Problem A

The business assets of MARIO and LUIGI appears below:

MARIO LUIGI
Cash 10,000 15,000
Accounts Receivable 30,000 20,000
Inventories 25,000 22,000
Furniture and Fixtures (net) 30,000 35,000
Office Equipment (net) 12,000 8,000
Prepaid Expenses 3,000 4,000

Total 110,000 104,000

Accounts Payable 35,000 12,000

Capital 75,000 92,000

Total 110,000 104,000

They agreed to have the following items recorded in their books:

1. Provide 10% allowance for doubtful accounts

2. MARIO’s furnitures and fixtures should be P33,000, while LUIGI’s office equipment is over-depreciated by
P2000.
3. Rent expense incurred previously by MARIO amounting to P1,000 was still part of the prepaid expenses,
while salary expense incurred by LUIGI was not also recorded amounting to P3,000.
4. The fair market value of inventory amounted to: MARIO – P29,000; LUIGI – P21,000.

Problem B

The following are the capital balances of COC Partnership:

Barbarian P50,000
Archer 30,000
Wizard 40,000
Giant 40,000
Total P160,000

Problem C

The following are the capital balances and share in profit of each partner of ML Partnership:

Tigreal P50,000 (40%)

Alice 30,000 (30%)
Layla 40,000 (30%)
Total P120,000
Problem D

DOTA Partnership Balance Sheet as of December 31, 2020 is shown below. On this date, the
partners decide to liquidate the partnership due to becoming unpopular.

DOTA Partnership
Balance Sheet
December 31, 2020

Cash 100,000 Accounts Payable 200,000

Non-Cash Assets 600,000 Notes Payable 50,000
Axe, Capital (40%) 225,000
Bone, Capital (40%) 175,000
Chen, Capital (20%) 50,000
Total Assets 700,000 Total Liabilities and Capital 700,000

The following is a summary of the realization and liquidation:

Cash
BV of Asset withheld for
Month Realized Cash Expenses future
Collected Paid Expenses
January 100,000 116,000 3,000 15,000
February 150,000 110,000 6,000 10,000
March 250,000 120,000 4,000 5,000
April 100,000 30,000 3,000 -

All available cash will be first paid to liabilities, then distributed to partners.