PROBLEM NO.

1
Papa Molina and Baby Molina formed a partnership. Papa Molina contributed cash of P93,500 and a
computer costing P70,000. Baby Molina contributed equipment costing P130,000. The current market value
of the assets are as follows:

Equipment P145,000
Computer P85,500

The partnership will assume a P33,000 liability on the equipment.

Compute for the following:

1. Capital balance of Baby Molina.
2. Capital balance of Papa Molina.
PROBLEM NO. 2
On February 28, 2023, Ralph, Jason and ER formed a partnership by combining their separate business
proprietorships. Ralph contributed cash of P330,000. ER Contributed property with a carrying value of
P211,000, original cost of P345,000, and appraised value of P288,000. The partnership accepted the
responsibility for the P136,000 mortgage attached to the property. Jason contributed machine with an
assessed value for tax purposes, original cost, and agreed value of P130,000, P146,700, P136,000,
respectively. The partnership agreement specifies the profits and losses are to be shared equally and
partners’ interests should be equal. Bonus method will be used for this problem.
Questions:
3. How much is the total partnership capital on February 28, 2023?
4. How much is the bonus to Jason?
5. How much is the bonus to ER from Jason?
6. Hom much was deducted from Ralph’s capital for the capital balances of the three partners to be
equal?
PROBLEM NO. 3
The partnership of Earl and Xai was formed on November 30, 2023. At that date, the following assets were
contributed:
Xai Earl
Cash P250,000 P90,000
Inventory - 230,000
Building - 333,000
Automobile P104,440 -

The building is subject to a mortgage loan of P93,000 which is not to be assumed by the partnership. Profit
sharing ratio is 36:24 for Xai and Earl, respectively.

Questions:
7. Earl’s capital account at Nov. 30, 2023.
8. Earl’s capital account on Nov. 30, 2023 assuming that the partnership agreement is that partners
should have an equal interest in partnership capital.
9. The total partnership capital on Nov. 30, 2023 using the information in # 8.
10. The bonus given to Xai using the information in #8.
11. The required capital of Xai using the original information and assuming that capital shall be
proportionate to the partners’ profit and loss ratio.
PROBLEM NO. 4
Bry admits Pattie as partner in business. Accounts in the ledger for Bry on March 28, 2023, prior to the
admission of Pattie, show the following balances:
Cash – P678,200; Accounts receivables – P126,775; Merchandise Inventory – P140,900; Accounts payable
– P216,565; Loan payable P291,520.
It is agreed that for purposes of establishing Pattie’s interest, the following adjustments shall be made:
a. An allowance for doubtful accounts at 20% of accounts receivable is to be established.
b. The merchandise inventory is to be valued at P165,780.
c. Prepaid interest expense of P56,430 and accrued salary expenses of P23,400 are to be recognized.
Pattie is to invest sufficient cash to obtain a 3/7 interest in the partnership.
Questions:
12. Bry’s adjusted capital before the admission of Pattie.
13. The amount of cash investment by Pattie.
PROBLEM NO. 4
On June 1, 2023, the business assets of Jo, Anna, and Reyes appear below:
Jo Anna Reyes
Cash P151,200 P203,800 P199,100
Accounts receivable 340,150 90,700 123,400
Allowance for bad debts (20,550) (5,600) (12,500)
Land - - 550,500
Building 332,660 - 300,000
Accum. Dep – Bldng (102,000) - (113,000)
Machine - 250,400 -
Accum. Dep – Machine - (100,400) -
Equipment - 340,500 -
Accum. Dep - Equipment - (67,250) -
Accounts payable 154,000 177,000 169,500
Notes payable - 250,000 40,000
Mortgage payable 111,000 - 34,220

Jo, Anna and Reyes agreed to form a partnership contributing their respective assets and liabilities subject
to the following adjustments:

 The partnership will not assume the mortgage on Jo’s building.

 Allowance for bad debts of each individual will be increased by 10% of their respective accounts
receivable balances.
 Reyes’ building should be written down to its recoverable amount of P131,500.
 Jo’s building has an appraised value of P320,440.
 The value of the machine will be written down by P30,000.
Profit – sharing ratio is 3:3:6 to Anna, Reyes, and Jo, respectively.
Questions:
14. Assuming that the partnership agreement is that the capital is equal to the net assets invested. How
much is the capital balance of Anna?
15. Using the information in # 14, how much is the capital balance of Jo?
16. Using the information in # 14, who has the highest capital balance?
17. Assuming that the partnership agreement is that partners should have an equal interest in
partnership capital, how much was the bonus to Jo?
18. Using the information in # 16, how much was deducted from the capital balance of Reyes?
19. Assuming that the partnership agreement is that capital accounts should be in proportion to the
profit-sharing ratio and that the capital of Jo is already in proportion to her profit share ratio, how
much is the required capital of Anna?
20. Using the information in # 19, how much will Reyes invest/withdraw cash in order that her capital
will be in proportion to her profit ratio? Indicate if INVEST or WITHDRAW.
21. Using the information in # 19, how much is the total capital of the partnership?
22. Using the information in # 19, how much is the total asset of the partnership?