Name:BOTICARIO,DOMINIC E.

Course and Block:BSA-3A

PARTNERSHIP FORMATION

Exercises

A. Ger and Vega (Individual vs Individual)

1. Journal entries to record the investment of the partners.

Vehicles ₱400,000
Notes Payable ₱120,000
Ger, Capital 280,000
To record Ger’s investment

Cash ₱300,000
Inventory 50,000
Veg, Capital ₱350,000
To record Veg’s investment

2. Journal entry necessary to satisfy the agreement on capital

interest.

Veg, Capital ₱35,000

Ger, Capital ₱35,000
To record the transfer of capital between partners

3. Partner’s capital balances immediately after partnership

formation.

Computation:

Ger, Capital ₱280,000

Veg, Capital 350,000
Total partnership capital ₱630,000
Divided by 2 (agreed capital interest is equal)
Capital agreement by partner ₱315,000

Therefore,
Ger, Capital ₱315,000
Veg, Capital ₱315,000
 B. Enci and Lali

1. Journal entries in the books of the partnership to reflect the

partnership formation.

Cash ₱730,000
Accounts receivable 341,500
Inventory 249,300
Equipment, net 250,000
Building, net 800,000
Accounts payable ₱195,000
Accrued expenses 100,000
Enci, Capital 735,500
Lali, Capital 1,340,300
To record the partners’ investment

Lali, Capital ₱94,820

Enci, Capital ₱94,820
To record the transfer of capital between partners

2. Balance sheet for the partnership.

Enci & Lali Partnership

Statement of Financial Position

Assets Liabilities and Partners’ Equity

Cash ₱730,000 Accounts Payable ₱195,000
Accounts receivable, net 341,500 Accrued expenses 100,000
Inventory 249,300 Enci, Capital 830,320
Equipment, net 250,000 Lali, Capital 1,245,480
Building, net 800,000 q Total Liabilities & ₱2,370,800
Total Assets ₱2,370,800 Partners’ Equity