Name KEY William Co Bautista

BUSIACC Assignment 4 (15 pts) College of Saint Benilde

Part I. Identification :
1. The basis of profit distribution when no agreement was made by the partners.
2. The basis of valuing the property or non-cash contribution of a partner in the firm.
3. Any partner can act in behalf of the partnership for as long as these acts are within the scope
of normal partnership activity.
4. A partnership where all members are general partners and are liable to the extend beyond their
separate capital contribution.
5. The contract in writing which governs the formation, operation and dissolution of a partnership.
6. The contribution of an industrial partner.
7. A ratio expressed in fraction or percentage having no relation to the amount of capital
investment of the partners or with no basis at all.
8. A transfer of interest credit to decrease the capital of one partner with the corresponding
increase in the capital of another partner.
9. Refers to the termination of the life of an existing partnership.
10. The statement that shows the results of business operation within a given period.
11. The partners are paid __ on capital to compensate for the difference in their capital contribution.
12. A method of dividing profits that uses the amount of partners' investment and the time during
which such funds were actually used by the partnership.
13. The basis in which the results of operations are shared by the partners.
14. Amount of capital set by partners for the firm which does not necessarily equal their contribution.
15. The excess of agreed capital over total contributed capital.
16. Represents a contribution shared by one partner to the credit of another partner in consideration
of the expertise or goodwill of the latter, which is not set up in the books.
17. An intangible advantage possessed by a business enterprise where it is able to earn more than
what is normal in its line of business.
18. The account debited for partner's permanent withdrawal
19. A partner whose liability for the debts of the firm does not extend beyond his promised capital.
20. Withdrawals made by partners in anticipation of their share in the partnership profit.
ANSWERS
1 Capital Ratio 11 Interest
2 Fair market value 12 Average capital ratio
3 Mutual agency 13 Profit and loss agreement
4 Universal / General Partnership 14 Agreed capital
5 Articles of Partnership 15 Goodwill
6 Industry / skill / talent 16 Bonus to partner
7 Arbitrary ratio 17 Goodwill
8 Bonus to partner 18 Partner's capital account
9 Dissolution 19 Limited partner
10 Statement of Income 20 Partner's drawings

Part 2. Record the following formation transactions of Cruzzett Pizza Partnership:

a. Rivera, who owned an ice cream parlor, invested merchandise costing P125,000 with fair market
value of P115,000 on the date of formation. The company will also assumed the obligation of Rivera
to his creditors valued at P34,500.
b. Ortega invested furnitures costing P450,000 with accumulated depreciation of P120,000. The
partners agreed to accept them at 60% of acquisition cost.
c. Toralba, a chef and expert in Italian cuisine will invest cash equal to 1/5 of the total capital.

a. Merchandise P 115,000
Accounts payable 34,500
Rivera, Capital 80,500
b. Furniture 270,000
Ortega, Capital 270,000
c. Cash 87,625
Toralba, Capital 87,625
Part 3. On July 1, 2019, Andero and Overo invested P250,000 and P150,000, respectively, to
establish a consultancy firm. They agreed to divide profits and losses based on capital investment.
How much will be the share on income of each partner?

Andero 250,000 0.625 62.5% will be his share on income

Overo 150,000 0.375 37.5% will be his share on income
Total 400,000 1.000

Part 4. On July 1, 2015, Tita and Chica invested P250,000 and P150,000, respectively, to
establish a consultancy firm. They agreed to divide profits and losses by allowing a 12% interest
on orginal capital, salary allowance of P3,000 per month to Chica; and, any remainder to be
shared in 3:2 ratio. For the six-month period ended Dec. 31, 2019, the company made a net
income after tax of P96,000. How much will be the share of each partner in 2019 net income ?
Total Tita Chica
Distributable Net Income P 96,000
12% interest on original capital (half year) (24,000) 15,000 9,000
Chica salary allowance (6 months) (18,000) 18,000
Remainder 54,000
Tita 3 / 5 ( 54,000 ) (32,400) 32,400
Chica 2 / 5 ( 54,000 ) (21,600) 21,600
Total Partner's Share on Income 96,000 - 47,400 48,600

Part 5. W, B and C are partners with capital balances at year-end of P90,000; P110,000; and
P50,000, respectively. They share profits and losses on a 4:4:2 ratio, after providing a 15%
bonus to partner C, as managing partner and a 10% interest on average capital.
Partner W invested P20,000 on April 30.
Partner B made a permanent drawing of P15,000 on August 1.
Partner C made P25,000 drawings in anticipation of profits on Sept. 30.
Operating income of P95,600 before the 30% income tax were realized during the year.
1. How much is the average capital of each partner ?
2. How much will be the share of each partner in the net income for the year ?
3. What entry should be made to record the profit distribution ?

W, Capital Ave. Capital

Jan. 1 70,000 4 280,000
Apr. 30 90,000 8 720,000
12 1,000,000 83,333
B, Capital
Jan. 1 125,000 7 875,000
Aug. 1 110,000 5 550,000
12 1,425,000 118,750
C, Capital
Jan. 1 50,000 50,000
Total 252,083

Total W B C
Distributable Net Income 66,920
15% Bonus to partner C (10,038) 10,038.00
10% interest on average capital (25,208) 8,333.30 11,875.00 5,000.00
Remainder 31,674
4 / 4 / 2 Ratio (31,674) 12,669.48 12,669.48 6,334.74
Total Partner's Share on Income - 21,002.78 24,544.48 21,372.74
66,920
Name William Co Bautista
BUSIACC Assignment 5 College of Saint Benilde

Case 1. A, B and C are partners with capital balances at year-end of P90,000; P110,000; and
P50,000, respectively. They share profits and losses based on capital ratio, after providing a
15% bonus on net income after bonus to partner C, as managing partner.
2020 Net income of P95,600 before the 30% income tax were realized during the year.
a. How much will be the share of each partner in the net income for the year.
b. What entry should be made to record the profit distribution ?
c. Prepare the Statement of Partners' Equity at year-end.

Case 2. X, Y and Z, a partnership formed on January 1, 2020, had the following initial investments:
X - P100,000 Y - P150,000 Z - P225,000
The partnership agreement states that profits and losses are to be shared equally by the
partners after considerations were made for the following :
Salaries allowed to partners : P60,000 for X; P48,000 for Y; and P36,000 for Z.
10% interest on average capital balances during the year shall be allowed.
Additional information :
On June 30, 2020, X invested an additional P60,000.
Z withdrew P70,000 from the partnership on Sept. 30, 2020.
During 2020, the professional partnership realized net operating income of P178,900 .
a. Calculate the share of each partner from the 2020 operating profits.
b. Journal entry to close and distribute the net income to the partners.
c. Prepare the Statement of Partners' Equity at year-end.

Case 3. Edgar, Paz ans Emy are partners sharing profits and loss in the ratio of 3:4:3 and their
capital balances were P400,000, P500,000 and P300,000, respectively as at Dec. 31, 2019.
Direction:
1) Prepare in tabular format the changes in partner's capital and the new P/L ratio.
2) Journal entries to record Romy's admission for the following independent cases:
A Romy will invest merchandise worth P450,000 for a 25% interest on
agreed capital of P1,750,000.
B Romy purchase 40% interest of Paz for P225,000.
C Romy buys out Emy for P350,000.
D Romy will invest P500,000 Cash for a 35% interest in the firm.
E Romy invest Equipment with fair value of P350,000 for a 20% interest
in the new partnership and he will be credited for the same amount.
Partnership Dissolution - Admission of New Partner

Rosy, Robert and Lina were partners with capital balances of P400,000; P200,000; and P300,000;
and the profit and loss agreement is in the ratio of 5: 3: 2, respectively.

From the following independent cases, prepare the Partner's Capital account with the admission of
John in the new partnership and show the new profit and loss ratio after John's admission :

a. John is buying the 50% share of Rosy for P250,000 and 1/3 share of Lina for P125,000.

b. John will purchase the interest of Robert for P250,000.

c. John will invest P350,000 cash for a 1/4 interest in the partnership and will be credited
for the same amount.

c. John will invest P300,000 cash and will be credited for a 1/5 interest to an agreed capital
of P1,250,000.

c. John will invest P350,000 cash for a 1/4 interest in the partnership and will be credited
for the same amount.

d. John will invest P300,000 cash and will be credited for a 1/5 interest to an agreed capital
of P1,250,000.
3) Dissolution - Admission of New Partner
New Partnership
Capital Old Agreed
Contribution P/L Changes Capital
Rosy 400,000 5
Robert 200,000 3
Lina 300,000 2
900,000
a) John purchase 50% Rosy & 33.3% of Lina Interest Purchase
of Interest
Rosy 400,000 (200,000) 200,000
Robert 200,000 200,000
Lina 300,000 (100,000) 200,000
John - 300,000 300,000
Total 900,000 - 900,000

b) John purchase Robert Interest New Partnership

Capital Old Purchase Agreed
Contribution P/L of Interest Capital
Rosy 400,000 5 400,000
Robert 200,000 3 (200,000) -
Lina 300,000 2 300,000
John 200,000 200,000
Total - 900,000

c) John invest P350,000 for 1/4 interest.

New Partnership
Capital Agreed
Contribution Increment Goodwill Capital
Rosy 400,000 75,000 475,000
Robert 200,000 45,000 245,000
Lina 300,000 30,000 330,000
John 350,000 0.25 - 350,000
Total 1,250,000 1,400,000 150,000 1,400,000
150,000

d) John invest P300,000 for 1/5 interest @ P1,250,000 Agreed Capital

New Partnership
Capital Goodwill Partners' Agreed
Contribution to Old Bonus Capital
Rosy 400,000 25,000 25,000 450,000
 Robert 200,000 15,000 15,000 230,000
Lina 300,000 10,000 10,000 320,000
John 300,000 - (50,000) 250,000
Total 1,200,000 50,000 - 1,250,000
Bonus to Old partners

John invest P300,000 for 30% interest @ P1,250,000 Agreed Capital

Rosy 400,000 (12,500) 387,500
Robert 200,000 (7,500) 192,500
Lina 300,000 (5,000) 295,000
John 300,000 50,000 25,000 375,000
Total 1,200,000 Goodwill - 1,250,000
P25,000 Bonus to new patner
P50,000 Goodwill to John

John invest P300,000 for 30% interest

Rosy 400,000 (30,000) 370,000
Robert 200,000 (18,000) 182,000
Lina 300,000 (12,000) 288,000
John 300,000 60,000 360,000
Total 1,200,000 - 1,200,000
Bonus to John, new partner
New Partnership

P/L

2.50 Rosy, Capital 200,000

3.00 Lina, Capital 100,000
1.33 John, Capital 300,000
3.17
10.00

New Partnership

P/L
5 Robert, Capital 200,000
John, Capital 200,000
2
3

Cash 350,000
P/L John, Capital 350,000
37.5%
22.5% Goodwill 150,000
15.0% Rosy, Capital 75,000
25.0% Robert, Capital 45,000
100.0% Lina, Capital 30,000

Cash 300,000
P/L John, Capital 300,000
40.0%
 24.0% John, Capital 50,000
16.0% Rosy, Capital 25,000
20.0% Robert, Capital 15,000
100.0% Lina, Capital 10,000

Goodwill 50,000
Rosy, Capital 25,000
Robert, Capital 15,000
Lina, Capital 10,000

30%

new patner

30%