Problem #21

Preparation of Financial Statements

The following are the adjusted accounts balances of Calamba and Santiago as at Dec 31, 2018:

Accounts Payable P677820

Accounts Receivable 545070
Accumulated Depreciation-Equipment 462870
Allowance for Uncollectible Accounts 18790
Cash 132310
Calamba, Capital 612000
Calamba, Drawing 326400
Equipment 753150
Transportation In 224880
General Expenses (control) 149390
Interest Expenses 35000
Merchandise Inventory, December 31 1320420
Notes Payable 299000
Prepaid Insurance 7350
Purchases 5407160
Purchases Discounts 43050
Purchases Return and Allowances 259600
Santiago Capital 499600
Santiago, Drawing 244800
Sales 7155000
Sales Return and Allowances 375750
Selling Expenses (control) 385880
There were no changes in the partners’ capital accounts during the year. The merchandise inventory at the beginning of
the year was P1440590. The partnership agreement provides for salary allowances of P330000 for Calamba and P290000
for Santiago. It also stipulates an interest allowance of 10% on invested capital at the beginning of the year, with the
remainder of the profit to be divided equally.
Required:
1. Prepare an income statement for the year. Show the division of profit.
2. Prepare a statement of changes in partners’ equity for the year.
3. Prepare a statement of financial position at the end of the year.
 Calamba and Santiago
Income Statement
Dec 31, 2018
Net Sales
7155000.0
Sales 0
Sales Return and Allowances 375750.00
6779250.0
Net Sales 0
Cost of Sales
1440590.0
Merchandise Inventory, Jan 1 0
5407160.0
Purchases 0
Purchases Discounts 43050.00
Purchases Return and Allowances 259600.00 302650.00
5104510.0
Net Purchases 0
Transportation In 224880.00
5329390.0
Net Cost of Purchases 0
6769980.0
Goods Available for Sale 0
Merchandise Inventory, December 1320420.0
31 0  
5449560.0
Cost of Sales 0
1329690.0
Gross Profit 0
Operating Expenses
General Expenses (control) 149390.00
Selling Expenses (control) 385880.00
Interest Expenses 35000.00      
Total Operating Expenses 570270.00
Profit 759420.00

  Calamba Santiago Total

salary 330000.00 290000.00 620000.00
interest 10% 61200.00 49960.00 111160.00
remainder 1:1 14130.00 14130.00 28260.00
profit 405330.00 354090.00 759420.00

Calamba and Santiago

Statement of Changes in Partners’ Equity
Dec 31, 2018

Calamba Santiago Total

 1111600.0 1111600.0
Original Investments 612000.00 499600.00 0 0
Less: Temporary Withdrawals 326400.00 244800.00 571200.00 571200.00
Balances 285600.00 254800.00 540400.00 540400.00
Add: Profit 405330.00 354090.00 759420.00 759420.00
1299820.0 1299820.0
Partners' Equity, Dec 31 690930.00 608890.00 0 0

Calamba and Santiago

Statement of Financial Position
Dec 31, 2018
Assets
Cash 132310.00
Accounts Receivable 545070.00
Allowance for Uncollectible Accounts 18790.00 526280.00
1320420.0
Merchandise Inventory, December 31 0
Prepaid Insurance 7350.00
Equipment 753150.00
Accumulated Depreciation-Equipment 462870.00 290280.00
2276640.0
Total Assets 0
Liabilities & Partners' Equity
Accounts Payable 677820.00
Notes Payable 299000.00
Calamba, Capital 690930.00
Santiago Capital 608890.00
2276640.0
Total Liabilities and Partners' Equity 0