PARTNERSHIP FORMATION: ASSIGNMENT

1) A and B formed a partnership. The partnership agreement stipulates the following:

• A shall contribute noncash assets with carrying amount of P60,000 and fair
value of P100,000.
• B shall contribute cash of P200,000
• A and B shall have interests of 80% and 20%, respectively, on both the
initial partnership capital and in subsequent partnership profits and losses.
• No outside cash settlements shall be made between and among the
partners.

a) The total partnership capital after the formation is

b) The adjusted capital account of B after the formation is
c) The entry to record the contribution of B (and bonus given to A) includes
2) A, B and C formed a partnership. Their contributions are as follows:
A B C
Cash 50,000 40,000 140,000
Equipment 150,000
Totals 50,000 190,000 140,000

Additional information:
• Although C has contributed the most cash to the partnership, he did not
have the full amount of P140,000 available and was forced to borrow
P40,000. The partners agreed that half of the amount borrowed shall be
assumed by the partnership.
• The equipment contributed by B has an unpaid mortgage of P20,000, the
repayment of which is not assumed by the partnership.
• The partners agreed to equalize their interest. Cash settlement among the
partners are to be made outside the partnership.

a) Which partner(s) shall receive cash payment from the other partner(s)?

3) A and B agreed to form a partnership. The partnership agreement stipulates the

following:
• Initial capital of P300,000.
• A 25:75 interest in the equity of the partnership.

A contributed P100,000 cash while B contributed P200,000 cash. Which partner

should provide additional investment (or withdraw part of his investment) in order
to bring the partners’ capital credits equal to their respective interests in the equity
of the partnership?
4) On July 1, 20X3, Monuz and Pardo form a partnership, agreeing to share profits
and losses in the ratio of 4:6, respectively. Monuz contributed a parcel of land that
cost him P25,000. Pardo contributed P50,000 cash. The land was sold for P50,000
on July 1, 20X3 four hours after formation of the partnership. How much should be
recorded in Monuz capital account on formation of the partnership?

8) Cong and Dong have just formed a partnership. Cong contributed cash of
P126,000 and computer equipment that cost P54,000. The computer had been
used in his sole proprietorship and had been depreciated to P24,000. The fair
value of the equipment is P36,000. Cong also contributed a note payable of
P12,000 to be assumed by the partnership. Cong is to have 60% interest in the
partnership. Dong contributed only P90,000 cash.

Cong should make an additional (withdrawal) of:

6) Red, White and Blue form a partnership on May 1, 20X3. They agree that Red will
contribute office equipment with a total fair value of P40,000; White will contribute
delivery equipment with a fair value of P80,000; and Blue will contribute cash. If
Blue wants a one third interest in the capital and profits, he should contribute cash
of:

7) Aldo, Bert, and Chris formed a partnership on April 30, with the following assets,
measured at their fair values, contributed by each partner:
Aldo Bert Chris
Cash P10,000 P12,000 P30,000
Delivery trucks 150,000 28,000 -
Computers 8,500 5,100 -
Office furniture 3,500 2,500
Totals P168,500 P48,600 P32,500

Although Chris has contributed the most cash to the partnership, he did not have
the full amount of P30,000 available and was forced to borrow P20,000. The
delivery truck contributed by Aldo ha a mortgage of P90,000 and the partnership
is to assume responsibility for the loan. The partners agreed to equalize their
interest. Cash settlement among the partners are to be made outside the
partnership.
5) The business assets and liabilities of John and Paul appear below:
John Paul
Cash P11,000 P22,354
Accounts receivable 234,536 567,890

Inventories 120,035 260,102

Land 603,000 -
Building - 428,267
Furniture and fixtures 50,345 34,789

Other Assets 2,000 3,600

Total P1,020,916 P1,317,002

Accounts payable 178,940 243,605

Notes payable 200,000 345,000
John, capital 641,976 -
Paul, capital - 728,352
Total P1,020,916 P1,317,002

John and Paul agreed to form a partnership contributing their respective assets
and equities subject to the following adjustments:
• Accounts receivable of P20,000 in John’s books and P35,000 in Paul’s are
uncollectible.
• Inventories of P5,500 and P6,700 are worthless in John’s and Paul’s
respective book.
• Other assets of P2,000 and P3,600 in John’s and Paul’s respective books
are to be written off.

The capital account of the partners after the adjustments will be:
9) On June 1, 20X3, May and Nora formed a partnership. May is to invest assets at
fair value which are yet to be agreed upon. She is t transfer her liabilities and is to
contribute sufficient cash to bring her capital to P210,000 which is 70% of the total
capital of the partnership.

Details regarding the book values of May’s business assets and liabilities and their
corresponding valuations are:
Book Agreed
values valuations
Accounts receivable P58,000 P58,000
Allowance for doubtful accounts 4,200 5,000
Merchandise inventory 98,400 107,000
Store equipment 32,000 32,000
Accumulated depreciation – Store 19,000 16,400
equipment
Office equipment 27,000 27,000
Accumulated depreciation – Office 14,200 8,600
equipment
Accounts payable 56,000 56,000

Nora agrees to invest cash of P42,000 and merchandise valued at current market
price. The value of the merchandise to be invested by Nora and the cash to be
invested by May are: