Professional Documents
Culture Documents
Capital Credit
1. Capital of partner after formation
2. Always based on agreed capital
3. If silent: contributed = capital
Average Capital
1. Simple = (Beg + End)/2
2. Weighted, every investment and withdrawal is accounted
Additional Notes:
1. If there is no Profit ratio, assuming there is an operating gain, do not use the loss ratio
instead go with original contribution
2. If there is no Loss ratio, assuming there is an operating loss, do use the profit ratio
Account Titles QQ RR
Cash 11,000 22,354
Accounts Receivable 234,536 567,890
Inventories 120,035 260,102
Land 603,000 0
Building 0 428,267
Furniture and Fixtures 50,345 34,789
Other Assets 2,000 3,600
Total 1,020,916 1,317,002
Accounts Payable 178,940 243,650
Notes Payable 200,000 345,000
QQ, Capital 641,976 0
RR, Capital 0 728,352
Total 1,020,916 1,317,002
QQ and RR agreed to form a partnership by contributing their respective assets and equities
subject to the following adjustments:
a, Accounts Receivable of P20,000 in QQ’s books and P35,000 in RR’s books are
uncollectible.
b, Inventories of P5,500 and P6,700 are worthless in QQ’s and RR’s books,
respectively.
c. Other assets of P2,000 and P3,600 in QQ’s and RR’s books are to be written off.
Required:
DEBIT CREDIT
Cash 9,000
Receivable, net 15,000
Equipment, net 19,000
Other Assets 50,000
Liabilities 17,000
DouDou, capital 30,000
MiaoMiao, capital 40,000
Service Revenue 50,000
Supplies Expense 17,000
Utilities Expense 4,000
Salaries to partners 18,000
Other Miscellaneous Expenses 5,000
Total 137,000 137,000
the partners agreed on the following: a monthly salary allowances of P800 and P1,000 for
DouDou and MiaoMiao, respectively; interest allowance at 12% annual rate on average capital
balances and remaining profits allocated equally.
Required
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