[PARTNERSHIP]

SOLUTIONS TO MULTIPLE CHOICE PROBLEMS

PARTNERSHIP FORMATION

1-18: C
De Leon's adjusted capital (see schedule 1) P 40,500
Divide by De Leon's P & L share percentage 40%
Total partnership capital P 101,250
Flores' P & L share percentage 60%
De Guzman' capital credit P  60,750
De Guzman' contributed capital (see schedule 2) 43,500
Additional cash to be invested by De Guzman P 17,250

Schedule 1:
De Leon, capital:
Unadjusted balance P 49,500
Adjustments:
Accumulated depreciation (   4,500)
Allowance for doubtful account (   4,500)
Adjusted balance P 40,500

Schedule 2:
De Guzman, capital:
Unadjusted balance P 57,000
Adjustments:
Accumulated depreciation (   1,500)
Allowance for doubtful accounts (  12,000)
Adjusted balance P 43,500

1-2: D
Revilla Enrile Total
(     60%) (     40%)
Unadjusted capital balances P 133,000 P 108,000 P 241,000
Adjustments:
Allowance for bad debts (   2,700) (   1,800) (   4,500)
Inventories 3,000 2,000 5,000
Accrued expenses (   2,400) (   1,600) (   4,000)
Adjusted capital balances P 130,900 P 106,000 P 237,500

Total capital before the formation of the new partnership (see above) P 237,500
Divide by the total percentage share of Revilla and Enrile (50% + 30%) 80%
Total capital of the partnership before the admission of Ejercito P 296,875
Multiply by Ejercito' interest 20%
Cash to be invested by Ejercito P   59,375

1-3: D
Merchandise to be invested by Roxas:
Total partnership capital (P 180,000/60%) P 300,000

Roxas' capital (P 300,000 X 40%) P 120,000

Less Cash investment 30,000
Merchandise to be invested by Roxas P  90,000

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Cash to be invested by Poe:

Adjusted capital of Poe:
Total assets (at agreed valuations) P 180,000
Less Accounts payable 48,000 P 132,000
Required capital of Poe 180,000
Cash to be invested by Poe P   48,000

1-4: B
Unadjusted Binay, capital (P 75,000 – P 5,000) P 70,000
Allowance for doubtful accounts (   1,000)
Accounts payable (   4,000)
Adjusted Binay, capital P  65,000

1-5: C
Total partnership capital (P 113,640/1/3) P 340,920
Less Cayetano, capital 113,640
Duterte's capital after adjustments P 227,280
Adjustments made:
Allowance for doubtful account (2% X P 96,000) 1,920
Merchandise inventory (  16,000)
Prepaid expenses (   5,200)
Accrued expenses 3,200
Duterte's capital before adjustments P 211,200

1-6: 1: A
Total agreed capital (210,000 ÷ 70%) P 300,000
Marcos interest 30%
Agreed capital of Marcos P 90,000
Cash invested 42,000
Value of merchandise to be invested by Marcos P 48,000

1-6: 2: A
Contributed capital of Santiago (P 194,000 – P 56,000) P 138,000
Agreed capital of Santiago (P 300,000 x 70%) 210,000
Cash to be invested by Santiago P 72,000

PARTNERSHIP OPERATIONS

2-1: B
Net income after salary, interest and bonus P 467,500
Add back: Salary (P 10,000 X 12) P 120,000
Interest (P250,000 X .05) __12,500 132,500
Net income after bonus (80%) P 600,000
Net income before bonus (P 600,000/80%) 750,000
Vice’s bonus P 150,000

2-2: B
XX YY ZZ Total
Salary P 14,000 P 14,000
Balance P 14,000 P 8,400 5,600 28,000
Additional profit to YY (   1,500) 2,100 (     600) ______
Total P 12,500 P10,500 P  19,000 P  42,000

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Net income
Fees Earned P 90,000
Expenses 48,000
Net Income P 42,000

2-3: D
Total receipts (P 1,500,000 + P 1,625,000) P 3,125,000
Expenses (  1,080,000)
Net income P 2,045,000

Distribution to Partners
Ai-Ai – P 1,500,000/P 3,125,000 X P 2,045,000 = P   981,600 (1)
Kris – P 1,625,000/P 3,125,000 X P 2,045,000 = 1,063,400
P2,045,000

Capital balance of Kris Dec. 31

Capital Balance, Jan. 1 P 374,000
Additional investment __22,000
Capital balance before profit and
loss distribution P 396,000
Profit share 1,063,400
Drawings (  750,000)
Capital balance, Dec. 31 P    709,400 (2)

2-4: A

John Lloyd Jericho Total

Capital balances, March 1 P 150,000 P 180,000 P 330,000
Additional investment, Nov. 1 _______ 60,000 60,000
Capital balances before salaries, profit and Drawings 150,000 240,000 390,000
Profit share:
Interest 15,000 20,000 35,000
Balance, 60:40 51,000 34,000 85,000
Total 66,000 54,000 120,000
Total 216,000 294,000 510,000
Salaries 18,000 _24,000 _42,000
Total 234,000 318,000 552,000
Drawings (18,000) (24,000) (42,000)
Capital balances, Feb. 28 P 216,000 P 294,000 P 510,000

2-5: A

Wen Jose Total

Capital balances, 1/1 P 150,000 P 30,000 P 180,000
Additional investment, 4/1 8,000 8,000
Capital withdrawals, 7/1 _______ (6,000) _(6,000)
Balances before profit distribution 158,000 24,000 182,000
Profit distribution:
Interest 23,400 4,050 27,450
Bonus (20% x P 30,000) 6,000 6,000
Balance, equally (1,725) (1,725) (3,450)
Total 21,675 _8,325 30,000
Total 179,675 32,325 212,000

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Drawings (12,000) (12,000) (24,000)

Capital balances, 12/31 P 167,675 P 20,325 P 188,000
PARTNERSHIP DISSOLUTION

3-1: C

Maine Alden Dora Total

Unadjusted capital balances P 175,000 P 100,000 P 45,000 P320,000
Overvaluation of Marketable Securities (  12,500) (   7,500) (   5,000) (  25,000)
Allowance for Bad Debts (  12,500) (   7,500) (   5,000) (  25,000)
Adjusted capital balances before admission P150,000 P 85,000 P 35,000 P270,000

Total agreed capital (270,000/2/3) P 405,000

Frankie's interest 1/3
Investment P 135,000

3-2: B

Happy Gay Merry Joy TOTAL

Capital balances before
admission P360,000 P225,000 P135,000 – P720,000
Capital transfer
to Joy (1/6) (  60,000) (  37,500) (  22,500) 120,000 _______
Balances P300,000 P187,500 P112,500 P120,000 P720,000
Equalization of capital ( 100,000) __12,500 __87,500 ______ _______
Balances P200,000 P200,000 P200,000 P120,000 P720,000
Net profit, equally 3,150 3,150 3,150 3,150 12,600
Drawings (2 months) _(   1,500) _(   2,000) _(   1,500) (   2,000) _(   7,000)
Capital balances before
Joy’s Investment P201,650 P201,150 P201,650 P121,150 P725,600

Total agreed capital (201,650+201,150+201,650)/2/3 P 906,675

Joy's interest 1/3
Agreed capital of Joy P302,225
Contributed capital (see above) 121,150
Cash to be invested P181,075

3-3: 1-C; 2-A; 3-D

_ANA_ _BRENDA _Total_

Capital balance 3/1/11 480,000 240,000 720,000
Net loss-2011:
Salary (10 months) 480,000 240,000 720,000
Interest (10 months) 40,000 20,000 60,000
Bal. beg. cap. ratio: 48:24 (544,000) (272,000) (816,000)
Total ( 24,000) ( 12,000) ( 36,000)
Capital balance 456,000 228,000 684,000
Drawings ( 24,000) ( 24,000) ( 48,000)
Capital balance, 12/31/11 432,000 204,000 636,000
Net profit- 2012:
Salary 576,000 288,000 864,000
Interest 43,200 20,400 63,600
Balance, equally ( 397,800) ( 397,800) ( 795,600)
Total 221,400 ( 89,400) 132,000
Capital balance 653,400 114,600 768,000

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Drawings ( 24,000) ( 24,000) ( 48,000)

Capital balance 12/31/12 629,400 90,600 720,000

Total contributed capital (720,000 + 400,000) 1,120,000

Cara’s interest 40%
Cara’s agreed capital 448,000
Cara’s contributed capital 400,000
Bonus to Cara, from Ana and Brenda 4:2 48,000

3-4: 1-A; 2-B; 3-C

Poppy Coney Total

Capital balance, beg. 2012 P 80,000 P 30,000 P 110,000
2012 net profit (90,000 – 59,000):
Interest 8,000 3,000 11,000
Compensation 5,000 20,000 25,000
Balance, 4:6 ( 2,000) ( 3,000) ( 5,000)
Total 11,000 20,000 31,000
Balance 91,000 50,000 141,000
Withdrawal ( 8,000) ( 11,000) (19,000)
Repairs (charge to Poppy) ( 5,000) - ( 5,000)
Capital balance, 12/31/12 78,000 39,000 117,000

1/1/13: Admission of Sonny

Total agreed capital (P117,000 +43,000) P160,000
Sonny’s interest 20%
Sonny’s agreed capital 32,000
Sonny’s contributed capital 43,000
Bonus to Poppy & Coney, 4:6 11,000

3-5: A

B: P 100,000 + (P 600,000 – P 500,000) × 20% = P 120,000 – (P 14,000 × 2/7) = P 116,000

C: P 200,000 + (P 600,000 – P 500,000) × 30% = P 230,000
D: P 200,000 + (P 600,000 – P 500,000) × 50% = P 250,000 – (P 14,000 × 5/7) = P 240,000

Amount paid P 244,000

Less: BV of interest at C 230,000
Bonus to retiring partner P 14,000

PARTNERSHIP LIQUIDATION

4-1: C

TOTAL MM NN OO
Capital balances, June 11 P32,700 P15,000 P13,500 P 4,200
Net loss from operation (squeeze) (  9,800) (  4,200) (  2,800) (  2,800)
Capital balances, August 30 before
liquidation (48,500-25,600) P22,900 P10,800 P10,700 P 1,400
Loss on realization (47,500-30,000) ( 17,500) (  7,500) (  5,000) (  5,000)
Balances P 5,400 P 3,300 P 5,700 (  3,600)
Additional investment by Olga _1,500 ______ ______ _1,500
Balances P 6,900 P 3,300 P 5,700 (  2,100)

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Elimination of Olga's deficiency ______ (  1,260) (    840) _2,100

Payment to partners P  6,900 P  2,040 P  4,860 P          –

4-2:

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