The balance sheet of South Company on November 30, 2019 before accepting East as his

partner to form SouthEast Partnership is presented below:

South
Balance Sheet
As of November 30, 2019
Assets
Cash P120,000
Accounts receivable P48,000
Less: Allowance for doubtful
3,000 45,000
accounts
Notes receivable 60,000
Merchandise inventory 27,000
Equipment P72,000
Less: Accumulated depreciation 6,000 66,000
Total assets P318,000
Liabilities and Capital
Accounts payable P12,000
Notes payable 60,000
H, capital 246,000
Total liabilities and capital P318,000

It is agreed that for purposes of establishing South’s interest the following adjustments shall be
made:

1. The accounts receivable is estimated to be 90% realizable.

2. Interest at 8% on notes receivable dated March 1, 2019 is to be accrued.
3. The merchandise inventory is to be valued at P21,000.
4. The equipment is under-depreciated by P4,800.
5. Prepaid expenses of P2,400 and accrued expenses of P7,200 are to be recognized.

East is to invest cash equal to a one-third interest in the partnership.

1. What is the amount presented under the Cash account upon formation of the partnership?
236,100 (with margin: 0)

2. What is the amount presented for South’s capital upon formation of the partnership? 232,200

3. What is the amount presented for East’s capital upon formation of the partnership? 116,100

4. Under an independent assumption, if it was agreed that the partners are to have equal capital
interests using the bonus method regardless of the partners’ investments, what is the amount of bonus
given to East? 58,050
5. Under an independent assumption, if it was agreed that the partners are to have equal capital
interests using the goodwill method regardless of the partners’ investments, what is East’s capital
interest upon recognition of goodwill amounting to P31,700? 190,000

Play and Station organized their partnership on January 1, 2020. The following entries were
made into their capital accounts during 2020:

Play:

  Debit Credit Balance

1/1   30,000 30,000
6/1   15,000 45,000
10/1   5,000 50,000

Station:

  Debit Credit Balance

1/1   25,000 25,000
3/1   10,000 35,000
9/1 12,000   23,000
11/1 3,000   20,000
12/1   8,000 28,000

The partners agreed on their income allocations under the following conditions:

1. Interest of 10% is allocated on weighted average capital balance.

2. A salary of P9,000 will be allocated to Play while P5,000 was allocated to Station
3. A bonus of 10% of partnership profits after bonus is credited to Station.
4. The remainder of the profits is to be allocated according to the partner’s ending capital
balance.

Assume the following additional information for questions 6 and 7: Each partner has withdrawn
P500 per month in anticipation of the partnership’s net income. Net income for the year
amounted to P66,000. Round the final answers to the nearest peso.

6. How much partnership income is allocated to Play? 38,032

7. What is the year-end balance of Station’s capital account? 49,968

Assume the following additional information for question 8: Net loss amounted to P40,000
during the year.
8. How much partnership income/loss is allocated to Station? (Denote a negative amount if loss)

-13,929

Uno, Dos and Tres are partners sharing profit on a 7:2:1 ratio. On January 1, 2020, Singko was
admitted into the partnership with 15% share in profits. The old partners continued to participate
in profits in the original ratios. For the year 2020, the partnership showed profits of P15,000.
However, it was discovered in 2020 that the following items were omitted in the firm’s books:

Unrecorded at year-end 2019 2020

Accrued expense   P1,050
Accrued income   875
Prepaid expense P1,400  
Unearned income 1,225  

The only changes on the old partner’s capital during 2020 were the net income allocation and the
correcting entries.

9. After effecting the correcting entries for the unrecorded transactions, how much is the change
on Uno’s capital during 2020?

8,698 (with margin: 0)

10,658 (with margin: 0)

10. After effecting the correcting entries for the unrecorded transactions, how much is the change on
Tres’ capital during 2020?

1,243 (with margin: 0)

1,523 (with margin: 0)