PARTNERSHIP ACCOUNTING EXAMPLES:

Adam, Boon and Chelsey decided to form the partnership firm. They contributed as follows:

Adam – computers P500,000 and cash P300,000

Boon – cash P700,000 and stock P100,000

Chelsay – plant P280,000 and cash P520,000

Required:
a. Calculate the initial capital of each partner.
b. Prepare a journal entries for the above transaction in the books of partnership firm,
Solution
Initial Capital Calculation

Adam – Cash 300,000 +

computers 500,000 =
$800,000

Boon – Cash 700,000 + stock

100,000 = $800,000

Chelsey – Cash 520,000 +

plant 280,000 = $800,000

Description Debit Credit

Cash 300,000   
Computers 500,000   
      Adam’s capital   800,000 
     
Cash  700,000  
Stock 100,000   
     Boon’s capital   800,000 
     
Cash  520,000  
Plant   280,000   
      Chelsey’s capital    800,00
On Jan 1, 2017 Raju, Sanjay and Tendulkar formed a shoe manufacturing partnership.
Each of the partners have strong reputation in the shoe industry and as a result, their venture could bring about significant be
They agreed to share profit & loss in the ratio of 1:2:3 respectively. The said ratio is based on the basis of capital contribution

Raju, who is the oldest among all partners contributed with a cash money of P60,000 and machinery costing P120,000.

Sanjay who has vast experience in supply chain management contributed with furniture of P100,000 and with cash

On the other hand, Tendulkar just contributed with cash balance

Required

a. record entries in the general journal of the partnership.

ould bring about significant benefits for every partner.
e basis of capital contribution of each partner.

inery costing P120,000.

,000 and with cash

Raju’s capital (60,000 +
120,000)          =               
 180,000
As Raju’s shae of capital is 
1/6th, so we can calculate
total capital of the firm as
follows:

Total capital of the partnership

firm (6×180,000)     1, 080,000

Now, we can easily calculate

Sanjay and Tendulkar’s capital
a s follows:
Sanjay’s capital (10,80,000 x
2/6)                            360,000 
      

Tendulkar’s capital (10,80,000

x 3/6)                        540,000
Aiman and Fazila fomed a retial outlet for grocery named “Savers” with a capital investment of 1,000,000 of which Aiman has
Aiman contributed with furniture which costs P400,000 at an agreed value of 325,000. On the other hand, Fazila contributed

Required

i. prepare journal entries to record the capital investment of Aiman and Fazila.

ii. prepare the balance sheet of the newly formed partnership.

1,000,000 of which Aiman has 40 % share while Fazila has 60 % shares.
ther hand, Fazila contributed in the partnership with equipment costing 350,000 but at an agreed value of 450,000. Apart from this, each
50,000. Apart from this, each partner invested necessary cash to meet the capital requirement.
  Particular Debit Credit
  

Cash 75,000
Furniture 325,000
Aiman capital 400,000
  (To record the investment of Aiman)

Cash 150,000
Equipment 450,000
Fazila capital 600,000
(To record the investment of Fazila)

SAVERS PARTNERSHIP
BALANCE SHEET

ASSETS
CASH 225,000
FURNITURE 325,000
EQUIPMENT 450,000
TOTAL ASSETS 1, 000,000

EQUITIES
Aiman's Capital P400, 000
Fazila's Capital 600,000
TOTAL EQUITIES 1,000,000