Output No.

Instruction: Write your answers on long bond papers.

I. B and T formed a partnership on January 2, 2019 by contributing the following net assets
from their respective proprietorships:
B T
Cash ₱ 30,000 ₱ 20,000
Non-cash assets 620,000 730,000
Liabilities (450,000) (530,000)
Net assets ₱ 200,000 ₱ 220,000

The non-cash assets of B is overstated by ₱ 24,500 while that of T is understated by ₱

5,500. They agreed on an interest/capital ratio of 48:52 to B and T, respectively.
Requirement No. 1: What is the entry to record the formation of the Partnership?

In continuation of the same case

Partner B invested additional capital on May 1, 2019 for ₱ 30,000 cash; contributed
merchandise with a fair value of ₱ 24,000 on September 1, 2019; and withdrew
permanently cash of ₱ 12,000 on December 1, 2019. Partner T has no additional
investments nor permanent withdrawals during 2019.

They agreed to divide profits and losses as follows:

a. Interest of 6% on average capital for each partner. The average capital balances of B
and T are ₱ 214,200 and ₱ 202,800, respectively.
b. Salaries of ₱ 4,000 each month to both partners.
c. Bonus to B of 10% of net income after interests and salaries.
d. The balance is agreed to be divided equally.
e. Both partners withdrew temporarily 60% of their respective salaries.
Requirement No. 2: What is the entry to transfer the net income for 2019 to capital?

Continuing with the same case,

Requirement No. 3: Statement of Changes in Partner’s Equity

Continuing with the problem, assume S was admitted as a partner in the BT Partnership by
investing ₱ 200,000 for 40% interest in capital and in profits.

The total contributions by the partners will be ₱ 724,400 (₱ 277,191 + ₱ 247, 209 + ₱
200,000). The acquired interest is ₱ 289,760 at 40%, which is ₱ 89,760 excess credit over
the amount contributed.
Requirement No. 4: What is the journal entry to be recorded upon S’s admission?

Continuing with the same case and assuming partner B succumbed to head injuries from a car
accident a day after S’s admission by investment.
Requirement No. 5: What is the journal entry to be recorded by the partnership if the
heirs of B sold the partnership equity to Violet (with T and S’s
permission) for ₱ 300,000?