1. Compute the adjusted capital of X and Y using the bonus method.

(2 items)

X Y Partnership
Cash P200,000 P200,000
Accounts Receivable 60,000 60,000
Inventory 90,000 90,000
Land P1,200,000 1,200,000
Building (3,800,000 – 2,600,000 2,600,000
1,200,000)
Notes Payable (50,000) (50,000)
Total adjusted capital accounts 300,000 3,800,000 4,100,000

Actual Application of Agreed Capital

Contribution Bonus Method
X P300,000 (4,100,000 x 40%) P1,640,000
Y 3,800,000 (4,100,000 x 60%) 2,460,000
Total 4,100,000 4,100,000

2. Prepare the journal entries to record the contributions. (1 item)

Cash P200,000
Accounts Receivable 60,000
Inventory 90,000
Land 1,200,000
Building 2,600,000

Notes Payable P50,000

X, Capital 1,640,000
Y, Capital 2,460,000

3. Compute the amount of bonus. (1 item)

Agreed Capital P1,640,000

Less: Actual Contribution 300,000
Bonus P1,340,000