sol man baysa chapter 1

CHAPTER 1 Partnership Formation and Operations EXERCISES Exercise 1 –1 1.a

Campos, Capital Allowance for Uncollectible Accounts

14,000

Goodwill Campos, Capital

30,000

14,000 30,000

Accumulated Depreciation Campos, Capital Furniture and Fixtures

1.b

6,000 6,500 12,500

Campos, Capital Cash

40,000

Cash (P83,500 x 1/2) Tomas, Capital To record contributions of Tomas

41,750

40,000 41,750

Req. 2. Campos and Tomas Partnership Statement of financial Position July 1, 2008 Assets Cash Accounts Rec’l Less Allowance for Uncol Accts. Inventory Furniture Goodwill TOTAL ASSETS

Liabilities & Owners’ Equity P60,000 24,000

P41,750 36,000 100,000 7,500 30,000 P215.250

Accounts Payable Campos, Capital Tomas, Capital

P90,000 83,500 41,750

________

TOTAL LIABILITIES & OWNERS’ EQUITY

P215,250

Exercise 1-2 1.

2.

Cash Accounts Receivable Merchandise Inventory Equipment Allowance for Uncollectible Accounts Accounts Payable Notes Payable Bernal, Capital Cash

90,000 36,000 54,000 25,000 2,000 21,000 18,000 164,000 100,000

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Camino, Capital

100,000

Exercise 1 –3 1.

2.

Cash Land Building Legaspi, Capital Sabino, Capital

800,000 540,000 900,000

Cash Land Building Legaspi, Capital Sabino, Capital

800,000 540,000 900,000

800,000 1,440,000

1,120,000 1,120,000

Exercise 1 - 4 1.

2.

Income Summary Santos, Capital (P238,000 x 260/425) Abad, Capital (P238,000 x 165/425)

238,000

Income Summary Santos, Capital (P238,000 x 3,125/5,000) Abad, Capital (P238,000 x 1,875/5,000)

238,000

Santos: Jan. 1 – Mar. 31 Apr. 1 – Apr. 30 May 1 – July 31 Aug. 1 – Dec. 31 Abad: Jan. 1 – May 31 June 1 – Aug. 31 Sept.1 – Dec. 31 3.

P165,000 x 5 215,000 x 3 195,000 x 4

148,750 89,250 P780,000 290,000 1,080,000 1,600,000 P3,750,000/12 P825,000 645,000 780,000 P2,250,000/12

Income Summary Santos, Capital Abad, Capital Interest on ave. capital Salaries to partners Balance - equally Net Profit

4.

P260,000 x 3 290,000 x 1 360,000 x 3 320,000 x 5

145,600 92,400

Income Summary Santos, Capital Abad, Capital

P312,500

P187,500 238,000 147,750 90,250

Santos P 18,750 150,000 ( 21,000) P 147,750

Abad 11,250 100,000 ( 21,000) P 90,250 P

Total P 30,000 250,000 (42,000) P238 000 238,000 164,840 73,160

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Santos Bonus to Santos 25% (P238,000 - B) Interest of 6% on excess average investment 6% (P312,500 - P187,500) Balance - 3:2 Net Profit

5.

Abad

Total

P 47,600 7,500 109,740 P 164,840

P 47,600

73,160 P73,160

Income Summary Santos, Capital (P238,000 x 15/25) Abad, Capital (P238,000 x 10/25)

7,500 182,900 P238,000

238,000 142,800 95,200

Exercise 1 – 5 Sanchez and Gomez Schedule of Distribution of Net Profit December 31, 2008 Sanchez Gomez 6% interest on average capital P 6,246 P 14.440 10% bonus on net profit after interest 8,331 Salaries 20,000 30,000 Balance – 70%, 30% 17,488 7,495 Net Profit P52,065 P51,935 Computation of average capital: Sanchez, Capital Jan. 1 P81,600 x 3 P 244,800 Apr. 1 P111,600 x 9 1,004,400 P1,249,200 Ave. capital (P1,249,200/12)

P104,100

Jan. 1 Aug. 1

Total P 20,686 8,331 50,000 24,983 P104,000

Gomez, Capital P224,000 x 7 P1,568,000 P264,000 x 5 1,320,000 P2,888,000

Ave. capital (P2,888,000/12)

P240,667

Computation of bonus: P160,000 x 65%= P104,000– P20,686 x 10% = P8,331 2. Sanchez and Gomez Statement of Partners’ Capital For the Year Ended December 31, 2008 Capital, January 1 Additional investment Net profit Drawings Capital, December 31 3. 6% interest on average capital 10% bonus on net profit after interest Balance – Salary ratio Net Profit

Sanchez P 81,600 30,000 52,065 ( 41,600) P122,065

Gomez P224,000 40,000 51,935 ( 41,600) P274,335

Total P305,600 70,000 104,000 ( 83,200) P396,400

Sanchez P 6,246 8,331 34,083 P48,660

Gomez P14.440

Total P 20,686 8,331 74,983 P104,000

40,000 P 55,340

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Exercise 1-6 1. 8% interest on beg capital Salaries Balance 3:2 Net Profit

Mercado P 48,000 225,000 ( 38,700) P234,300

Puzon P 54.000 112,500 ( 25,800) P140,700

Total P102,000 337,500 ( 64,500) P375,000

8% interest on beg capital Balance – Salary ratio Net Profit

Mercado P 48,000 182,000 P230,000

Puzon P 54.000 91,000 P145,000

Total P102,000 273,000 P375,000

2.

3.

Puzon P375,000 x 2/3 = P150,000; however, minimum guaranteed amount is P160,000 Mercado P375,000 – P160,000 = P215,000 Exercise 1 – 7 Net profit after salary, interest and bonus Interest P200,000 x 10% Salary P8,000 x 12 Net profit before interest and salary Bonus rate Amount of bonus to Lirio

P374,000 P20,000 96,000

116,000 P490,000 x 25% P122,500

Exercise 1 – 8 1.

B = .25 x P500,000 = P125,000

2.

B = .25 x P500,000 = P100,000 1.25

3.

B T B B

= .25 (P500,000 - Tax) = .35 x P500,000 = P175,000 = .25 (P500,000 – P175,000) = P 81,250

4.

B B B B B

= .25 (P500,000 - B - Tax) = .25 (P50,0000 - B - P175,000) = P81,250 - .25B = P81,250/1.25 = P65,000

Exercise 1 - 9 1. Salary Bonus Interest

Estrella P40,000 6,000 10,000

Felipe P20,000 4,000 9,000

Garcia P 4,000

Jimenez P 9,400

Total P 60,000 10,000* 32,400

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Balance Total

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26,900 26,900 P82,900 P59,900 *B = 5% (P210,000 – B) = P10,000

26,900 P30,900

26,900 P36,300

107,600 P210,000

Garcia

Jimenez

P 4,000 ( 43,100) (P39,100)

P 9,400 ( 43,100) (P33,700)

Total P 60,000 32,400 (172,400) (P 80,000)

2. Estrella P40,000 10,000 ( 43,100) P 6,900

Salary Interest Balance Total

Felipe P20,000 9,000 ( 43,100) (P 14,100)

3. Interest Bonus Salary Total

Estrella P10,000 6,000 25,067 P41,067 *P37,600 x 4/ 6 = P25,067;

Felipe Garcia P 9,000 P 4,000 4,000 12,533 _______ P25,533 P 4,000 P37,600 x 2/ 6 = P12,533

Jimenez P 9,400 ________ P 9,400

Total P 32,400 10,000 37,600* P 80,000

Exercise 1-10 1.

2.

Fees Earned Joseph, Capital Luis, Capital Operating Expenses Income Summary

750,000 50,000

Income Summary Joseph Capital Luis, Capital Nicolas, Capital

500,000

200,000 100,000 500,000 150,000 250,000 100,000

Exercise 1 – 11 1. Capital balances before payment of cash Required capital balances based on on profit and loss ratio Cash received (paid)

Benito

Cabral

Duenas

Total

P120,000

P100,000

P100,000

P320,000

128,000 (P 8,000)

112,000 (P 12,000)

80,000 P 20,000

320,000 -

Journal entry on the partnership books Duenas, Capital Benito, Capital Cabral, Capital

20,000 8,000 12,000

2. Capital balances before additional cash investment Required capital balances based on

Benito

Cabral

Duenas

P120,000

P100,000

P100,000

Total P320,000

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lowest possible cash investment* 160,000 140,000 100,000 400,000 Required additional cash investment P 40,000 P 40,000 P 80,000 * P120,000/40% = P300,000; P100,000/35% = P285,174; P100,000/25% = P400,000 Journal entry on the partnership books Cash Benito, Capital Cabral, Capital

80,000 40,000 40,000

3. Capital balances Required capital Additional investment(withdrawals)

Benito P120,000 120,000 --------

Cabral P100,000 105,000 5,000

Duenas P100,000 75,000 (P 25,000)

Duenas, Capital Cash Cabral, Capital

Total P320,000 300,000 P 20,000

25,000 20,000 5,000

Exercise 1 – 12 Enriquez and Flores Schedule Showing Adjustments in Capital For the Year Ended December 31, 2008 Reported net profit Adjustments: Equipment purchased charged to expense Depreciation on equipment Overstatement of 2008 ending inventory

P400,000 P200,000 ( 20,000) ( 24,000) P156,000 x 65%

Corrected net profit

101,400 P501,400

Distribution of 2008 net profit Salaries Interest Balance Distribution of 2008 corrected net profit Salaries Interest Balance Adjustments

Enriquez P120,000 30,000 51,000 P201,000

Flores P120,000 45,000 34,000 P199,000

Total P240,000 75,000 85,000 P400,000

P120,000 30,000 111,840 P261,840 P 60,840

P120,000 45,000 74,560 P239,560 P 40,560

P240,000 75,000 186,400 P501,400 P101,400

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Equipment Enriquez, Capital Flores, Capital Accumulated Depreciation Inventory Income Tax Payable

200,000 60,840 40,560 20,000 24,000 54,600 PROBLEMS

Problem 1 – 1 1.

a. b. c.

d.

e.

f. g.

Merchandise, Inventory Ruiz, Capital

60,000

Ruiz, Capital Allowance for Uncollectible Accounts

30,000

60,000 30,000

Interest Receivable Ruiz, Capital P150,000 x 6% x 2/12 = P1,500

1,500

Ruiz, Capital Interest Payable P300,000 x 10% x 3/12 = P7,500

7,500

Accumulated Depreciation Ruiz, Capital Furniture and Fixtures

1,500

7,500 180,000 60,000 240,000

Office Supplies Ruiz, Capital

5,000 5,000

Cash Santos, Capital

524,500 524,500 Ruiz and Santos Statement of Financial Position December 1, 2008 Assets

Cash Notes Receivable Accounts Receivable Less Allowance for Uncollectible Accounts Interest Receivable Merchandise Inventory Office Supplies Furniture and Fixtures Total Assets Liabilities and Capital Notes Payable

P P900,000 90,000

P300,000

764,500 150,000

810,000 1,500 300,000 5,000 480,000 P2,511,000

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Accounts Payable Interest Payable Total Liabilities Ruiz, Capital Santos, Capital Total Capital Total Liabilities and Capital

630,000 7,500 P 937,500 P1,049,000 524,500 1,573,500 P2,511,000

Problem 1-2 1.

2.

Cash Merchandise Inventory Tomas, Capital

518,000 1,152,000

Accounts Receivable Merchandise Inventory Office Equipment Goodwill Allowance for Uncollectible Accounts Accounts Payable Vicente, Capital

1,792,000 256,000 160,000 198,000

1,670,000

160,000 576,000 1,670,000

Tomas and Vicente Statement of Financial Position June 1, 2008 Assets Cash Accounts Receivable Less Allowance for Uncollectible Accounts Inventories Office Equipment Goodwill Total Assets Liabilities and Capital Accounts Payable Tomas, Capital Vicente, Capital Total Liabilities and Capital

P P1,792,000 160,000

518,000

1,632,000 1,408,000 160,000 198,000 P3,916,000 P 576,000

P1,670,000 1,670,000

3,340,000 P3,916,000

Problem 1 – 3 1.

Merchandise Inventory Goodwill Accumulated Depreciation Allowance for Uncollectible Accounts Equipment Rosas, Capital Cash Accounts Receivable Merchandise Inventory

3,000 3,000 900 1,000 2,000 3,900 5,000 46,000 108,000

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2.

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Equipment Furniture and Fixtures Goodwill Allowance for Uncollectible Accounts Accounts Payable Perlas, Capital

12,000 9,000 3,000

Cash Accounts Receivable Merchandise Inventory Equipment Furniture and Fixtures Goodwill Allowance for Uncollectible Accounts Accounts Payable Perlas, Capital

5,000 46,000 108,000 12,000 9,000 3,000

Cash Accounts Receivable Merchandise Inventory Equipment Goodwill Allowance for Uncollectible Accounts Accounts Payable Rosas, Capital

7,000 49,000 75,000 7,000 3,000

Problem 1 – 4 1. Cash Inventories Equipment Notes Payable Serrano, Capital Cash Land Mortgage Payable Torres, Capital

4,000 54,000 125,000

4,000 54,000 125,000

5,000 36,000 100,000 900,000 1,500,000 3,000,000 1,050,000 4,350,000 600,000 6,000,000 1,950,000 4,650,000

Torres, Capital Serrano, Capital

150,000

Purchases Accounts Payable

900,000

Accounts Payable Cash

720,000

Mortgage Payable Interest Expense Cash

300,000 120,000

Notes Payable Interest Expense

225,000 75,000

150,000 900,000 720,000

420,000

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Cash

300,000

Accounts Receivable Sales

3,450,000

Cash Accounts Receivable

3,150,000

3,450,000 3,150,000

Selling and General Expenses Cash Accumulated Depreciation Accrued expenses

870,000

Serrano, Drawing Torres, Drawing Cash

351,000 351,000

Income Tax Income Tax Payable

204,750

630,000 150,000 90,000

702,000 204,750

Inventories, end Sales Inventories, beginning Purchases Selling and General Expenses Interest Expense Income Tax Income Summary

600,000 3,450,000 1,500,000 900,000 870,000 195,000 204,750 380,250

Income Summary Serrano, Capital Torres, Capital Interest on beginning capital Salaries Remainder – 60%, 40% Net Profit

380,250 192,150 188,100 Serrano

Torres

Total

P180,000 150,000 ( 137,850) P192,150

P180,000 100,000 ( 91,900) P188,100

P360,000 250,000 ( 229,750) P380,250

Serrano, Capital Torres, Capital Serrano, Drawing Torres, Drawing

351,000 351,000 351,000 351,000

Serrano and Torres Partnership Statement of Recognized Income and Expenses For the Year Ended December 31, 2008 Sales Cost of Goods Sold: Inventories, beginning Purchases

P3,450,000 P1,500,000 900,000

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Cost of Goods Available for Sale Less Inventories, end Gross Profit Selling and General Expenses Operating Income Interest Expense Net Profit before Income Tax Income Tax Net Profit

P2,400,000 600,000

1,800,000 P1,650,000 870,000 P 780,000 195,000 P 585,000 204,750 P 380,250

Serrano and Torres Partnership Statement of Financial Position December 31, 2008 Assets Current Assets: Cash Accounts Receivable (P3,450,000 – P3,150,000) Inventories Property, Plant and Equipment: Land Equipment P3,000,000 Less Accumulated Depreciation 150,000 Total Assets

Liabilities Current Liabilities: Accounts Payable (P900,000 – P720,000) Accrued Expenses Income Tax Payable Long-term Liabilities: Notes Payable (P1,050,000 – P225,000) Mortgage Payable (P1,950,000 – P300,000) Total Liabilities

P1,878,000 300,000 600,000

P 2,778,000

P6,000,000 2,850,000

8,850,000 P11,628,000

P180,000 90,000 204,750 P P 825,000 1,650,000

474,750

2,475,000 P 2,949,750

Capital Serrano, Capital Torres, Capital Total Capital

P4,341,150 4,337,100 8,678,25 0 P11,628,000

Total Liabilities and Capital Problem 1 - 5

1. P2,700,000 (P200,000 + P1,100,000 + P500,000 + P1,500,000 – P600,000 = P2,700,000) 2 P2,600,000. (P2,500,000 + P2,700,000) / 2 = P2,600,000 Problem 1 – 6 1.

Income Summary

700,000

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Bernabe, Capital Burgos, Capital Interest on beg. capital Balance – 3:1 Net Profit 2.

Bernabe: Jan. 1 – May 31 June 1 – Oct. 31 Nov, 1 – Dec. 31

Total P 64,000 636,000 P700 000 700,000 284,000 416,000

Bernabe P 140,000 48,000 96,000 P 284,000

Burgos 260,000 60,000 96,000 P 416,000 P

Total P400,000 P108,000 96,000 P700 000 700,000 394,150 305,850

Bernabe P 90,000 49,000 255,150 P 394,150 P360,000 x 5 460,000 x 5 400,000 x 2

Burgos: Jan. 1 – June 30

P440,000 x 6

July 1 – Oct. 31 Nov.1 – Dec. 31

360,000 x 4 500,000 x 2

Burgos 170,000 50,800 85,050 P 305,850 P

Total P260,000 99,800 340,200 P700 000

P1,800,00 0 2,300,000 800,000 P4,900,000/12

P408,333

P2,640,00 0 1,440,000 1,000,000 P5,080,000/12

P423,333

Income Summary Bernabe, Capital Burgos, Capital Salaries Interest on average. cap Balance – 40%, 60% Net Profit

5.

Burgos 35,200 159,000 P 194,200 P

Income Summary Bernabe, Capital Burgos, Capital Salaries Interest on average. cap Balance – 3:1 Net Profit

4.

Bernabe P 28,800 477,000 P 505,800

Income Summary Bernabe, Capital Burgos, Capital Salaries Interest on end capital Balance – Equally Net Profit

3.

505,800 194,200

700,000 267,567 432,433 Bernabe P 100,000 40,833 126,734 P 267,567

Burgos 200,000 42,333 190,100 P 432,433 P

Income Summary Bernabe, Capital Burgos, Capital

Total P300,000 83,166 316,834 P700 000 700,000 329,360 370,640

Bernabe

Burgos

Total

AA 1 - Chapter 1 (2008 edition)

Salaries Interest on beg. cap Bonus Balance – 2:3 Net Profit B = 10%(NI –S – I)

page 13

P 100,000 28,800 43,600 156,960 P 329,360

P

P

100,000 35,200 235,440 370,640

P220,000 64,000 43,600 392,400 P700 000

Problem 1 – 7 1.

2.

6% interest on capital Salaries Balance – 5:3:2 Net Profit 6% interest on capital Salaries Balance – 5:3:2 Net Profit

Sandy P 16,800 ( 74,500) P(57,700) P 16,800 ( 32,000) P( 15,200)

Tammy P 12,000 48,000 ( 44,700) P 15,300

Manny P 7,200 40,000 ( 29,800) P 17,400

Total P 36,000 88,000 (149,000) P(25,000)

P 12,000 48,000 ( 19,200) P 40,800

P

7,200 40,000 ( 12,800) P 34,400

P 36,000 88,000 ( 64,000) P 60,000

P

P 36,000 88,000 13,500 112,500 P250,000

3.

6% interest on capital P 16,800 P 12,000 Salaries 48,000 Bonus 13,500 Balance – 5:3:2 56,250 33,750 Net Profit P 73,050 P107,250 B = (P250,000 – P36,000 – P88,000 – P72,000)25% = P13,500

7,200 40,000

22,500 P 69,700

Problem 1 - 8 1. 5% interest on capital Salaries 20% bonus on net profit Balance – capital ratio Net Profit 2.

Delmar P 2,500 12,000 22,100 40,250 P76,850

Pilar P 1,500 8,000 24,150 P33,650

Sales Cost of Goods Sold Operating Expenses Income Taxes Income Summary

480,000

Income Summary Delmar, Capital Pilar, Capital

110,500

Delmar, Capital Pilar, Capital Delmar, Drawing Pilar, Drawing

6,000 10,000

Total 4,000 20,000 22,100 64,400 P110,500 P

210,000 100,000 59,500 110,500 76,850 33,650

6,000 10,000 Delmar and Pilar Company

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Statement of Changes in Partners’ Capital For the Year Ended December 31, 2008 Capital balances, January 1, 2008 Add Distribution of net income for 2008: Interests Salaries Bonus Balance - capital ratio Total share in net profit Total Less Drawings Capital balances, December 31, 2008

Delmar P 50,000

Pilar P30,000

Total P 80,000

P

2,500 12,000 22,100 40,250 P 76,850

P 1,500 8,000

P

24,150 P33,650

4,000 20,000 22,100 64,400 P110,500

P126,850 6,000 P120,850

P63,650 10,000 P53,650

P190,500 16,000 P174,500

Problem 1 - 9 Ramos, Gonzales and Martinez Statement of Changes in Partners’ Capital For Three Years Ended December 31, 2008 Capital, January 1, 2006 Distribution of net loss (Sch. 1) Withdrawals Capital, December 31, 2006 Distribution of net profit (Sch. 2) Withdrawals Capital, December 31, 2007 Distribution of net profit (Sch. 3) Withdrawals Capital, December 31, 2008

Ramos P 80,000 ( 2,000) (12,000) P 66,000 7,960 (13,960) P 60,000 21,840 (20,400) P 61,440

Gonzales P 48,000 ( 1,520) (14,480) P 32,000 8,320 (16,320) P 24,000 18,840 (24,000) P 18,840

Martinez P 40,000 ( 2,000) (16,000) P 22,000 7,720 (17,720) P12,000 18,120 (21,200) P 8,920

Total P 168,000 ( 5,520) (42,480) P120,000 24,000 (48,000) P 96,000 58,800 (65,600) P 89,200

Gonzales P 12,000 2,880 (16,400) P( 1,520)

Martinez P 12,000 2,400 (16,400) P( 2,000)

Total P 33,600 10,080 P 49,200 P( 5,520)

Gonzales

Martinez

Total

Schedule 1 - Distribution of 2006 net loss Salaries to partners Interest of 6% on beg. Capital Balance – equally Net income

Ramos P 9,600 4,800 (16,400) P( 2,000)

Schedule 2 - Distribution of 2007 net profit Ramos

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Salaries to partners Interest of 6% on beg. Capital Balance – equally Net income

P 9,600 3,960 ( 5,600) P 7,960

P 12,000 1,920 ( 5,600) P 8,320

P 12,000 1,320 ( 5,600) P 7,720

P 33,600 7,200 (16,800) P 24,000

Gonzales P 12,000 1,440

Martinez P 12,000 720

5,400 18,840

5,400 18,120

Total P 33,600 5,760 3,240 16,200 58,800

Schedule 3 - Distribution of 2008 net profit Salaries to partners Interest of 6% on beg. Capital Bonus - 20% (P58,800 - P39,360 - B) Balance – equally Net income

Ramos P 9,600 3,600 3,240 5,400 21,840

Problem 1 -10 Robles, Bernal and Reyes Statement of Partners’ Capital For the Year Ended December 31, 2008 Robles

Berna

Reyes

Total

l Capital balances before closing the nominal accounts Add Distribution of net profit: Drawing allowance Interest on average capital Balance - 60%, 30%, 10% Total Deduct Cash distribution Capital, December 31, 2008

P120,000

P ( 2,000)

P20,000

P138,000

20,000 7,200 58,800 P206,000 122,720 P 83,280

14,000 240 29,400 P41,640

10,000 560 9,800 P40,360 26,480 P13,880

44,000 8,000 98,000 P288,000 149,200 P138,800

P41,640

P206,000 / 60% = P343,333; P40,360 / 10% = P403,600 P41,640 / 30% = P138,800 (required total capital) Problem 1 - 11 Chavez, Roman, and Valdez Statement of Changes in Partners’ Capital January 1 to November 1, 2008 Chavez Loan Beginning balances Loan from Chavez Transfer of equipment to Valdez Balances Distribution of loss on realization* Salary to Valdez

Chavez Capital P 80,000

Roman Capital P 80,000

Valdez Capital P 80,000

P 80,000

P 80,000

( 16,000) P 64,000

P 60,000 P 60,000

24,000

Total P240,000 60,000 ( 16,000) P284,000 24,000

AA 1 - Chapter 1 (2008 edition)

Int. to Chavez for 7 months Balance divided equally* Balances Dist. of cash in final settlement

page 16

P 60,000 60,000

2,100 ( 76,700) P 5,400 5,400

*Total partners’ equity as shown above Less Cash available for distribution Loss on realization Less Salary and interest Total loss to be divided equally

( 76,700) P 3,300 3,300

( 76,700) P 11,300 11,300

2,100 ( 230,100) P 80,000 80,000

P284,000 80,000 P204,000 26,100 P230,100

Problem 1 - 12 Canlas, David, Estrella and Fajardo Statement of Changes in Partners’ Capital Accounts For the Year Ended December 31, 2008 Investment Net profit Total Less: Excess rent (P225 x 6) Withdrawals Uncollectible accounts Capital, December 31

Canlas P309,000 237,700 P546,700

David P159,000 186,230 P345,230

P 78,000 18,000 P 96,000 P450,700

P 66,000 6,750 P 72,750 P272,480

Estrella P327,000 140,310 P467,310 P 13,500 87,000

Fajardo ------P 24,010 P 24,010

P100,500 P366,810

P 37,500 P(13,490)

Total P 795,000 588,250 P1,383,250 P 13,500 268,500 24,750 P 306,750 P1,076,500

P 37,500

Supporting computations: Revenue from fees Expenses: Total expenses, excluding depreciation and uncollectible accounts (P290,000 - P13,500) Depreciation [(P195,000 x 10%) + (P75,000 x 5%) Doubtful accounts (P24,000 x 50%) Net profit

P 900,000 P 276,500 23,250 12,000

311,750 P588,250

Distribution of net income Canlas 20% of gross fees from respective clients 20% of fees after April 1 after expenses but before bad debts Balance -Canlas-40%, David-35%, Estrella-25% Total

P 66,000

171,700 P237,700

David P 36,000

150,230 P186,230

Estrella

Fajardo

P 33,000

107,310 P140,310

Total P135,000

P24,010*

24,010

P24,010

429,240 P588,250

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Revenues Expenses before uncollectible accounts (P276,500 + P23,250) x 180 / 900 Share of Fajardo

After April 1 P 180,000 59,950 P120,050 20% P 24,010

Problem 1-13 1.

2.

3.

Equipment Accumulated Depreciation Profit and Loss

13,500 1,350 12,150

Profit and Loss Interest Payable P87,500 x 6% x 10/12 = P4,375

4,375

Profit and Loss Abaya, Capital Reyes, Capital

159,025 63,700 95,505

Salaries Bonus [25% x (NI – B – S) ] Balance – equally Total 4.

4,375

Abaya P 39,000 24,610 P 63,610

Reyes P 58,500 12,305 24,610 P 95,415

Abaya, Capital Reyes, Capital Abaya, Drawing Reyes, Drawing

Total P 97,500 12,305 49,220 P159,025 36,000 62,500 36,000 62,500

Problem 1-14

1.

Jaime = 5/10 x 80% = 40% Madrid = 3/10 x 80% = 24%

2.

Corrected net income = P250,000 – (P12,000 – P31,000 – P20,000 + P15,000 + P9,000 x 65%) = P240,250 Jaime = P240,250 x 40% = P96,100 Madrid = P240,250 x 24% = P57,660

Soriano = 2/10 x 80% = 16% Matias = 20%

Soriano = P240,250 x 16% = P38,440 Matias = P240,250 x 20% = P48,050

MULTIPLE CHOICE 1. 2. 3. 4.

D D A C Abena – MV – Cost (P90,000 – P60,000)

Total P30,000

Abena (60%) P18,000

Buendia (40%) P12,000

AA 1 - Chapter 1 (2008 edition)

Buendia – MV – Cost (P60,000 – P70,000) Actual Inequity 5. 6. 7. 8.

A C B B

page 18

( 10,000) P20,000 ( 20,000) P 0

( 6,000) P12,000 ( 30,000) (P18,000)

Molina’s contribution (P190,000 – P60,000) Nuevo’s tangible contribution Total capital contributions

( 4,000) P 8,000 10,000 P18,000

P130,000 100,000 P230,000 x 60% P 138,000 130,000 P 8,000

Capital credit of Molina Contribution of Molina Bonus to Molina 9.

Roxas = P596,250 - P5,550 = P590,700 Bernardo = P335,000 - P4,050 - P9,000 = P321,950

10.

Roxas = (P590,700 + P321,950) x 60% = P547,590 Bernardo = (P590,700 + P321,950) x 40% = P365,060

11.

Roxas = P650,000 – P590,700 = P59,300 Bernardo = P400,000 – P321,950 = P78,050

12.

Bruno = P150,000 - P90,000 = P60,000

13.

Total assets = Total liab. + Total capital = P25,000 + P300,000 = P325,000

14.

Cash contribution = (P248,850 x 1/3) – P50,000 = P32,950

15

Total capital = (P158,400 + P17,500 – P5,000 – P5,000) ÷ 2/3 = P248,850

16.

Required capital of Esteban (P287,500 x 60%) Non-cash contributions of Esteban (P125,000 – P30,000) Cash contribution

P172,500 95,000 P 77,500

17.

Contribution of Diaz Contribution of Esteban (P125,000 – P30,000 + P50,000) Total partnership capital

P115,000 145,000 P260,000

18.

C

P115,000 + P95,000 = P210,000/2

P105,000

19.

A

Net increase (decrease) in capital Add Withdrawals Total Less Additional investments Profit share Profit share percentage Total partnership net profit

(P120,000) 260,000 (P140,000) 50,000 P 90,000 ÷ 30% P300,000

AA 1 - Chapter 1 (2008 edition)

20. 21. 22.

C B C

23. 24.

D

page 19

Net profit (exclusive of salary, interest and bonus) Salary (P2,000 x 12) Interest (P50,000 x 5%) Net profit after deduction of bonus Bonus = .20 (P120,000 + Bonus) = P24,000 + .20 Bonus = P24,000/.80 = P30,000 C 10% x P1,000,000 20% x P1,500,000 5% (P1M – P400,000) Balance – equally Net income

25.

A Interest Salaries Balance – equally

26.

C

B

D

A

Bustos

Cancio

P30,000 680,000

P30,000 680,000

Campos P12,000 40,000 (70,000) Torres

Ocampo P 8,000 ( 70,000)

6,800 Torres

(1,200) Torres

12,000 3,400 P19,400

1,000 22,000 17,000 P44,000

Velasco P 2,000

Total P 2,000

12,000 (600) P13,400

1,000 22,000 (3,000) P22,000

Velasco P 2,000

Total P 2,000

10,364 P12,364

1,000 19,000 P22,000

P 1,000 P8,636

Average capital of Tamayo P100,000 x 6 = P 600,000 160,000 x 6 = 960,000 P1,560,000/12 P130,000

Total P 44,000 100,000 ( 210,000) Total P 4,000

P 1,000 P10,000 (1,200)

Total P 100,000 300,000 60,000 2,040,000

Velasco P 4,000

P 1,000 P10,000 6,800

Sison Bonus - 10%(P22,000 - B) Interest on capital in excess of P100,000 Balance – Salary ratio

29.

Ramos P24,000 60,000 ( 70,000) P14,000

Sison Bonus - 10%(P22,000 - B) Interest on capital in excess of P100,000 Salaries to partners Balance - 4:4:2

28.

680,000 P1,080,000

Sison Bonus - 10%(P44,000 - B) Interest on capital in excess of P100,000 Salaries to partners Balance - 4:4:2

27.

Alberto P 100,000 300,000

P 93,500 24,000 2,500 P120,000

Average capital of Vidal P225,000 x 9 = P2,025,000 155,000 x 3 = 465,000 P2,490,000/12 P207,500

AA 1 - Chapter 1 (2008 edition)

page 20

Average capital of Banson - P150,000 Total int. on ave. capital= (P130,000 + P207,500 + P150,000) 10% = P48,750 30.

D

Interest on ave. capital Salaries to partners Balance - divided equally

31.

B

Total capital before net income (P475,000 + P60,000 – P70,000) Add Net profit Total capital, Dec. 31, 2008

32.

D Int. on average capital Salaries to partners Balance - equally Net increase (decrease)

33.

C

P 48,750 144,000 9,000 P 201,750

Andal P 47,250 122,325 (139,308) P 30,267

A

35. 36. 37.

D A A

38.

Briones P 23,865 (139,308) P(115,443)

Camba P 16,235 82,625 (139,308) P( 40,448)

Net income = Net sales - CGS - Depr. - Oper. exp. Others) = P228,000 - P123,000 - P7,500 - P58,100 x 65% Mariano P10,000 1,561 8,781 P 20,342

Salary to partner for 10 mos. Bonus to managing partner Balance – based on orig. cap. TOTAL share in profit 34.

P465,000 201,750 P666,750

TOTAL share in profit Add Capital, beginning TOTAL Less Withdrawals Capital, end Belen Interest Salaries Balance Add’l profit for Edna Net profit

B Salaries Bonus Interest Balance Total

P 20,342 125,000 P145,342 20,000 P125,342

P25,610

Lucas

total P 10,000 1,561 14,049 P 25,610

P 5,268 P 5,268 P 5,268 75,000 P 80,268 30,000 P 50,268

Total P 87,350 204,950 (417,924) P(125,624)

P 25,610 200,000 P 225,610 50,000 P 175,610

Lorna

Ursula

P 5,000.00 10,000.00 10,000.00

P 2,500.00 6,000.00 10,000.00

P 2,500.00

P2,000.00

6,666.67

6,666.67

P12,000.00 16,000.00 33,333.34

________ P25,000.00

________ P18,500.00

_________ P9,166.67

3,333.33 P12,000.00

3,333.33 P64,666.67

Puno P40,000 13,000 1,000 7,000 P61,000

Edna

Quirino P36,000

Romero P13,650

750 7,000 P43,750

4,600 7,000 P25,200

Total

Total P 89,650 13,000 6,350 21,000 P130,000

AA 1 - Chapter 1 (2008 edition)

Computation of average capital: Puno, capital Jan. 1 – P10,000 x 3 Apr 1 9,000 x 3 July 1 - 11,000 x 3 Oct. 1 - 10,000 x 3 Quirino, capital Jan. 1 – P 6,000 x 6 July 1 - 10,000 x 3 Oct. 1 - 8,000 x 3 Romero, capital Jan. 1 – P40,000 x 3 Apr. 1 - 38,000 x 3 July 1 - 53,000 x 6

page 21

P 30,000 27,000 33,000 30,000

P120,000 / 12

P10,000

P 36,000 30,000 24,000 P 90,000 / 12

P 7,500

P120,000 114,000 318,000 P552,00 / 12

P46,000

Let X = Net Income P40,000 + 10% X + P1,000 + 1/3 (X – P89,650 – 10% X – P6,350 = P61,000 P40,000 + 10% X + P1,000 + 1/3 (90% X – P96,000) = P61,000 P40,000 + 10% X + P1,000 + 30% X – P32,000 = P61,000 10% X + 30% X = P61,000 – P40,000 – P1,000 + P32,000 40% X = P52,000 X = P130,000 39.

D

Legarda- 5/10 x 80% = 40% Madrigal-3/10 x 80% = 24%

Sotto - 2/10 x 80% = 16% Pimentel 20%

40.

C

Share of Legarda = P25,000 – ( P1,200 - P3,100 - P2,000 + P1,500 + P 900 x 65%) = P24,025 x 40% = P9,610

41.

C

Serrano 2008 Net income (P50,000 – P8,000) Salary to Serrano Remainder Divided equally

P42,000 ( 36,000) P 6,000 ( 6,000)

Understatement in 2007 NI Divided 60:40

P8,000 ( 8,000)

Income allocation

Toledo

P36,000 3,000

P 3,000

4,800

3,200

P43,800

P 6,200