Partnership and Corporation Accounting 2022

Exercise 1-1
1. True 6. True 11. True
2. False 7. False 12. True
3. True 8. True 13. False
4. True 9. True 14. True
5. True 10. False 15. True

Exercise 1-2
1. B 6. C 11. D
2. D 7. D 12. B
3. A 8. D 13. C
4. A 9. D 14. B
5. A 10. B (Corr: “any” to anytime) 15. C

Problem 1-1
A.

1. Cash 550,000
Transportation Equipment 210,000
Land 700,000
Marsha, Capital 460,000
Mila, Capital 1,000,000

2. Cash 550,000
Transportation Equipment 210,000
Land 700,000
Mortgage Payable 250,000
Marsha, Capital 460,000
Mila, Capital 750,000

B.

1. Cash 250,000
Rick, Capital 250,000
Cash 250,000
Nick, Capital 250,000

2. Cash 120,000
Rick, Capital 120,000
Cash 240,000
Nick, Capital 240,000

3. Cash 400,000
Land 600,000
Rick, Capital 1,000,000
Cash 1,500,000
Nick, Capital 1,500,000
Supporting Computation:

Total Partnership Capital (1,500,000/60%) 2,500,000

Less: Nick contribution 1,500,000
Rick contribution 1,000,000
Less: Fair value of land 600,000
Cash contribution of Rick 400,000

4. Cash 500,000
Rick, Capital 500,000

Memorandum Entry (to be recorded in the General Journal and General Ledger)

Nick is an industrial partner of this partnership and shall earn a 25% share in the
partnership profit.

5. Cash 50,000
Rick, Capital 50,000
Cash 150,000
Nick, Capital 150,000

Memorandum Entry (to be recorded in the General Journal and General Ledger)

Nick is an industrial partner of this partnership and shall earn additional share in the
partnership profit.

Problem 1-2

1. P747,000
2. Merchandise inventory 40,000
Accumulated depreciation 5,000
Allowance for uncollectible accounts 4,000
Diana, Capital 41,000
3. Allowance for uncollectible accounts 10,000
Accumulated depreciation 10,000
Diana, Capital 788,000
Cash 9,000
Accounts receivable 189,000
Merchandise inventory 460,000
Store equipment 150,000
4. Cash 9,000
Accounts receivable 189,000
Merchandise inventory 460,000
Store equipment 140,000
Allowance for uncollectible accounts 10,000
Diana, Capital 788,000
Cash 1,576,000
Denny, Capital 1,576,000

(788,000 x 2)
5.
 DD Partnership
Statement of Financial Position
April 1, 2022

Assets Capital
Cash P1,585,000 Diana, Capital P 788,000
Accounts receivable P189,000 Denny, Capital 1,576,000
Less: Allowance for UA 10,000 179,000
Merchandise inventory 460,000
Store equipment 140,000
Total Assets P2,364,000 Total Capital P2,364,000

Problem 1-3

a. Nash, Capital 34,000

Allowance for uncollectible accounts 10,000
Merchandise inventory 10,000
Accumulated depreciation 14,000

b. Allowance for uncollectible accounts 10,000

Accumulated depreciation 30,000
Accounts payable 64,000
Nash, Capital 136,000
Cash 20,000
Accounts receivable 50,000
Merchandise inventory 90,000
Store equipment 80,000

c. Cash (20,000 + 364,000) 384,000

Accounts receivable 50,000
Merchandise inventory 90,000
Store equipment 80,000
Allowance for uncollectible accounts 10,000
Accounts payable 64,000
Nash, Capital 500,000

Additional Cash for Nash:

Agreed Nash Capital 500,000

Less: Adjusted capital 136,000
Additional cash contribution 364,000
Cash 150,000
Merchandise inventory 100,000
Store equipment (at FMV) 250,000
Neville, Capital 500,000
Problem 1-4

Case A:

1. Cash 25,000
Accounts receivable 120,000
Equipment 250,000
Accounts payable 125,000
Ryan, Capital (450,000 x 60%) 270,000

Cash 25,000
Accounts receivable 150,000
Equipment 130,000
Accounts payable 25,000
Notes payable 100,000
Harvey, Capital (450,000 x 40%) 180,000

2.
RH Trading
Statement of Financial Position
September 9,2022

Assets Liabilities & Capital

Cash P 50,000 Accounts payable P 150,000
Accounts receivable 270,000 Notes payable 100,000
Equipment 380,000 Ryan, Capital 270,000
Harvey, Capital 180,000
Total Assets P 700,000 Total Liabilties & Capital P 700,000

Case B:

Requirement 1

Books of Raffy:

Adjustment:
Raffy, Capital 21,500
Allowance for uncollectible accounts 6,500
Accumulated depreciation 15,000

Closing:
Allowance for uncollectible accounts 6,500
Accumulated depreciation 15,000
Accounts payable 360,000
Raffy, Capital 463,500
Cash 85,000
Accounts receivable 140,000
Merchandise inventory 230,000
Furniture & fixtures 340,000
Prepaid expenses 50,000
Books of Gabby:

Adjustment:
Gabby, Capital 4,500
Allowance for uncollectible accounts 4,500

Closing:
Allowance for uncollectible accounts 4,500
Accounts payable 145,000
Gabby, Capital 270,500
Cash 25,000
Accounts receivable 105,000
Merchandise inventory 165,000
Furniture & fixtures 110,000
Prepaid expenses 15,000

Books of Partnership:

Cash 110,000
Accounts receivable 245,000
Merchandise inventory 395,000
Furniture & fixtures 435,000
Prepaid expenses 65,000
Allowance for uncollectible accounts 11,000
Accounts payable 505,000
Raffy, Capital 463,500
Gabby, Capital 270,500

Requirement 2

RG Partnership
Statement of Financial Position
Date

Assets Liabilities & Capital

Cash P 110,000 Accounts payable P 505,000
Accounts receivable P245,000 Raffy, Capital 463,500
Less: Allowance for UA 11,000 234,000 Gabby, Capital 270,500
Merchandise inventory 395,000
Furniture & fixtures 435,000
Prepaid expenses 65,000
Total Assets P1,239,000 Total Liab. & Capital P1,239,000
Open-Ended Questions:

1. P500,000
2. P250,000
3. P1,000,000
4. P400,000
5. 500,000
6. 550,000
7. 408,000
8. A-P75,000; B-P60,000
9. A-P65,000; B-P81,000
10. P200,000

Problem 1-6

1. C
2. D (Please change the amount in letter d to P1,660,000)
3. C
4. B
5. D (Please change the amount in letter d to P300,000)
6. C
7. A
8. D
9. C
10. B