to the

old partners)

Cash 160,000


Lim, Capital 16,000


Assumption 4: Lapu-lapu, Capital 180,000

Lim, Capital 140,000

Besario, Capital 72,000Total Contributed Capital 392,000


(Her capital credit is greater than her capital contribution of P100,000, so, bonus is given to

the new partner)

Cash 72,000


Lim, Capital 10,400


4-11 Cacdac, Lopez and Cruz

Requirement A:

1. Capital Adjustments 6,000







30/77


4. Cacdac, Capital 6,800

Lopez, Capital 10,200

Capital Adjustments 17,000

Capital Adjustments

(1) 6,000 17,000 (4)

(2) 7,000

(3) 4,000

17,000 17,000

Requirement B:

Post-Closing Trial Balances

Debit Credit

Cash in Bank 40,000



Merchandise 63,000

Store Equipment 80,000


Accounts Payable 40,000Cacdac, Capital 93,200


Total 233,000 233,000

Requirement C:

a) Cruz is going to pay 40,750

Computed as follows:

Refugio, Capital (P93,200 x 25%) 23,300

Berhay, Capital (P69,800 x 25%) 17,450

40,750

b) Cacdac, Capital 23,300


Cruz, Capital 40,750

4-12 Jadulco, Mabad and Anghag

Instruction No. 1:

a. Capital Adjustments 20,000

Allowance for Doubtful Accounts 20,000

b. Capital Adjustments 20,000

Merchandise 20,000

c. Capital Adjustments 50,000


d. Capital Adjustments 10,000

Accrued Expenses 10,000

e. Jadulco, Capital (30%) 30,000

Mabad, Capital (20%) 20,000

Anghag, Capital (50%) 50,000


Instruction No.2:

New Capital of the Partnership

Jadulco, Capital (P400,000 30,000) = 370,000

Mabad, Capital (P280,000 20,000) = 260,000

Anghag, Capital (P150,000 50,000) = 100,000

730,000

a) P730,000 x 1/3 = P243,333

Jadulco, Capital 123,333

Mabad, Capital 86,667

Anghag, Capital 33,333



31/77


b) Cash 200,000



Anghag, capital 16,250




Anghag, Capital 100,000Caete, Capital 200,000

Total Contribution 930,000

x 25%

Capital Credit of New Partner 232,500

Capital Contribution of New Partner 200,000

Bonus to New Partner 32,500

c) Cash 200,000


Mabad, capital 2,800







Total Contribution 930,000

20%

Capital of New Partner 186,000

Capital Contribution of New Partner 200,000

Bonus to Old Partners 14,000

4-13 Bartolome, tan and de los Santos

Instruction No.1:


Inventory 10,000

2. Prepaid Insurance 7,000


3. Accumulated Depreciation 2,000


4. Bartolome, Capital (50%) 500

Tan, Capital (40%) 400

Delos Santos, Capital (10%) 100


Capital Adjustment

(1) 10,000 7,000 (2)

2,000 (3)

1,000 (4)

10,000 10,000

Instruction No.2:

2a) Adjusted Capital Account of the old partners

Bartolome (200,000500) = 199,500

Tan (180,000400) = 179,600

de los Santos ( 60,000100) = 59,900

439,000

Bartolome, Capital 49,875

Chua, Capital 49,875

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

2b) Bartolome 199,500

Tan 179,600

de los Santos 59,900

Chua 80,000

519,000



32/77


(Her capital credit is bigger than her capital contribution so, bonus is given to the new partner)

Journal Entry;

Cash 80,000

Bartolome, Capital 37,850

Tan, Capital 30,280

Delos Santos, Capital 7,570

Chua, Capital 155,700

4-14 Davao Commodity Sales

Requirement 1:

a) Allowance for Doubtful Accounts 2,000


b) Capital Adjustments 8,000

Merchandise 8,000

c) Capital Adjustments 2,000


d) Accounts Payable 7,000

Cash 7,000

e) Unused Supplies 5,000


f) Capital Adjustments 100

Unearned Interest Income 100

g) Saburnido, Capital 1,550

Cervantes, Capital 1,550


Requirement 2:


Assets Liabilities and Partners' Equity

Current Assets:

Cash in Bank 233,000 Liabilities

Accounts Receivable 30,000 Current Liabilities:

Allow. for Doubtful Accounts 3,000 27,000 Accounts Payable 33,000

Notes Receivable 10,000 Unearned Int. Income 100 33,100


Unused Supplies 5,000 347,000

Partners' Equity

Property And Equipment Calimpusan, Capital 178,450

Furniture and Fixture 50,000 Sala, Capital 165,450 343,900

Accu. Depreciation 20,000 30,000 Total Liabilities and

Total Assets 377,000 Partners' Equity 377,000

Requirement 3:


Banta, Capital 171,950

Computed as follows:

Saburnido, Capital (178,450 x 50%) 89,225

Cervantes, Capital (165,450 x 50%) 82,725

171,950

4-15 Ruben, Lacierda and Ordoez

Requirement 1: V. Ruben, Capital 80,000

O. Lacierda, Capital 40,000

B. Ordoez, Capital 30,000


150,000 x 30% = 50,00030,000 = 20,000 bonus to new partner, Ordoez

Capital Adjustments

(b) 8,000 2,000 (a)

(c) 2,000 5,000 (e)

(f) 100 3,100 (g)

10,100 10,100


33/77


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 Ordoez.

Requirement 3:

Ruben Lacierda Ordoez

Capital 80,000 40,000 30,000

Bonus to Ordoez ( 12,000) ( 8,000) 20,000

Balance 68,000 32,000 50,000

Requirement 4:

Cash 30,000

Ruben, Capital 12,000

Lacierda, Capital 8,000

Ordoez, Capital 50,000

4-16 Mendez, Tirol and Lupot

Requirement 1: Mendez 200,000

Tirol 100,000

Lupot 125,000Total Contributed Capital 425,000


Mendez P 40,000 x .75 = 30,000

Tirol 40,000 x .25 = 10,000

Bonus as distributed 40,000

Requirement 2:

Capital Bonus Total

Mendez 200,000 + 30,000 = 230,000

Tirol 100,000 + 10,000 = 110,000

Capital Account balance after the bonus 340,000

Requirement 3:

Mendez 200,000 + 30,000 = 230,000

Tirol 100,000 + 10,000 = 110,000

Lupot 125,000 - (40,000) = 85,000

425,000

Requirement 4:

Cash 125,000

Mendez, Capital 30,000

Tirol, Capital 10,000

Lupot, Capital 85,000

4-17 Jay, Mamaril and Chung

Requirement 1: Total Contributed Capital

Jay 120,000

Mamaril 100,000

Chung 80,000


300,000 x 1/3 = 100,000 80,000 = 20,000 bonus to Chung

Requirement 2:

Jay Mamaril Chung

Capital 120,000 100,000 80,000

Bonus to Chung (12,000) (8,000) 20,000Balance 108,000 92,000 100,000 = 300,000

Requirement 3:

Cash 80,000

Jay, Capital 12,000

Mamaril, Capital 8,000

Chung, Capital 100,000


34/77


4-18 Butuan Internet Cafe

Case 1: Basarte, Capital 265,000

Silverio, Capital 185,000

Jostol, Capital 160,000

Total (3/4 capital after admission) 610,000

New capitalization after admission

(610,000/.75) 813,333

Required contribution of Balibay 203,333




Bonus 24,000

Total 634,000

75%

Share of New Partner after admission 845,333

610,000





Bonus to new partner 10,000

Total 600,000

New capital after admission 800,000

Share of new partner after bonus 200,000

Less: Bonus to new partner 10,000





Asset Revaluation 80,000

Total 690,000


Share of new partner after bonus 230,000




Assets write down (50,000)

Bonus to new partner (40,000)

Total 520,000


Share of the new partner after bonus 173,333

Less: Bonus to new partner (40,000)

Contribution of new partner 133,333

4-19 Independents Cases

Case 1

Lopez 800,000

Baya 1,200,000

Maguid 500,000

Total Contributed Capital 2,500,000

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

Journal Entry

Cash 500,000

Maguid, Capital 500,000

Case 2

Solis 40,000

Orbita 50,000

Tangaro 25,000




35/77


Journal Entry

Cash 25,000

Solis, Capital 23,000

Orbita, Capital 1,000

Tangaro, Capital 1,000

Case 3

Sison 45,000

Laranjo 40000Morales 35,000


120,000 x 30% = 36,00035,000 = 1,000 bonus to new partners

Journal Entry

Cash P 35,000

Laranjo, Capital 600

Sison, Capital 400

Morales, Capital 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 1/5 x 75% = 15%

Tropico 2/5 x 75% = 30% (B)

Canque 2/5 x 75% = 30%

Aguilar 1/4 = 25%

= 100%

Q-4 210,000 x 25% = 52,500 - 210,000 = 157,500 (A)

4 - II Panganiban, Salisana and Berhay

Q-5 414,375 (C)

Q-6 Panganiban and Salisana (C)

Q-7 1,835,000 (B)

Solutions

a) Capital Adjustments 5,000


b) Capital Adjustments 15,000

Merchandise 15,000

c) Accumulated Depreciation 15,000


d) Panganiban, Capital 2,500

Salisana, Capital 2,500


Panganiban, Capital950,0002,500 = 947,500 x .25 = 236,875

Salisana, Capital 890,0002,500 = 887,500 x .20 = 177,500

1,835,000 414,375 (C)

Panganiban Salisana Berhay

Capital after adjustments 947,500 887,500

Acquired by Berhay (236,875) (177,500) 414,375

710,625 P710,000 414,375 =1,835,000 (B)

4 - III Southwxpressway Merchandising

Q-8 450,000 x 1/2 =225,000 (B)


36/77


Q-9 Book Value of Igaos interest sold to Estroso 225,000

Cash proceeds from the sale 220,000

Personal loss to Igao 5,000 (C)

Q-10 Estroso should be credited by P225,000equal to the book value of interest she acquired. (B)

4 - IV Southwxpressway Merchandising

Q-11 Espero 30,000

Aduana 45,000Gelacio 20,000

Total Contributed Capital 95,000 (B)

Q-12 95,000 x 1/5 = 19,00020,000 = 1,000 bonus to old partners (B)

Q-13 Espero 1,000 x 40% = 400

Aduana 1,000 x 60% = 600 (A)

1,000

4 - V Ligsay, Emperado and Balagot

Q-14 Ligsay Emperado Balagot

Capital Balances 150,000 100,000 120,000

Understatement of Inventory 4,000 4,000 2,000

Understatement of depreciation (2,400) (2,400) (1,200)Adjusted Balance 151,600 101,600 120,800

Q-15 Selling Price of share sold 35,000

Book Value of interest purchased 30,200

Gain on sale of share sold 4,800 (A)

Q-16 Balagot will share a capital credit of P30,200 (B)

4 - VI Galos and Villarido

Q-17 Galos 200,000

Villarido 160,000

Villanueva 110,000

470,000

470,000 x 1/4 = 117,500110,000 = 7,500 bonus to new partner (C)

Q-18 Galos 7,500 x 60% = 4,500

Villarido 7,500 x 40% = 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) Joel Jo, Capital 85,000

Alex Ajoc, Capital 85,000

b) Joel Jo, Capital 85,000

Heginio Lacson, Capital 63,750

Alex Ajoc, Capital 21,250

c) Joel Jo, Capital 85,000

Marco Ocenar, Capital 85,000

Requirement 2:

Heginio Lacson 60,000

Alex Ajoc 140,000

200,000


Alex Ajoc 76,250

200,000


Alex Ajoc 55,000

Marco Ocenar 85,000

200,000


37/77


4 - 2 Esparaguera, Supapo and Ceniza

1. Ceniza, Capital 650,000

Cash 600,000

Esparaguera, Capital (2/6 x P 50,000) 16,667

Supapo, Capital (4/6 x P 50,000) 33,333

2. Ceniza, Capital 650,000

Esparaguera, Capital 16,667

Supapo, Capital 33,333Cash 700,000

4 - 3 Tea for Snack House

Requirement 1:

Orcullos Withdrawal

Orcullo, Capital 80,000

Reyes, Capital 7,500


Cash 95,000

Capital Balances



175,000

Requirement 2:

Orcullo, Capital 80,000

Cash 75,000



4 - 4 Long Live Enterprises

Requirement 1:

Mr. Dimamatays interest, Dec. 31, 2009 50,000

Add: Share in Net Income from Jan. 1-Feb.29 (20,000 x ) 10,000

60,000

Requirement 2:

Dimamatay, Capital 60,000

Cash 60,000

Requirement 3:

Dimamatay, Capital 60,000

Buhay, Capital 60,000

4 - 5 Walangbuhay and Maylangit

Requirement 1:

Capital Adjustment 5,000

Allow. for Doubtful Account 5,000

Inventories 15,000







Walangbuhay, Capital (60%) 30,000

Maylangit, Capital (40%) 20,000


38/77


Requirement 2:

Effects of Adjustments:

Decrease in Account Receivable (5,000)

Increase in Inventory 15,000

Increase in Equipment 50,000

Increase in Expense (10,000)

Total 50,000

P/L Ratio of Walangbuhay x 60%

Share of Walangbuhay on the adjustments 30,000Add: Feb. 14 balance of Walangbuhay 950,000

Walangbuhays adjusted capital balance 980,000

Requirement 3:

Walangbuhay, Capital 980,000

Cash 980,000

Requirement 4:

Walangbuhay, Capital 980,000

Maylangit, Capital 20,000

Cash 1,000,000

4 - 6 Sianosa, Rosete and Facturan

Requirement 1:

Non-Cash Assets 56,000

Gatmaitan, Capital (25%) 14,000

Barroga, Capital (25%) 14,000

Dorado, Capital (50%) 28,000

Requirement 2:

Gatmaitan, Capital 56,000

Gatmaitan, Loan 9,000Cash 16,200

Barroga, Capital 16,267

Dorado, Capital 32,533

4 - 7 Lopez, Albios and Aguhob

ERRATUM: Accounts Payable should be 90,000

Requirement 1:

a) Inventory 30,000


Albios, capital 7,500

Aguhob, Capital 9,000

b) Equipment 20,000




c) Lopez, Capital 9,000



Accrued Salaries 20,000

Requirement 2:


Cash in Bank 50,000Albios, Capital (25/55) 29,318

Aguhob, Capital (30/55) 35,182

(Note: Since this only a retirement of a partner, a partners deficiency will be considered as

his own loss and become the advantage of the remaining partners.)


39/77


40/77


Requirement B:

Centerpoint Commercial

Statement of Partnership Liquidation

40% 20% 40%

Cash

Non-

Cash Liabilities

Dizon,

Loan

Dizon,

Capital

Tamala,

Capital

Dimalanta,

Capital

Balance before realization 30,000 340,000 49,000 20,000 95,000 100,000 106,000

Realization and Loss 200,000 (340,000) - - (56,000) (28,000) (56,000)

Balances 230,000 49,000 20,000 39,000 72,000 50,000Payment of Liabilities (49,000) (49,000) - - - -

Balance 181,000 20,000 39,000 72,000 50,000

Payment to Partners Loan (20,000) (20,000) - - -

Balances 161,000 39,000 72,000 50,000

Payment to Partners Capital (161,000) (39,000) (72,000) (50,000)

Journal Entries

a) Cash 200,000

Dizon, Capital 56,000

Tamala, Capital 28,000

Dimalanta, Capital 56,000


b) Liabilities 49,000

Cash 49,000

c) Dizon, Loan 20,000

Cash 20,000

d) Dizon, Capital 39,000



Cash 161,000

Requirement C:

Centerpoint Commercial


40% 20% 40%

Cash

Non-

Cash Liabilities

Dizon,

Loan

Dizon,

Capital

Tamala,

Capital

Dimalanta,

Capital



Balances 120,000 49,000 20,000 (5,000) 50,000 6,000

Payment of Liabilities (49,000) (49,000) - - - -

Balance 71,000 20,000 (5,000) 50,000 6,000

Right of Offset - (5,000) 5,000 - -

Balance 71,000 15,000 50,000 6,000

Payment to Partners Loan (15,000) (15,000) - -

Balances 56,000 50,000 6,000

Payment to Partners Capital (56,000) (50,000) (6,000)

Journal Entries

a) Cash 90,000






Cash 49,000



d) Dizon, Loan 15,000

Cash 15,000

e) Tamala, Capital 50,000


Cash 56,000


41/77


Requirement D:

40% 20% 40%

Cash

Non-

Cash Liabilities

Dizon,

Loan

Dizon,

Capital

Tamala,

Capital

Dimalanta,

Capital



Balances 90,000 49,000 20,000 (17,000) 44,000 (6,000)


Balance 41,000 20,000 (17,000) 44,000 (6,000)

Right of Offset - (17,000) 17,000 - -

Balance 41,000 3,000 44,000 (6,000)

Payment to Partners Loan (3,000) (3,000) - -

Balances 38,000 44,000 (6,000)

Deficiency of Dimalanta

absorbed by Tamala - (6,000) 6,000

Balances 38,000 38,000

Payment to Partners Capital (38,000) (38,000)

Journal Entries

a) Cash 60,000


Tamala, Capital 56,000Dimalanta, Capital 112,000



Cash 49,000



d) Dizon, Loan 3,000

Cash 3,000



f) Tamala, Capital 38,000

Cash 38,000

Requirement E:

40% 20% 40%

Cash

Non-

Cash Liabilities

Dizon,

Loan

Dizon,

Capital

Tamala,

Capital

Dimalanta,

Capital



Balances 70,000 49,000 20,000 (25,000) 40,000 (14,000)


Balance 21,000 20,000 (25,000) 40,000 (14,000)

Right of Offset - (20,000) 20,000 - -

Balance 21,000 (5,000) 40,000 (14,000)

Deficiency of Dizon & Tamala

absorbed by Dimalanta - 5,000 (19,000) 14,000

Balances 21,000 21,000

Payment to Partners Capital (21,000) (21,000)

Journal Entries

a) Cash 40,000






Cash 49,000



d) Tamala, Capital 19,000




Cash 21,000


42/77


5 - 2 WatinVeloso Partnership

Requirement A1:

(SOVENT)

WatinVeloso Partnership


60% 40%

Cash

Non-

Cash Liabilities

Watin,

Loan

Watin,

Capital

Veloso,

Capital

Balance before realization 20,000 180,000 60,000 10,000 40,000 90,000Realization and Loss 85,000 (180,000) - - (57,000) (38,000)

Balances 105,000 60,000 10,000 (17,000) 52,000

Payment of Liabilities (60,000) (60,000) - - -

Balance 45,000 10,000 (17,000) 52,000

Right of Offset - (10,000) 10,000 -

Balances 45,000 (7,000) 52,000

Additional Cash - Watin 7,000 7,000 -

Balances 52,000 52,000

Payment to Veloso (52,000) (52,000)

Requirement A2:

(INSOVENT)

60% 40%

Cash

Non-

Cash Liabilities

Watin,

Loan

Watin,

Capital

Veloso,

Capital

Balance before realization 20,000 180,000 60,000 10,000 40,000 90,000

Realization and Loss 85,000 (180,000) - - (57,000) (38,000)

Balances 105,000 60,000 10,000 (17,000) 52,000

Payment of Liabilities (60,000) (60,000) - - -

Balance 45,000 10,000 (17,000) 52,000

Right of Offset - (10,000) 10,000 -

Balances 45,000 (7,000) 52,000

Deficiency of Watin

Absorbed by Veloso 7,000 (7,000)

Balances 45,000 45,000

Payment to Veloso (45,000) (45,000)

Requirement B1: SOLVENT

Journal Entries

a) Cash 85,000

Watin, Capital 57,000

Veloso, Capital 38,000


b) Accounts payable 60,000

Cash 60,000

c) Watin, Loan 10,000


d) Cash 7,000


e) Veloso, Capital 52,000

Cash 52,000

Requirement B2: INSOLVENT

Journal Entries

a) Cash 85,000


Veloso, Capital 38,000


b) Accounts payable 60,000Cash 60,000

c) Watin, Loan 10,000


d) Veloso, Capital 7,000


e) Veloso, Capital 45,000

Cash 45,000


43/77


5 - 3 Sanciangko Commercial

Requirement 1:

SanciangkoCommercial


30% 30% 40%

Cash

Non-

Cash

Accounts

Payable

Pozon,

Loan

Pozon,

Capital

Selisana,

Capital

Teque,

Capital


Customers Collection 50,000 (57,000) - - (2,100) (2,100) (2,800)

Balances 95,000 70,000 62,000 5,000 32,900 32,900 32,200

Sale of Mdse. at a Loss 59,500 (70,000) - - (3,150) (3,150) (4,200)

Balances 154,500 62,000 5,000 29,750 29,750 28,000


Balances 92,500 5,000 29,750 29,750 28,000

Payment to Loan (5,000) (5,000) - - -

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

Payment to Partners (87,500) (29,750) (29,750) (28,000)

Requirement 2:

1) Cash 50,000

Allowance for doubtful Accounts 3,000

Pozon, Capital 2,100

Selisana, Capital 2,100

Teque, Capital 2,800


To record collection from cus

Documents

Solution Manual - Partnership & Corporation, 2014-2015.pdf