ADVANCE ACCOUNTING AND REPORTING

1. A, B and C formed a partnership sharing profits and losses in the ratio of 3:2:1. A contributed a land
which he bought for P120,000 B contributed cash of P50,000 and C also contributed the same amount as
B. The land which A contributed has a mortgage value of P50,000. Mortgage Value of land are one third
of prevailing market price. It was agreed that they will share initial capital in the ratio of 2:1:1. Under
the bonus method how much should be the capital given to A?

2. A, B and C are partners sharing profits and losses in the ratio of 3:2:1 after the bonus (20% of the net
income) to A and the salary provision of P3,000 to A. They have beginning balances of P30,000 each of
the beginning year. A contributed an additional P30,000 while B contributed an additional P20,000. The
partnership had net income of P30,000. How much should be the increase in the capital balance of A?

3. K is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus of 10% of
net income after salary and bonus as a means of allocating profit among the partners. Salaries traceable
to other partners are estimated to be P100,000. What amount of income would be necessary so that K
would consider the choices to be equal?

4. M, N and O have a partnership. Their capital balances are P90,000, P130000 and P170,000,
respectively. They share profits and losses 30%, 30% and 40%, respectively. P wants to become a
partner with 25% share in the partnership capital. Appraisal of the partnership reveals that the fair value
of the partnership net assets is P450,000.

How much should P be asked to contribute?