Professional Documents
Culture Documents
1. Roberts and Smith drafted a partnership agreement that lists the following assets
contributed at the partnership’s formation:
Contributed by
Roberts Smith
Inventory 15,000
Building 40,000
The building is subject to a mortgage of P 10,000, which the partnership has assumed.
The partnership agreement also specifies that profits and losses are to be distributed
evenly.
What amounts should be recorded as capital for Roberts and Smith at the formation of the
partnership?
2. The Grey and Redd Partnership was formed on January 2, 2010. Under the partnership
agreement, each partner has an equal initial capital balance. Partnership net income or loss is
allocated 60% to Grey and 40% to Redd. To form the partnership, Grey originally contributed
assets costing P30,000 with a fair value of P60,000 on January 2, 2010, and Redd contributed
P20,000 cash. Drawings by the partners during 2010 totaled P3, 000 by Grey an P9,000 by
Redd. The partnership net income in 2010 was P25,000.
Under the bonus method, compute for the amount of bonus given and identify to whom it was
given.
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
3. On May 1, 2010, the business assets of John and Paul appear below:
John Paul
Land 603,000
Building 428,267
John and Paul agreed to form a partnership contributing their respective assets and
equities subject to the following adjustments:
2. Accounts receivable of P20, 000 in John’s books and P35, 000 in Paul’s are uncollectible.
3. Inventories of P5, 500 n P6, 700 are worthless in John’s and Pail’s respective books.
4. Other assets of P2, 000 and P3, 600 in John’s and Paul’s respective books are to be
written off.
The capital accounts of John and Paul, respectively, after the adjustments will be:
Answers:
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
Paul, Capital =683,052
4. Roy, Sam and Tim decided to engage in a real estate venture as a partnership. Roy
invested P140,000 cash and Sam provided an office and furnishings valued at
P220,000. (There is a 60,000 note payable remaining on the furnishings to be assumed
by the partnership). Although Tim has no tangible assets to invest, both Roy and Sam
believe that Tim's expert salesmanship provides an adequate investment. The partners
agree to receive an equal capital interest in the partnership. Using the bonus method,
what is the capital balance of Tim?
Answer: 100,000
5. Ana and Elsa form a new partnership. Ana invests P300,000 in cash for her 60%
interest in the capital and profits of the business. Elsa contributes land that has an
original cost of P40,000 and a fair market value of P70,000, and a building that has a
tax basis of P50,000 and a fair market value of P90,000. The building is subject to a
P40,000 mortgage that the partnership will assume. What amount of cash should Elsa
contribute to get 40% interest in the partnership?
Answer: 80,000
6. On July 1, Manny and Floyd formed a partnership, agreeing to share profits and losses in
the ratio of 4:6, respectively. Manny contributed a parcel of land that cost him P25,000. Floyd
contributed P50,000 cash. The land was sold for P50,000 on July 1, four hours after formation
of the partnership. How much should be recorded in Manny’s capital account on the
partnership formation?
Answer: 50,000
7. On May 1, 2015, Cat and Meow formed a partnership and agreed to share profits and losses
in the ratio of 3:7, respectively. Cat contributed a parcel of land that cost her P10,000. Meow
contributed P40,000 cash. The land has a fair value of P15,000. Cat insisted that the value of
land should be P18,000. The partners agreed to value the land at P18,000. What amount
should be recorded in Cat’s capital account on formation of the new partnership?
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
Answer: 18,000
8. Jones and Smith formed a partnership with each partner contributing the following items:
Jones Smith
Assume that for tax purposes Jones and Smith agree to share equally in the liabilities
assumed by the Jones and Smith partnership.
What is the balance in each partner’s capital account for financial accounting purposes?
Jones = 360,000
Smith = 260,000
9. On March 1, 2015, PP and QQ decide to combine their businesses and form a partnership.
Their balance sheets on March1, before adjustments, showed the following:
PP QQ
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
Cash P 9,000 P 3,750
For PP ...............................P29,500
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
For QQ ...............................P21,000
Answer: 65,550
A B
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
Total Assets ₱ 100,000 120,000
Answer: = T
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
12. On April 30, year 1, Algee, Belger, and Ceda formed a partnership by combining their
separate business proprietorships. Algee contributed cash of $50,000. Belger contributed
property with a $36,000 carrying amount, a $40,000 original cost, and $80,000 fair value. The
partnership accepted responsibility for the $35,000 mortgage attached to the property. Ceda
contributed equipment with a $30,000 carrying amount, a $75,000 original cost, and $55,000
fair value. The partnership agreement specifies that profits and losses are to be shared equally
but is silent regarding capital contributions. Which partner has the least April 30, year 1 capital
account balance?
Answer: Belger
13. Alma and Becca have just formed a partnership. Alma contributed cash of P176,400 and
office equipment that cost P75,600. The equipment had been used in his sole proprietorship
and had been 70% depreciated, the current value of the equipment is P50,400. Alma also
contributed a note payable of P16,800 to be assumed by the partnership. Alma is to have a 30%
interest in the partnership. Becca contributed P256,000 land at fair market value. Becca should
make additional investment of = 234,000
14. Cat and Dog formed a partnership, each contributing assets to the business. Cat contributed
inventory with a current market value in excess of its carrying amount. Dog contributed real
estate with a carrying amount in excess of its current market value.
At what amount should the partnership record each of the following assets:
This study source was downloaded by 100000852596785 from CourseHero.com on 09-19-2022 03:46:21 GMT -05:00
https://www.coursehero.com/file/82417254/PARTNERSHIPFORMATIONANSWERKEYdocx/
Powered by TCPDF (www.tcpdf.org)