1. Abad and Besa each invests P100,000 cash in a new partnership.

2. Assume that Pedro and Jose form a partnership for the first time. Their investments are as
follows:

Pedro (Fair Value) Jose (Fair Value)

Cash 70,000

Merchandise inventory (cost, P10,000) 20,000

Computer equipment (cost, P50,000) 30,000

3. Jose has been operating a retail store for a number of years. An excerpt of the statement
of financial position on December 31, 2023 is prepared by Jose Company as follows:
Cash 60,000
Accounts receivable 50,000
Inventory 70,000
Equipment 40,000
Accumulated depreciation (4000)
Accounts payable 86,000
Jose, Capital 130,000
Jose needs additional capital to meet the increasing sales and offers Pedro an interest in
the business. Jose and Pedro agree to form a partnership to be known as JP Partnership,
Jose’s business is audited and its net assets are appraised. The audit and appraisal shows
the following:
a. Allowance for bad debts of P5,000 is to be provided
b. Inventory is to be recorded at its market value of P80,000
c. The equipment has a fair value of P35,000
d. P2,000 of accounts payable has not been recorded
Jose and Pedro prepare and sign articles of co-partnership that include all significant
operating policies. On January 1, 2024 Pedro contributed P100,000 cash for a one-third
capital interest. The JP Partnership is to acquire all of Jose’s business and assume its
liabilities.
Assumption 1 - The partnership will use the books of the sole proprietor
Assumption 2 – The partnership will open a new set of books