CHAPTER 1

Partnership Formation and Operations
EXERCISES
Exercise 1 –1
1.a

Campos, Capital
Allowance for Uncollectible Accounts

14,000

Goodwill
Campos, Capital

30,000

14,000
30,000

Accumulated Depreciation
Campos, Capital
Furniture and Fixtures

1.b

6,000
6,500
12,500

Campos, Capital
Cash

40,000

Cash (P83,500 x 1/2)
Tomas, Capital
To record contributions of Tomas

41,750

40,000
41,750

Req. 2.
Campos and Tomas Partnership
Statement of financial Position
July 1, 2008
Assets
Cash
Accounts Rec’l
Less Allowance for
Uncol Accts.
Inventory
Furniture
Goodwill
TOTAL ASSETS

Liabilities & Owners’ Equity
P60,000
24,000

P41,750
36,000
100,000
7,500
30,000
P215.250

Accounts Payable
Campos, Capital
Tomas, Capital

P90,000
83,500
41,750

________

TOTAL LIABILITIES &
OWNERS’ EQUITY

P215,250

Exercise 1-2
1.

2.

Cash
Accounts Receivable
Merchandise Inventory
Equipment
Allowance for Uncollectible Accounts
Accounts Payable
Notes Payable
Bernal, Capital
Cash

90,000
36,000
54,000
25,000
2,000
21,000
18,000
164,000
100,000

AA 1 - Chapter 1 (2008 edition)

page 2

Camino, Capital

100,000

Exercise 1 –3
1.

2.

Cash
Land
Building
Legaspi, Capital
Sabino, Capital

800,000
540,000
900,000

Cash
Land
Building
Legaspi, Capital
Sabino, Capital

800,000
540,000
900,000

800,000
1,440,000

1,120,000
1,120,000

Exercise 1 - 4
1.

2.

Income Summary
Santos, Capital (P238,000 x 260/425)
Abad, Capital (P238,000 x 165/425)

238,000

Income Summary
Santos, Capital (P238,000 x 3,125/5,000)
Abad, Capital (P238,000 x 1,875/5,000)

238,000

Santos:
Jan. 1 – Mar. 31
Apr. 1 – Apr. 30
May 1 – July 31
Aug. 1 – Dec. 31
Abad:
Jan. 1 – May 31
June 1 – Aug. 31
Sept.1 – Dec. 31
3.

P165,000 x 5
215,000 x 3
195,000 x 4

148,750
89,250
P780,000
290,000
1,080,000
1,600,000
P3,750,000/12
P825,000
645,000
780,000
P2,250,000/12

Income Summary
Santos, Capital
Abad, Capital
Interest on ave. capital
Salaries to partners
Balance - equally
Net Profit

4.

P260,000 x 3
290,000 x 1
360,000 x 3
320,000 x 5

145,600
92,400

Income Summary
Santos, Capital
Abad, Capital

P312,500

P187,500
238,000
147,750
90,250

Santos
P 18,750
150,000
( 21,000)
P 147,750

Abad
11,250
100,000
( 21,000)
P
90,250
P

Total
P 30,000
250,000
(42,000)
P238 000
238,000
164,840
73,160

600 x 9 1.500 182.440 10% bonus on net profit after interest 8.983 P104.249.000 x 10/25) 7.331 50.249.000 Ave.000 P 55. 2008 Sanchez Gomez 6% interest on average capital P 6.P187.200/12) P104.AA 1 .000 104.000 142. capital (P1.000 ( 83.440 Total P 20.000 x 7 P1.000 Gomez.888.495 Net Profit P52. Sanchez and Gomez Statement of Partners’ Capital For the Year Ended December 31.600) P274.600 70.000/12) P240.500 109.331 Salaries 20.200 Ave.340 .500 .000 x 15/25) Abad.000 40.686 8.Chapter 1 (2008 edition) page 3 Santos Bonus to Santos 25% (P238.065 P51.660 Gomez P14.935 ( 41.400 Sanchez P 6.000 40.000 x 65%= P104.900 P238.331 34.600) P122. 2008 Capital.935 Computation of average capital: Sanchez.600 7.000 P264.000 238.488 7. Capital (P238.800 Apr.888.200) P396.800 95.600 73. 1 Aug. December 31 3. capital (P2.335 Total P305.686 8.246 P 14.004.686 x 10% = P8.160 Income Summary Santos.065 ( 41.500) Balance .B) Interest of 6% on excess average investment 6% (P312.000– P20.000 51. 1 P111.600 30. Capital Jan.568. 1 P81.3:2 Net Profit 5. Capital (P238.840 P 47.667 Computation of bonus: P160. 30% 17.983 P104.100 Jan. Capital P224.331 74.200 Exercise 1 – 5 Sanchez and Gomez Schedule of Distribution of Net Profit December 31.000 30.246 8. 1 Total P 20.160 P73. 6% interest on average capital 10% bonus on net profit after interest Balance – Salary ratio Net Profit Sanchez P 81.000 x 5 1.320.000 Balance – 70%.740 P 164.331 2.000 24.000 52.000 .000 P2.400 P1. Abad Total P 47.083 P48. January 1 Additional investment Net profit Drawings Capital.600 x 3 P 244.065 Gomez P224.

B = .25 x P500. B B B B B = .000 x 25% P122. B T B B = .000 6.000 P230.000 2.000 P145. 3.000 – P175.000 182.000 x 12 Net profit before interest and salary Bonus rate Amount of bonus to Lirio P374.25 (P500.000 = P125.000 Exercise 1 .000 x 10% Salary P8.25 x P500.250 .000 P375.000 = P215.300 Puzon P 54.000 ( 38.25 = P65.000) = P 81.000 P20.000 337.000 Puzon P 54. Salary Bonus Interest Estrella P40.000 10.25 (P500. however.700) P234. 8% interest on beg capital Salaries Balance 3:2 Net Profit Mercado P 48.000 116.25B = P81.35 x P500.000 ..000 Garcia P 4.000 4.500 ( 64.000 x 2/3 = P150.000 = P175.000 Jimenez P 9.25 (P500.000 P490.000 – P160.B .000* 32.800) P140.P175.000) = P81.000 Exercise 1 – 7 Net profit after salary.000 9.AA 1 .0000 .500 Exercise 1 – 8 1.000 = .000 = P100.000 96.Tax) = .25 (P50.Tax) = .700 Total P102.000 225.Chapter 1 (2008 edition) page 4 Exercise 1-6 1.000 91.250/1.400 Total P 60.250 4.000 112. interest and bonus Interest P200.000 1.400 .000 Mercado P375.9 1.500 ( 25.000 .000 273. minimum guaranteed amount is P160.000. Puzon P375.500) P375.000 8% interest on beg capital Balance – Salary ratio Net Profit Mercado P 48.000 10.000 Felipe P20.25 3.000 Total P102.B . B = .000 2.

000 32.000 .000 12.000 ( 43.533 Jimenez P 9.900 *B = 5% (P210.000 8. Capital 500. Capital Cabral.700) Total P 60.000 P37.100) P 9.000 P 4.100) (P 14.600 x 2/ 6 = P12.400) (P 80.000 100.000 – B) = P10. Estrella P40.000 P100.100) 3. Fees Earned Joseph.000 Garcia Jimenez P 4.000 25. Capital balances before additional cash investment Benito Cabral Duenas P120.533 _______ P25.300 107.000 10.000 - Journal entry on the partnership books Duenas.400 (172.400 Total P 32.000 2.000 37.000 Income Summary Joseph Capital Luis. Capital 20.600 P210.000 ( 43. Interest Bonus Salary Total Estrella P10.Chapter 1 (2008 edition) Balance Total page 5 26. ________ P 9.000 P100.400 ( 43.000 4. Capital Operating Expenses Income Summary 750.900 26.AA 1 .067 *P37.000) 80.000 Exercise 1-10 1.100) (P33.067.000 26.000 Exercise 1 – 11 1.000 500. Capital Luis. Capital Benito.600 x 4/ 6 = P25.000) 112.000 150.000 200.067 P41.000 ( 43.000 Total P320. Capital balances before payment of cash Required capital balances based on on profit and loss ratio Cash received (paid) Benito Cabral Duenas Total P120.000 128.000 (P 12. 2.000 P100.900 P59.533 P 4. Capital Nicolas.000 100.100) P 6.000 P100.000 6.000 (P 8.900 P30.900 26.000) Felipe Garcia P 9.400 10.400 2.000 250.000 9.000 P320.900 P36.000 50.000 P 20.000 320.000 12.900 Salary Interest Balance Total Felipe P20.600* P 80.900 P82.100) (P39.

000 P199.174.000 75.000.000 20.000 105.000 P120.000 75.000 3.000 45. P100.560 P239. Capital Total P320.400 Distribution of 2008 net profit Salaries Interest Balance Distribution of 2008 corrected net profit Salaries Interest Balance Enriquez P120. P100.000 P400.000 51.000/25% = P400.000) P156.400 P501.000 120. Capital 80.000 40.000 34.000 140.840 P120.400 P501.000 P201.000 45.000 75.000 25.000 Total P240.000 5.000 ( 20.000 111.Chapter 1 (2008 edition) page 6 Required capital balances based on lowest possible cash investment* 160.000 * P120.000 85.400 .000 P 20.000 40.840 P261.000 300.000 Journal entry on the partnership books Cash Benito.000 400.000 P 80.000 Required additional cash investment P 40.000 100.000 Exercise 1 – 12 Enriquez and Flores Schedule Showing Adjustments in Capital For the Year Ended December 31. Capital Cabral.AA 1 .000 186.000) ( 24. Capital Cash Cabral.000/40% = P300. 2008 Reported net profit Adjustments: Equipment purchased charged to expense Depreciation on equipment Overstatement of 2008 ending inventory P400.000 30.000 74.000 P 40.000 Flores P120.000/35% = P285.000 -------- Cabral P100. Capital balances Required capital Additional investment(withdrawals) Benito P120.000 P200.000 30.000 Duenas P100.560 P240.000 5.000) Duenas.000 (P 25.000 x 65% Corrected net profit 101.

511. c.000 . Inventory Ruiz. Capital 60.500 300.500 180.000 1. a.500 7.000 24. Capital Allowance for Uncollectible Accounts 30.000 5.560 20.000 x 6% x 2/12 = P1.560 P101.400 200. Capital P150.000 810.600 PROBLEMS Problem 1 – 1 1. Capital Accumulated Depreciation Inventory Income Tax Payable P 40. Capital Interest Payable P300.000 30. g.500 Ruiz and Santos Statement of Financial Position December 1. 2008 Assets Cash Notes Receivable Accounts Receivable Less Allowance for Uncollectible Accounts Interest Receivable Merchandise Inventory Office Supplies Furniture and Fixtures Total Assets Liabilities and Capital P P900.500 Ruiz. Merchandise. Capital 524. Capital 1. b.000 240. e. f.500 524. P 60.000 5.500 7.000 5.000 Cash Santos.000 Ruiz.500 Accumulated Depreciation Ruiz.000 60.Chapter 1 (2008 edition) page 7 Adjustments 2.000 54.AA 1 .500 1. d.000 764.000 60. Capital Furniture and Fixtures Office Supplies Ruiz. Capital Flores.000 Interest Receivable Ruiz.500 150.000 480.840 Equipment Enriquez.840 40.000 60.000 90.000 P2.000 x 10% x 3/12 = P7.

000 P 576. Capital 518.000 160.000 3. Capital Cash Accounts Receivable 3. 2008 Assets Cash Accounts Receivable Less Allowance for Uncollectible Accounts Inventories Office Equipment Goodwill Total Assets Liabilities and Capital Accounts Payable Tomas.000 524.000 160.000 Tomas and Vicente Statement of Financial Position June 1. Cash Merchandise Inventory Tomas.670.000 7.000 518. Capital Vicente.408.000 .792.000 1.000 3.000 P1.000 Accounts Receivable Merchandise Inventory Office Equipment Goodwill Allowance for Uncollectible Accounts Accounts Payable Vicente.000 1.500 P2.000 Problem 1 – 3 1.000 Problem 1-2 1.670.152.500 P 937.573.000 576.500 1.000 198.000 160.000 P3.916.000 P3.000 900 1. 2.511. Capital Total Liabilities and Capital P P1.000 46.049.340.632. Merchandise Inventory Goodwill Accumulated Depreciation Allowance for Uncollectible Accounts Equipment Rosas.000 2.000 160.Chapter 1 (2008 edition) page 8 Notes Payable Accounts Payable Interest Payable Total Liabilities Ruiz.000 630.792. Capital 1. Capital Santos.000 1.000 1.000 256.000 3.000 1.AA 1 .000 1.000 198.500 P1.670.900 5. Capital Total Capital Total Liabilities and Capital P300.916.670.

000 6.000 720.650.000 36.000 1.000 100. Capital 150.000 7. Capital Cash Land Mortgage Payable Torres. Capital 5.000 600.000 9.000 Problem 1 – 4 1.000 125.000 125.000 3.350. Capital 108.000 54.500.000 Cash Accounts Receivable Merchandise Inventory Equipment Goodwill Allowance for Uncollectible Accounts Accounts Payable Rosas.000 120.000 46.000 .000 9.000 1.000 420.000 1.000 108.000 75.000.Chapter 1 (2008 edition) 2.000 4.000 Cash Accounts Receivable Merchandise Inventory Equipment Furniture and Fixtures Goodwill Allowance for Uncollectible Accounts Accounts Payable Perlas. page 9 Merchandise Inventory Equipment Furniture and Fixtures Goodwill Allowance for Uncollectible Accounts Accounts Payable Perlas.AA 1 .000 150.000 Accounts Payable Cash 720.050.000 12.000 12.000 4. Capital 7.000 Torres.000 Purchases Accounts Payable 900.000 Notes Payable 225.000.000 54.000 3.950.000 3. Capital 4.000 Mortgage Payable Interest Expense Cash 300.000 900.000 3.000 4. Capital Serrano.000 49.000 5. Cash Inventories Equipment Notes Payable Serrano.000 900.

40% Net Profit 380.000 Selling and General Expenses Cash Accumulated Depreciation Accrued expenses 870.000 351.450.000 3.000 351.750) P380.000 ( 137. Capital Torres.000 100.AA 1 .Chapter 1 (2008 edition) page 10 Interest Expense Cash 75.000 300.000 204.000 Serrano.250 Serrano.150.750 Inventories. Drawing Torres.000 204.900) P188.000 P1. beginning Purchases Selling and General Expenses Interest Expense Income Tax Income Summary 600.000 870.450.000 Serrano and Torres Partnership Statement of Recognized Income and Expenses For the Year Ended December 31. Capital Serrano.850) P192.000 351.100 Serrano Torres Total P180. Drawing Torres.000 702.750 380.000 .250 Income Summary Serrano. Drawing Cash 351.000 1.000 ( 229.750 630.000 250.150 188.000 90.100 P360.450. Capital Interest on beginning capital Salaries Remainder – 60%.000 150.000 Cash Accounts Receivable 3.000 Income Tax Income Tax Payable 204.000 150. Drawing 351. beginning P3.000 Accounts Receivable Sales 3. end Sales Inventories.450. 2008 Sales Cost of Goods Sold: Inventories.250 192.150 P180.500.500.000 900.000 ( 91.150.000 3. Capital Torres.000 351.000 195.000 3.

700.000 Total Assets Liabilities Current Liabilities: Accounts Payable (P900.000 Less Accumulated Depreciation 150.650.000 204.000) 2 P2. (P2. Capital Torres.000 – P300.000) Mortgage Payable (P1.400.000 195.000 + P2.000) Total Liabilities P1.100.000 P6.000 – P720.25 0 P11.150 4.800.000 P2.000.878.000 P 2.678.475.750 P 825.750 P 380.000 8. P2.000) / 2 = P2.600.000.000 1.000 600.050.000) Accrued Expenses Income Tax Payable Long-term Liabilities: Notes Payable (P1.000 204.Chapter 1 (2008 edition) page 11 Purchases Cost of Goods Available for Sale Less Inventories.650.000 P11.000 = P2.700.600.250 Serrano and Torres Partnership Statement of Financial Position December 31.100 8.000 P 474.341.000 300.150.628.500.000 P1.000 – P600.000) Inventories Property. Capital Total Capital Total Liabilities and Capital P4.000 2.000 – P3.700.000 P180.5 1.750 2.628.000 600.AA 1 .000 P 2.337.000 P 780.450. Plant and Equipment: Land Equipment P3.850.950.500. 2008 Assets Current Assets: Cash Accounts Receivable (P3.850.000 + P1.000 Problem 1 .000 1.000 (P200.000 + P1. end Gross Profit Selling and General Expenses Operating Income Interest Expense Net Profit before Income Tax Income Tax Net Profit 900.949.750 Capital Serrano.000 – P225.000 P 585.000 870.000 90.000.000 + P500.000 Problem 1 – 6 .778.

000 50.000 96.800 340.1 – Dec. Capital Burgos.000 40.300.000 P5.150 P 394.200 Income Summary Bernabe.000 x 2 P440.000/12 P408.000 49. Capital Salaries Interest on end capital Balance – Equally Net Profit 3.000 Burgos: Jan.000 394.000 P4.567 432.900.000 P 416.000 83.800 477. 1 – May 31 June 1 – Oct.200 P700 000 P1.640.000 P700 000 700.166 316.000 Bernabe P 140. 60% Net Profit 5. Income Summary Bernabe. Bernabe: Jan. Capital Income Summary Bernabe. Capital Burgos. 505. 1 – Dec. Capital Burgos. 1 – June 30 Salaries Interest on average. 700.000 P700 000 700. 31 Nov.333 190.000 x 5 400. Capital Total P 64.200 P 284.000 x 2 Burgos 170.433 P Total P300.000 1. Capital Interest on beg.800 194.800 Burgos 35.800. 31 360. cap Balance – 3:1 Net Profit 4. Capital Burgos.000 48.000 42. page 12 700.000 P Total P400.800 85. capital Balance – 3:1 Net Profit 2.000.100 P 432.000 96.567 Burgos 200.333 P2.Chapter 1 (2008 edition) 1.000 329.00 0 1.000 P 194.833 126.AA 1 . 31 Nov.433 Bernabe P 100.000 x 6 July 1 – Oct. 31 Bernabe P 28.000 636.333 Income Summary Bernabe.360 370.000 P108.850 P Total P260. Capital Salaries Interest on average.734 P 267.000 255.000 416.200 159.000 60.850 Bernabe P 90.640 .050 P 305.000 P 505.080.000 800.000 P 284.440.000 267.000/12 P423.834 P700 000 700.000 Burgos 260.000 x 4 500. cap Balance – 40%. Capital Burgos.000 Income Summary Bernabe.150 P360.00 0 2.000 96.150 305.000 x 5 460.000 99.

700 Problem 1 . Capital Pilar.000 35.000 Salaries 48.000 22.850 Pilar P 1. 2.300 Manny P 7.250 P76.500 110.000) P 60.000 Total 4.000 ( 12.000 59.100 64.000 – P88.000) P 12.000 (149.250 B = (P250.200 40. 5% interest on capital Salaries 20% bonus on net profit Balance – capital ratio Net Profit 2.000 13.650 Sales Cost of Goods Sold Operating Expenses Income Taxes Income Summary 480.500 P 210.000 ( 44.000 .Chapter 1 (2008 edition) Salaries Interest on beg.200) P 40.700) P 16.000 24. 6% interest on capital Salaries Balance – 5:3:2 Net Profit 6% interest on capital Salaries Balance – 5:3:2 Net Profit Sandy P 16.500 12.000 ( 29. Delmar P 2.000 10.000) P( 15.000 Bonus 13.700) P 15.500 P250.000 22. Drawing Pilar.600 156.750 Net Profit P 73.800 P 7.000)25% = P13.640 Total P220. Drawing 6.440 370.000 28.000 64.960 P 329.650 6. Capital Delmar.000 3.000) P(25.500 7.000 88. 6% interest on capital P 16.800 ( 74.000 – P36.500 8.000 88.000 P P 36.850 33.500 Delmar.800) P 17.500 112.000 43. cap Bonus Balance – 2:3 Net Profit B = 10%(NI –S – I) page 13 Bernabe P 100.400 P 36.000 Income Summary Delmar.000 100.100 40.8 1.200) Tammy P 12.000 – P72.500 76.150 P33.000 88.400 P700 000 Problem 1 – 7 1.800) P 34.000 ( 19.000 48.250 33.800 43.360 P P Burgos 100. Capital Pilar.000 ( 64.500 Balance – 5:3:2 56.400 P110.000 20.AA 1 . Capital 110.000 22.800 P 12.000 10.200 40.400 Total P 36.050 P107.200 235.200 40.800 ( 32.600 392.000 48.500 P 69.500) P(57.

January 1.000 2.000 20.AA 1 .000) Schedule 2 .000 8.250 P 76.000 Total P 80.400 P110.000) P 96. 1) Withdrawals Capital.200 P( 5. 2008 Add Distribution of net income for 2008: Interests Salaries Bonus Balance .000 58.480) P 32.500 8. 2006 Distribution of net loss (Sch.840 (20.400) P( 2.000 18.000 7.Chapter 1 (2008 edition) page 14 Delmar and Pilar Company Statement of Changes in Partners’ Capital For the Year Ended December 31.850 6. Capital Balance – equally Net income Ramos P 9.400) P( 2.000 7.440 Gonzales P 48. January 1.320) P 24. December 31.520) (14.000 2.520) (42.400) P( 1.880 (16.960) P 60.480) P120.100 64.000 (48.000 P120.Distribution of 2007 net profit .520) Schedule 1 .capital ratio Total share in net profit Total Less Drawings Capital balances.150 P33.500 Problem 1 .850 P63. 2007 Distribution of net profit (Sch. December 31.000 P 2.000 ( 2.320 (16.120 (21.080 P 49. 3) Withdrawals Capital.000 21.000 Pilar P30.000) P 18.000 P 24. December 31.000 ( 1.500 P126.850 P 1.000 P174.000 ( 5. Gonzales and Martinez Statement of Changes in Partners’ Capital For Three Years Ended December 31.650 4.9 Ramos. 2006 Distribution of net profit (Sch.720 (17.000 22.100 40.800 (65. 2008 Capital balances.600 10.000 22.000) (12. 2008 Capital.650 P190.600 4.800 (16.200) P 8.920 Total P 168.000) P 66.000) Total P 33. 2008 Delmar P 50. December 31.000 18.600) P 89.840 (24.000 P53.400) P 61.960 (13.000 ( 2.720) P12.400 (16.000 24.840 Martinez P 40.200 Gonzales P 12. 2008 Ramos P 80.520) Martinez P 12.650 10.500 12.000) P 22.500 16.000) (16. 2) Withdrawals Capital.Distribution of 2006 net loss Salaries to partners Interest of 6% on beg.

440 Martinez P 12.360 .600) P 7.840 Problem 1 -10 Robles. Bernal and Reyes Statement of Partners’ Capital For the Year Ended December 31.320 Martinez P 12.600 7.600 3.720 P 83.000) P20.240 16.800 .11 Chavez.120 Total P 33.B) Balance – equally Net income Ramos P 9.800 (required total capital) Problem 1 .P39.000 P 80.AA 1 .333.000 ( 16. P40.200 58.600 5.000 Roman Capital P 80. 2008 Robles Berna Reyes Total l Capital balances before closing the nominal accounts Add Distribution of net profit: Drawing allowance Interest on average capital Balance .880 44.000 / 60% = P343.400 21. 30%.600 P41. December 31.000 .000 1.20% (P58.000 P 60.60%.720 Total P 33.000 240 29.280 14.000 P288. 2008 Chavez Loan Beginning balances Loan from Chavez Transfer of equipment to Valdez Balances Chavez Capital P 80.000 1.000 8.000 20.000) P284.000 Total P240.400 P41.600 3.360 26.800) P 24.000 1.000 149. Capital Balance – equally Net income Gonzales P 12.000 P138.960 Salaries to partners Interest of 6% on beg.000 ( 16.960 ( 5.000 Valdez Capital P 80.640 P206.640 / 30% = P138.600 3.800 P41.400 18.200 P138.600) P 8.000 P 60.000 P 80.320 ( 5.200 (16.000) P 64.000 122.000 60. 2008 P120.000 560 9.200 58.760 3.000 P ( 2.000 720 5.Distribution of 2008 net profit Salaries to partners Interest of 6% on beg. Capital Bonus .360 / 10% = P403.840 5.000 7.640 10.Chapter 1 (2008 edition) page 15 Ramos P 9.400 18.920 ( 5.240 5.600) P 7.480 P13. Roman.800 Schedule 3 .000 Gonzales P 12.000 98. and Valdez Statement of Changes in Partners’ Capital January 1 to November 1.800 P40. 10% Total Deduct Cash distribution Capital.800 P206.

000 .000 186.750 P272.010 .310 P 13.310 P467.000 Fajardo ------P 24.12 Canlas.810 P 37.000 311.000 P 60.010 P 24.500 87.500 23.300 11.400 5.000 80.750 P588.AA 1 .490) Total P 795.010 P100.000 Total P135.300 24.500 268.000 P 276.P13.500 P366.000 x 10%) + (P75. David.500 P 37.500 P(13.500 24. excluding depreciation and uncollectible accounts (P290.750 P 306.300 3.100) P 80.000 140.700 P546.500 Supporting computations: Revenue from fees Expenses: Total expenses.700) P 3.000 6.000 588.Chapter 1 (2008 edition) Distribution of loss on realization* Salary to Valdez Int. 2008 Investment Net profit Total Less: Excess rent (P225 x 6) Withdrawals Uncollectible accounts Capital.000 David P 36.250 P 13.000 60.000 237. December 31 Canlas P309. to Chavez for 7 months Balance divided equally* Balances Dist.000 P204.230 P 78.383.000 P284.000 P450.000 2.230 P345.000 x 50%) Net profit P 900.100 Problem 1 .250 12.700 P 66.700) P 11.300 ( 76. Estrella and Fajardo Statement of Changes in Partners’ Capital Accounts For the Year Ended December 31.100 P230.000 18.076. of cash in final settlement page 16 24.100 ( 230.750 P 72.000 80.000 x 5%) Doubtful accounts (P24.500) Depreciation [(P195.000 26.000 Estrella Fajardo P 33.250 Distribution of net income Canlas 20% of gross fees from respective clients 20% of fees after April 1 after expenses but before bad debts P 66.700 David P159.250 P1.000 P24.750 P1.100 ( 76.480 Estrella P327.000 P 96.700) P 5.010* 24.000 2.400 *Total partners’ equity as shown above Less Cash available for distribution Loss on realization Less Salary and interest Total loss to be divided equally ( 76.

310 P140.025 63.025 36.230 P186.305 24.375 Abaya P 39. Estrella-25% Total 171.Chapter 1 (2008 edition) page 17 Balance -Canlas-40%.250 x 16% = P38. Capital 159.950 P120. 3.610 Reyes P 58.240 P588.310 P24.000 – (P12.000 x 65%) = P240.000 + P9. 3. Corrected net income = P250.220 P159.375 4.415 Abaya.505 Salaries Bonus [25% x (NI – B – S) ] Balance – equally Total 4.500 36.250 Jaime = P240.305 49.100 Madrid = P240.500 12.500 12.610 P 63.500 + P23.000 62. Equipment Accumulated Depreciation Profit and Loss 13.250 x 24% = P57.000 – P31.610 P 95. Jaime = 5/10 x 80% = 40% Madrid = 3/10 x 80% = 24% 2. 2.000 + P15.350 12.700 95. Drawing Total P 97.000 62. D D A .010 Problem 1-13 1. 4. Capital Reyes.500 1.AA 1 .250 x 20% = P48.230 107.250 After April 1 P 180.050 MULTIPLE CHOICE 1.375 Profit and Loss Abaya. David-35%. Capital Abaya.440 Matias = P240. Capital Reyes. 2.000 – P20.000 24.500 Problem 1-14 1. Drawing Reyes.700 150.250) x 180 / 900 Share of Fajardo 429.150 Profit and Loss Interest Payable P87.250 x 40% = P96.000 59.660 Soriano = 2/10 x 80% = 16% Matias = 20% Soriano = P240.500 x 6% x 10/12 = P4.050 20% P 24.700 P237.010 Revenues Expenses before uncollectible accounts (P276.

AA 1 . + Total capital = P25. 7.000 + P95. C Abena – MV – Cost (P90.000 P 90. Total assets = Total liab.000 – P590.500 x 60%) Non-cash contributions of Esteban (P125.500 95.000 = P325. Cash contribution = (P248.000) P12.500 – P5. Roxas = (P590.000) 260.000 P260.000 P 8.000) ÷ 2/3 = P248.000 (P140.550 = P590.000 – P5.P4.000 ( 10.000 13. Roxas = P596. page 18 A C B B Total P30.000 + P300.000 P230.950 = P78.700 + P321.000 130.250 .700 = P59. 6.000) Cash contribution P172.000 x 60% P 138.000 ( 4.000 – P30. Required capital of Esteban (P287.000) Total partnership capital P115.000 P 77.000 – P70.400 + P17.000 Capital credit of Molina Contribution of Molina Bonus to Molina 9.000) Molina’s contribution (P190.000) (P18. C P115.000 ( 6.300 Bernardo = P400.000) P 8.000 = P32.000) Nuevo’s tangible contribution Total capital contributions Buendia (40%) P12.700 + P321.050 .000) P20.000 = P60.000 14.590 Bernardo = (P590.000 = P210.P90.700 Bernardo = P335.500 17.000 – P30. Roxas = P650.000 = P321. Bruno = P150. 8.000 .000 10.000 ( 30.950) x 40% = P365.000 – P60.000 145.000) P 0 Abena (60%) P18.000 100.060 11.000 .000 .000 P18.050 12.000) 50.000 18.P5. Contribution of Diaz Contribution of Esteban (P125.000 ( 20.000/2 P105.950) x 60% = P547.P9.850 x 1/3) – P50.950 15 Total capital = (P158.000) Actual Inequity 5.950 10.850 16.Chapter 1 (2008 edition) 4.000 P130.000 19.000 – P321.000 + P50. A Net increase (decrease) in capital Add Withdrawals Total Less Additional investments Profit share (P120.000 – P60.000) Buendia – MV – Cost (P60.

000 x 12) Interest (P50.000) Torres Ocampo P 8.636 Total P 100.500 P120.000 P44.000 Balance – Salary ratio 29.364 P12.000 x 6 = 960.000 P30.000 Salaries to partners Balance .000) P14.400 1.000.000 40. 21.20 (P120.000 (600) P13.000 6.B) Interest on capital in excess of P100. A Interest Salaries Balance – equally 26.000 20% x P1.040.000 + .080.000 P10.000 x 9 = P2.000 2.000 Velasco P 2.000 Total P 44.000 2.000 100.000 C Alberto P 100.B) Interest on capital in excess of P100.000 Sison Bonus .000 5% (P1M – P400.000 Total P 4.000 300.000 .000) P22.500.B) Interest on capital in excess of P100.000) Balance – equally Net income 25.000 . Bustos P 1.000 x 5%) Net profit after deduction of bonus Bonus = .000 .000 160.4:4:2 28. interest and bonus) Salary (P2.20 Bonus = P24.000/.10%(P22.000 6.000 10.800 Sison Bonus .000 P 93.000 + Bonus) = P24. 24.000 (70.000) P 1.000 300.10%(P44.Chapter 1 (2008 edition) page 19 Profit share percentage Total partnership net profit 20.000) ( 70. 22.000 680.500 24.000 10% x P1.000 22.400 P19.000 P10.364 1.000 P22.400 1.000 P1.000 P 1.000 19.000 (3.000 Total P 2.000 (1.000 12. C B C 23.80 = P30.200) Torres Velasco P 4.000 155.000 3.025.AA 1 . 680.000 ( 210.800 Torres Sison Average capital of Tamayo P100.000 60.4:4:2 27. D ÷ 30% P300.000 Salaries to partners Balance .000 (1.000 680.000 x 3 = 465. C B D A Cancio P30.000 17.10%(P22.000 Total P 2.000 Velasco P 2.000 P8.200) Bonus .000 12.000 22.000 .000 x 6 = P 600.000 60.000 ( 70. Ramos P24.000 Net profit (exclusive of salary.000 Campos P12.000 Average capital of Vidal P225.

333.000 + P207.equally Net increase (decrease) 33.000/12 P130.000 13.750 P666.490.268 Total P 87.268 75.000 P 225.000 – P70.000) Add Net profit Total capital. D Int.000 .67 3.342 P25.267 A 35.00 10.268 P 5. Bonus to managing partner Balance – based on orig.924) P(125.00 _________ P9.610 Lorna Ursula P 5.000) 10% = P48.342 125.000 P 201.000/12 P207.34 ________ P25. exp.500.750 Andal P 47.750 144.650 13.67 6.00 33.00 10.000.865 (139.000 9.950 (417. 2008 32. .350 204.781 P 20.67 Puno P40.443) Camba P 16.049 P 25. capital= (P130. 36.000 + P60.000.666.00 6.000 1.610 50. capital Salaries to partners Balance .650 Total Total P 89.000.610 Lucas total P 10. end Belen Interest Salaries Balance Add’l profit for Edna Net profit B Salaries Bonus P 20.342 Salary to partner for 10 mos.560.000 Total int.448) Net income = Net sales .000 Edna Romero P13.268 P 5. Briones P 23.000 P145.Chapter 1 (2008 edition) page 20 P1.Depr.250 122. TOTAL share in profit 34.00 P 2.100 x 65% Mariano P10. D Interest on ave.333. B Total capital before net income (P475.308) P( 40.33 P64.000. Others) = P228.000 .000.308) P(115.561 8.000 P125.268 30.divided equally 31.000.P123.625 (139.624) P 25.000 .00 16.33 P12.00 ________ P18.342 20.666.000 P 80.000 Quirino P36.000.333. cap.000 201.000 P 50.00 3. beginning TOTAL Less Withdrawals Capital.000 P2. 37.500.P58.325 (139. on ave.308) P 30. P465.500 .000 1.610 P 5. Dec.00 P2.000.P150.Oper.610 200.000.750 TOTAL share in profit Add Capital.67 P12.AA 1 .235 82.00 P 2. C P 48.000 P 175. D A A 38.500 + P150.00 10. on average capital Salaries to partners Balance .561 14.500 Average capital of Banson .666.750 30.CGS .P7.166.00 6.000. 31.500.

000 x 3 July 1 .000 3.000 10% X + 30% X = P61.000 + P32.610 41.000 x 6 750 7.000 x 3 Apr. 1 – P10.000 + 1/3 (X – P89.200 P43.200 .000 P43. capital Jan.53.000 / 12 P10.800 P 6.200 P 30.000 P120.000 P 3.000 x 3 Oct.38.000 27. 1 .8.000) = P61.000 P61.000 39.000) P 6.350 = P61.000 x 3 Oct.000 Let X = Net Income P40.000 + 30% X – P32.600 7.000 P552.000 + 1/3 (90% X – P96. capital Jan.000 ( 8.000 P130.000 x 3 Romero.000 114.00 / 12 P46. capital Jan.000 – P1.000 – P8.000 / 12 P 7.650 – 10% X – P6.P3.000 6.000 30.000) Salary to Serrano Remainder Divided equally P42.000 4.000 30.000 318. 1 .000 P 90. C Share of Legarda = P25.000) Understatement in 2007 NI Divided 60:40 P8.000) Income allocation Toledo P36.750 4.000 x 3 Apr 1 9.000 P 36.800 3.000 + 10% X + P1. 1 – P40.Chapter 1 (2008 edition) Interest Balance Total page 21 1.000 = P61.10.000 24.5/10 x 80% = 40% Madrigal-3/10 x 80% = 24% Sotto .000 – ( P1.000 Computation of average capital: Puno.000 P40.P2.000 x 6 July 1 . 1 .000 7. D Legarda.000 P25.025 x 40% = P9.000 – P40.000 + 10% X + P1.000 x 3 Quirino.11.000 33.100 . 1 – P 6.AA 1 .000 40% X = P52.000 ( 6.500 P120.10.000 P40.000 + P1.350 21. C Serrano 2008 Net income (P50.2/10 x 80% = 16% Pimentel 20% 40.500 + P 900 x 65%) = P24.200 .000 x 3 July 1 .000 X = P130.000 ( 36.000 + 10% X + P1.

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