Instruction: Solve the following Problems and double line your final Answer.

1.OO and PP form a new partnership. OO invests P360,000 in cash for his 60% interest in the capital and profits of
the business. PP contributes land that has an original cost of P48,000 and a fair market value of P84,000, and a
building that has a tax basis of P60,000 and a fair value of P108,000. The building is subject to a P48,000 mortgage
that the partnership will assume. What amount of cash should PP contribute?

2Rodrigo and Sandoval each operating a separate business agreed to join in partnership as of January 2, 2005. The
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following are the given accounts:

Rodrigo Sandoval
Cash P11,200 P42,000
Accounts Receivable 112,000 84,000
Merchandise 140,000 126,000
Office Equipment 35,000 42,000
Accounts Payable 35,000 56,000
Notes payable 7,000 --
The assets of the two partners were carefully examined and it was agreed that certain adjustments be made
and the above accounts as adjusted be the basis on which the partnership begins operations. The adjustments
agreed upon are as follows: Rodrigo’s accounts receivable are to be taken over at a book value less 15% and
Sandoval’s accounts receivable at book value less 10%. Rodrigo’s office equipment is new and is considered
adequate for the new business; therefore, it is decided that Sandoval dispose of his equipment at the highest
cash price possible and that Rodrigo bear one-fourth of the loss resulting from the sale. Sandoval’s office
equipment is disposed of at book value less 10%. It is further agreed that Sandoval pay sufficient cash to give
him one-half interest in the business after charging to Rodrigo’s capital account his share of the loss on the sale
by Sandoval of office equipment.
How much additional cash is to be contributed by Sandoval?
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3.Gigi is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus of 10% of net income
after salaries and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are
estimated to be P100,000. What amount of income would be necessary so that Gigi would consider the choices to be
equal?

4.CC, PP and AA, accountants, agree to form a partnership and to share profits in the ratio of 5:3:2. They also agreed that
AA is to be allowed a salary of P 14,000 and that PP is to be guaranteed P 10,500 as his share of the profits. During
the first year of operation, income from fees are P 90,000, while expenses total P 48,000. What amount of net income
should be credited to CC's capital account?

5.Pol, Eric and Rey are partners with average capital balances during 2003 of P120,000, P60,000, and P40,000,
respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of P30,000 to Pol and
P20,000 to Rey, the residual profit or loss is divided equally. In 2003 the partnership sustained a P33,000 loss before interest
and salaries to partners.
By what amount should Pol’s capital account change indicate whether increase or decrease?

6.Hans, Lance, Arthur and Sidd own a publishing company that they operate as a partnership. Their agreement includes the
following:
 Hans will receive a salary of P20,000 and a bonus of 3% of income after all the bonuses
 Lance will receive a salary of P10,000 and a bonus of 2% of income after all the bonuses
 All the partners are to receive the following: Hans – P5,000; Lance – P4,500; Arthur – P2,000; and Sidd –
P4,700, representing 10% interest on their average capital balances.
 Any remaining profits are to be divided equally among the partners
 Partnership reports a profit of P40,000
How much is Lance’s share in the profit if profit is distributed in the following order of priority: Interest on invested
capital, then bonuses, then salary, and then according to profit and loss percentage?

7. The following Statement of Financial Position for the partnership of A, B and C were taken from the books October 1,
2012.
Cash P100,000 Liabilities 200,000
Other assets 400,000 A. capital 120,000
B, capital 95,000
. C, capital 85,000
500,000 500,000
The partners agreed to distribute profits as follows:
• Annual salaries to A and B of P5,000 each
• Annual interest of 5% on beginning capital
• Bonus of 15% to A based on income after' salaries, interest and bonus
• Remaining profits: 26% to A; 35% to B and 40% to C
The partnership began operations on October 1, 2012 and net income for the period ended December 31, 2012 is
P69,500. Which of the following is true?
A The bonus to A is P5,804
B. B's total share in net income is P21,888
C. Net income after salaries, interest and bonus is P38,896
D. C's share in the profit after salaries, Interest, and bonus is P13,543

8.Kevin, Paul and Rey have capital balances of P60,000, P100,000 and P36,000 respectively and they share profits in the
respective ratio of 4:2:1. Paul received P52,000 as a result of the liquidation of the partnership.
Loss on assets realization is

Questions 9 thru 11 are based on the following information:

Lenie, Mec, and Nancy form a partnership on Jan. 1, 2015, each partner investing P25.000. On August 1, 2015, Lenie was
advanced P10.000 by the firm. On Sept. 1, 2015, Mec made a loan to the firm of P20.000. Interest is to be charged on
advances to partners and credited on loans by partners at the rate of 6%. Business is unsatisfactory and the partners decide
to liquidate. Nancy is allowed special compensation of P2.500 for managing the sale of assets and settlement with creditors.
On December 31, 2015 all assets were sold, outside creditors were paid, and cash of P.35,000 is distributed to the partners.
All partners are personally solvent.

9. The total loss distributed to the partners is

10. The capital balance of Lenie after loss distribution and before cash settlement

11. The cash settlement to Mec and Nancy is

12 On December 31, 2003, the accounting records of Ambo, Berto and Carlo Partnership included the following information:
Ambo, drawing (debit balance) P(24,000)
Carlo, drawing (debit balance) ( 9,000)
Berto, Loan 30,000
Ambo, capital 123,000
Berto, capital 100,500
Carlo, capital 108,000
Total assets amounted to P478,500, including P52,500 cash and liabilities totaled P150,000. The partnership was
liquidated on December 31, 2002 and Carlo received P83,250 cash pursuant to the liquidation. Ambo, Berto and Carlo
share net income and losses in a 5:3:2, respectively.
How much will Ambo receive upon the partnership’s liquidation?

13. The following balance sheet summary, together with residual profit sharing ratios, was developed on April 1, 2003, when
the Dick, Frank, and Helen partnership
Cash P140,000 Liabilities P 60,000
Accounts receivable 60,000 Loan from Frank 20,000
Inventories 85,000 Dick capital (20%) 75,000
Plant assets - net 200,000 Frank capital (40%) 200,000
Loan to Dick 25,000 Helen capital (40%) 155,000
Total P 510,000 Total P 510,000
If available cash except for a P5,000 contingency fund is distributed immediately, Dick, Frank and Helen, respectively, should
receive:

14. Partners RR, SS and TT share profits and losses in the ratio of 5:3:2. At the end of a very unprofitable year, they decided
to liquidate the firm. The partner’s capital account balances at this time are as follows:
RR P88,000
SS 99,600
TT 60,000
The liabilities accumulate to P120,000, including a loan of P40,000 from RR. The cash balance is P24,000. All the partners
are personally solvent. The partners plan to sell the assets in installment. If SS received P14,400 from the first distribution of
cash, how much did TT receive at that time?

15. JFK partnership engaged in steel manufacturing business had the following condensed financial position prior to
liquidation,
Assets Liabilities arid Capita;
Cash 120,000 Liabilities P350,000
Noncash assets 1,800,000 Loan payable to J 150,000
 J, Capital (50%) 450,000
F, Capital (30%) 700,000
. K, Capital /20%i 270,000
Total P1,920,000 Total P1,920,000
Assuming assets with a book value of P700,000 were sold for P500,000 and that all available cash was distributed.
For what amount would the remaining assets have to be sold in order for Partner P to receive a total of P790,000 cash
after liquidation.