On January 1, 2021, Mr. A and Ms.

B agreed to form a partnership contribuitng their respective assets and equities

Mr. A Ms. B
Cash 28,000 62,000
Accounts Receivable 200,000 600,000
Inventories 120,000 200,000
Land 600,000
Building 500,000
Furniture & Fixtures 50,000 35,000
Intangible Assets 2,000 3,000
Accounts payable 180,000 250,000
Other Liabilities 200,000 350,000
Capital 620,000 800,000

The following adjustments were agreed upon:

1. Accounts receivable of P20,000 and P40,000 are uncollectibe in A's and B's respective books
2. Inventories of P6,000 and P7,000 are worthless in A's and B's respective books
3. Intangible assets are to be written off in both books

Mr. A and Ms. B formed a partnership and agreed to divided the initial capital equally even though Mr. A contributed P100,000
P84,000 in identifiable assets.

The partners agree that the difference in the amount of contribution and the amount of credit to partner's capital
shall be treated as compensation for the expertise that the partner will be bringing to the partnership

Cash 100,000
Other Assets 84,000
A, Capital 100,000
B, Capital 84,000

184,000 92000

The partners agree that the difference in the amount of the contribution and the amount of credit to the partner's capital shall b
settlement between the partners

Cash 100,000
Other Assets 84,000
A, Capital 92,000
B, Capital 92,000

The partners agree that the difference in the amount of contribution and the amount of credit to the partner's capital
shall be treated as compensation for the expertise that the partner will be bringing to the partnership

How much is the unidentifiable asset to be recognize in the books for Ms. B's expertise?
Zero. We did not record a Goodwill
PROBLEM 3: ITEM NO. 2
On January 1, 2021, Ms. Ann and Mr. Buoy agreed to form a partnership. The partner's contributions are listed below:
Ms. Ann Mr. Buoy
Cash 50,000 120,000
Accounts Receivable 360,000 1,080,000
Inventories 216,000 360,000
Land 1,080,000
Building 900,000
Equipment 90,000 90,000
Accounts Payable 336,000 450,000
Capital 1,460,000 2,100,000

The partners agreed to the following:

1. The recoverable amounts of the partners' respective accounts receivable are P300,000 and P760,000, respectively
2. The inventory contributed by Mr. Buoy includes obsolete items with a recorded cost of P20,000
3. The land contributed by Ms. Ann has an attached mortgage of P180,000. The partnership shall assume the mortgage
4. THe equipment contributed by Ms. Buoy has a fair value of P130,000
5. Ms. Ann has an unrecorded Accounts Payable of P100,000. THe partnership assumes the obligation of settling that account

PARTNERSHIP FORMATION

1.Valuation of Contribution
2. Bonus on initial investment
Variations to bonus method:
a. Cash settlement between partners
b. Additional or withdrawal of investments

A and B formed a partnersip. Te partnership agreement stipulates the following:

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

QUESTION NO.1 - The total partnership capital after the formation is? PHP 300,000
QUESTION NO. 2 - THe adjusted capital account of B after the formation is?
QUESTION NO. 3 - Journal entry for the contribution of B

BONUS METHOD

Dr: Cash 200,000

Dr: Non cash assets 100,000
Cr: A, Capital 240,000
Cr: B, Capital 60,000

ADDITIONAL / WITHDRAWAL

Initial Capital: 300,000

Actual
Required Capital: Required Capital Contribution
A (80%) 240,000 100,000
 B (20%) 60,000 200,000

Cash Settlement Between Partners

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
1. Although C has contributed the most cash to the partnership, he did not have the full amount of P140,000 available and was
amount borrowed shall be assumed by the partnership.
2. The equipment contributed by B has an unpaid mortgage of P20,000, the repayment of which is not assumed by the partner
3. The partners agreed to equalize their interest. Cash settlements among the partners are to be made outside the partnership

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

A B C
Cash 50,000 40,000 140,000
Equipment 150,000
Loan payable -20,000
Actual Contribution 50,000 190,000 120,000
Required Capital 120,000 120,000 120,000
Cash Settlement between partners -70,000 70,000 0

Additional/Withdrawal of Investments
A and B agreed to form a partnership. The partnership agreement stipulates the following:
1. Initial capital of P300,000
2. A 25:75 interest in the equity of the partnership

A contributed P100,000 cash while B contributed P200,000 cas. WHich partner should provide additional investment (or withdr
in order to bring the partnership capital credits equal to their respective interests in the equity of the partnership?

Initial Capital: 300000

Required Actual
Capital Contribution
A (25%) 75,000 100,000
B (75%) 225,000 200,000

A - 20,000
B - 30,000
C - 50,000

Profit and losses

CHAPTER 2 - OPERATIONS
Division of Profits and Losses
1. Stipulation (agreement)
2. Profit = Losses
3. No Stipulation = PROPORTION TO WAT HE MAY HAVE CONTRIBUTED
4. INDUSTRIAL PARTNER - not liable for losses
5. INDUSTRIAL - as to profits - JUST and EQUITABLE

1. Salaries
2. Bonuses - ONLY if the partnership earns PROFIT
3. Interest on Capital Contributions - STIPULATED/AGREEMENT

The partnership agreement of A, B and C stipulates the following:

1. Partners A and C shall receive annual salaries of P12,000 and P8,000, respectively
2. A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner
3. Each partner shall receive 10% interest on average capital investments
4. Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C

The average capital investments of partners during the year are as follows:

A 100,000
B 60,000
C 120,000

The partnership earns profit of P100,000

A(40%) B(30%) C(30%)
Partnership profit
Salaries 12,000 8,000
Profit after salaries 12,000 0 8,000
Bonus 8,000
Profit after salaries and bonus 20,000 0 8,000
Interest on Capital 10,000 6,000 12,000
Profit after salaries, bonus and interest 30,000 6,000 20,000
Profits 17,600 13,200 13,200
Total amount 47,600 19,200 33,200

A. The partnership earns profit of P10,000

B. The partnership incurs loss of P20,000

Hammer and Nail formed a partnership. Hammer contributed equipment with original cost of Php 370,000 and fair value of Php

Hammer - Equipment - Php 300,000

Nail - Cash - Php 180,000

Hammer (60) Nail (40)

Equipment 300,000 300,000
Cash 200,000 200,000
Total Contribution 300,000 200,000 500,000
Nail, Capital 180,000 Hammer, Capital
Divide by: sharing ratio of Nail 40% Divide by: sharing ratio of Hammer
Total Capital 450,000 Total Capital
Multiply by: sharing ratio of Hammer 60% Multiply by: sharing ratio of Nail
Minimum capital required of Hammer 270,000 Minimum capital required of Nail
Actual contribution of Hammer 300,000 Actual Contribution of Nail
Deficiency on contribution Deficiency on contribution
espective assets and equities

Mr. A Ms. B Total

Cash 28,000 62,000 90,000
Accounts Receivable 180,000 560,000 740,000
Inventories 114,000 193,000 307,000
Land 600,000 600,000
Building 500,000 500,000
Furniture & Fixtures 50,000 35,000 85,000
Intangible Assets 0
Accounts payable 180,000 250,000 430,000
Other Liabilities 200,000 350,000 550,000
Capital 592,000 750,000

even though Mr. A contributed P100,000 and Ms. B Contributed

f credit to partner's capital

he partnership

Cash 100,000
Other Assets 84,000
A, Capital 92,000
B, Capital 92,000

nt of credit to the partner's capital shall be treated as cash

f credit to the partner's capital

he partnership
's contributions are listed below:
Ms. Ann Mr. Buoy Total
Cash 50,000 120,000 170,000
Accounts Receivable 300,000 760,000 1,060,000
Inventories 216,000 340,000 556,000
Land 1,080,000 1,080,000
Building 900,000 900,000
Equipment 90,000 130,000 220,000
Accounts Payable 436,000 450,000 886,000
Mortgage Payable 180,000 180,000
Capital 1,120,000 1,800,000

,000 and P760,000, respectively

t of P20,000
ership shall assume the mortgage

mes the obligation of settling that account.

tnership capital and in subsequent partnership profit and losses

QUESTION NO. 3

Dr: Cash 200,000

Cr: A, Capital 160,000
Cr: B, Capital 40,000

Additional
(withdrawal)
140,000
 -140,000

ull amount of P140,000 available and was forced to borrow P40,000. The partners areed that half of the

nt of which is not assumed by the partnership

s are to be made outside the partnership

Totals
230,000
150,000
-20,000
360,000
360,000
0

d provide additional investment (or withdraw part of his investment)

e equity of the partnership?

Additional
(Withdrawal)
-25,000
25,000
 to Partner A, the managing partner

Total
100,000
20,000
80,000
8,000
72,000
28,000
44,000
44,000
0

cost of Php 370,000 and fair value of Php 300,000

60.00% 40.00%
300,000
60%
500,000
40%
200,000
200,000
0
JOURNAL ENTRY

Cash 90,000
Accounts Receivable 740,000
Inventories 307,000
Land 600,000
Building 500,000
Furniture & Fixture 85,000
Accounts Payable 430,000
Other liabilities 550,000
Mr. A, Capital 592,000
Ms. B, Capital 750,000

PROBLEM 3: Item No. 2

Cash 170,000
Accounts Receivable 1,060,000
Inventories 556,000
Land 1,080,000
Building 900,000
Equipment 220,000
Accounts Payable 886,000
Mortgage Payable 180,000
Ms. Ann, Capital 1,120,000
Mr. Buoy, Capital 1,800,000