Exercise 2-5

Case A
Rose, Capital
Cash 500,000
Office Equipment 45,000
Rose, Capital 545,000

Furniture and Fixture 100,000

Guada, Capital 100,000

Memo
Marie admitted as industrial partner

Case B
Building 1,500,000
Office Equipment 30,000
Mortgage Payable (300,000)
Adjusted Capital, Romy 1,230,000
Divide 0.6
Total Partnership Capital 2,050,000
Multiply 0.4
Adjusted Capital, Vic 820,000
Office Equipment (220,000)
Furniture and Fixutre (50,000)
Cash Investment 550,000

Building 1,500,000
Office Equipment 30,000
Mortgage Payable 300,000
Romy, Capital 1,230,000

Case C
RGM Partnership
Statement of Financial Position
Tuesday, July 4, 2023
Assets
Current Assets
Cash 205,000
Trade Receivables (Note 1) 85,000
Office Supplies 12,000
Total Current Assets 302,000

Noncurrent Assets
 Property, Plant, and Equipment (Note 2) 460,000
Total Assets 762,000

Partners' Equity
Rosario, Capital 320,000
Guadalupe, Capital 225,000
Maria, Capital 217,000
Total Partners' Equity 762,000

Computational Notes to the Financial Statement

Note 1
Accounts Receivable 95,000
Less: Allowance for Doubtful Accounts 10,000
Trade Receivables (NRV) 85,000

Note 2
Office Equipment 320,000
Furniture and Fixture 140,000
Property, Plant, and Equipment 460,000
Exercise 2-6
Cash 125,650
Accounts Receivable 72,500
Catering Supplies Inventory 13,450
Catering Utensils and Equipment 225,600
Catering Furniture and Fixtures 60,800
Allowance for Doubtful Accounts 5,800
Accounts Payable 24,500
Lourdes, Capital 467,700
Initial Investment

Cash 182,500
Accounts Receivable 61,250
Catering Supplies Inventory 10,450
Catering Utensils and Equipment 182,400
Catering Furniture and Fixtures 54,400
Allowance for Doubtful Accounts 4,900
Accounts Payable 18,400
Bernadette, Capital 467,700
Initial Investment
Exercise 2-7
Step 1: Revaluation
a)
Dominic, Capital 6,000
Allowance for Bad Debts 6,000
Allowance increased by 5%

b)
Dominic, Capital 7,500
Laundry Supplies 7,500
Downward asset revaluation

c)
Dominic, Capital 31,250
Accumulated Depreciation - F&E 31,250
Downward asset revaluation

d)
Dominic, Capital 4,500
Utilities Payable 4,500

Augustine, Capital SOLUTION

Dominic, Capital before revaluation 905,250
Revaluations:
Increase in Allowance for Bad Debts (6,000)
Laundry Supplies Downward Revaluation (7,500)
Furniture & Equipment Downward Reval (31,250)
Utilities Payable (4,500)
Dominic, Capital ADJUSTED 856,000
Divide by Equivalent percentage 0.6
Total Partnership Capitalization 1,426,667
Multiply by Equivalent percentage 0.4
Augustine, Capital 570,667
Exercise 2-8
Step 1: Revaluation
a)
Francis, Capital 2,800
Allowance for Bad Debts 2,800
Allowance increased to 1.5%

b)
Landscaping Supplies 10,000
Francis, Capital 10,000
Upward asset revaluation

c)
Francis, Capital 100,000
Accumulated Depreciation - F&E 100,000
Downward Asset Revaluation

Step 3: Record the investment

Cash 130,000
Accounts Receivable 720,000
Landscaping Supplies 560,000
Furniture & equipment 800,000
Allowance for Bad Debts 10,800
Accounts Payable 565,000
Francis, Capital 1,634,200
Initial Investment

Cash 1,634,200
Pio, Capital 1,634,200
Initial Investment

Alternate Solution
Francis, Capital before Revaluation 1,727,000
Revaluations:
Increase in Allowance for Bad Debts (2,800)
Landscaping Supplies Upward Revaluatio 10,000
Furniture & equipment downward revalu (100,000)
Francis, Capital ADJUSTED 1,634,200
Divide by equivalent percentage 0.50
Total partnership capitalization 3,268,400
Multiply by equivalent percentage 0.50
Pio, Capital 1,634,200
 Francis and Pio, Limited
Statement of Financial Position
1-Oct-23
ASSETS
Current Assets
Cash 1,764,200
Trade and Other Receivables (Note 1) 709,200
Landscaping Supplies 560,000
Total Current Assets 3,033,400
Noncurrent Assets
Furniture & Equipment 800,000
Total Assets 3,833,400

LIABILITIES & PARTNERS' EQUITY

Current Liabilities
Accounts Payable 565,000

Parners' Equity
Francis, Capital 1,634,200
Pio, Capital 1,634,200 3,268,400
Total Liabilities & Equity 3,833,400

Computational Notes to the Financial Statement

Note 1
Accounts Receivable 720,000
Less: Allowance for Doubtful Accounts 10,800
Trade Receivables (NRV) 709,200
Exercise 2-9
Cash 25,000
Accounts Receivable 75,000
Allowance for Doubtful Accounts (7,500)
Catering Supplies inventory 15,000
Catering Utensils 110,000
Accounts Payable (8,000)
Anne, Capital 209,500
Divide: 0.67
Total Partnership Capital 314,250 314,250
Multiply: 0.33
Mary, Capital 104,750

AM Catering Services
Statement of Financial Position
1-Apr-23
ASSETS
Current Assets
Cash 129,750
Trade and Other Receivables 67,500
Catering Supplies Inventory 15,000
Total Current Assets 212,250

Noncurrent Assets
Catering Utensils and Equipment 110,000
Total Assets 322,250

LIABILITIES & OWNERS' EQUITY

Liabilities
Accounts Payable 8,000

Partners' Equity
Anne, Capital 209,500
Mary, Capital 104,750 314,250
Total Liabilities and Partners' Equity 322,250

Computational Notes to the Financial Statement

Note 1
Accounts Receivable 75,000
Less: Allowance for Bad Debts 7,500
Trade and Other Receivables (NRV) 67,500
Exercise 2-10
Michael Rafael
Cash 50,000 30,000
Accounts Receivable 20,000 18,000
Less: Allowance for Bad Debts (2,000) (1,800) Note 1
Office Supplies 4,000 5,000 Note 2
Office Equipment, net 70,500 52,500 Note 3
Furniture & Fixture 35,000 25,000
Accounts Payable (15,000) (10,000)
Capital Balance 162,500 118,700

Note 1
Accounts Receivable 20,000 18,000
Uncollectible (10%) 2,000 1,800

Note 2
Office Supplies prior to Partnership 4,400 5,500
Overstated by 10% 110% 110%
Office Supplies 4,000 5,000

Note 3
Office Equipment, net 80,000 60,000
Accumulated Depreciation (7,500) (9,000)
Net 72,500 51,000
Over(under) depreciation (2,000) 1,500
Balance 70,500 52,500