CHAPTER 2

Nature and Formation of a Partnership

E 2-1
a. Cash 400,000
Alonzo, Capital 400,000

b. Accounts Receivable 500,000

Allowance for Uncollectible Accounts 50,000
Alonzo, Capital 450,000

c. Inventories 240,000
Alonzo, Capital 240,000
P300,000 x 80% = P240,000

d. Equipment 540,000
Alonzo, Capital 540,000
P900,000 x 6/10 = P540,000
E 2-2
1. Cash 450,000
Accounts Receivable 180,000
Merchandise Inventory 270,000
Equipment 125,000
Allowance for Uncollectible Accounts 10,000
Accounts Payable 105,000
Notes Payable 90,000
Aquino, Capital 820,000

Cash 410,000
Asuncion, Capital 410,000
P820,000 X 3/2 = P1,230,000 X 1/3 = P410,000

2. Allowance for Uncollectible Accounts 5,000

Aquino, Capital 5,000

Merchandise Inventory 30,000

Aquino, Capital 30,000

Accumulated Depreciation 30,000

Aquino, Capital 25,000
Equipment 55,000

Allowance for Uncollectible Accounts 10,000

Accounts Payable 105,000
Notes Payable 90,000
Cash 450,000
Accounts Receivable 180,000
Merchandise Inventory 270,000
Equipment 125,000
E 2-3
1. a. Amores, Capital 25,000
Allowance for Uncollectible Accounts 25,000

b. Merchandise Inventory 160,000

Amores, Capital 160,000

c. Amores, Capital 30,000

c. Prepaid Expenses 72,000
Accounts Payable 102,000

d. Cash 1,717,000
Andrada, Capital 1,717,000
(P1,612,000 – P25,000 + P160,000 + P30,000 = P1,717,000

2. a. Cash 208,000
Accounts Receivable 460,000
Merchandise Inventory 1,600,000
Prepaid Expenses 72,000
Allowance for Uncollectible Accounts 25,000
Accounts Payable 598,000
Amores, Capital 1,717,000

b. Cash 1,717,000
Andrada, Capital 1,717,000

Amores and Andrada Company

Statement of Financial Position
January 1, 2014

Assets
Cash P1,925,000
Accounts Receivable P460,000
Less Allowance for Uncollectible Accounts 25,000 435,000
Merchandise Inventory 1,600,000
Prepaid Expenses 72,000
Total Assets P4,032,000

Liabilities and Capital

Accounts Payable P598,000
Amores, Capital P1,717,000
Andrada, Capital 1,717,000 3,434,000
Total Liabilities and Capital P4,032,000

E 2-4
1. Cash 1,000,000
Land 800,000
Building 1,900,000
Mortgage Payable 1,500,000
Aguirre, Capital 1,000,000
Aranas, Capital 1,200,000
2. Cash 1,000,000
Land 800,000
Building 1,900,000
Mortgage Payable 1,500,000
Aguirre, Capital 1,100,000
Aranas, Capital 1,100,000

P 2-1
1. a. Merchandise, Inventory 50,000
Acosta, Capital 50,000
b. Acosta, Capital 75,000
Allowance for Uncollectible Accounts 75,000
c. Interest Receivable 3,750
Acosta, Capital 3,750
P375,000 x 6% x 2/12 = P3,750
d. Acosta, Capital 18,750
Interest Payable 18,750
P750,000 x 10% x 3/12 = P18,750
e. Accumulated Depreciation 450,000
Acosta, Capital 150,000
Furniture and Fixtures 600,000
f. Office Supplies 15,000
Acosta, Capital 15,000
g. Cash 1,262,500
Aguas, Capital 1,262,500
P2,700,000 + 50,000 – 75,000 + 3,750 – 18,750 -150,000 + 15,000 = 2,525,000/2 = 1,262,500

Acosta and Aguas

Statement of Financial Position
December 1, 2014

Assets
Cash P 1,862,500
Notes Receivable 375,000
Accounts Receivable P 2,250,000
Less Allowance For Uncollectible Accounts 225,000 2,025,000
Interest Receivable 3,750
Merchandise Inventory 650,000
Office Supplies 15,000
Furniture And Fixtures 1,200,000
Total Assets P 6,131,250
Liabilities and Capital
Notes Payable P 750,000
Accounts Payable 1,575,000
Interest Payable 18,750
Total Liabilities P 2,343,750
Acosta, Capital P 2,525,000
Aguas, Capital 1,263,500
Total Capital 3,787,500
Total Liabilities and Capital P 6,131,250

P 2-2
1. a. April, Capital 9,000
Allowance for Doubtful Accounts 9,000

b. April, Capital 21,000

Accrued Expenses 21,000

c. Accumulated Depreciation 112,500

Accounts Payable 345,000
Accrued Expenses 21,000
Allowance for Doubtful Accounts 9,000
April, Capital 800,000
Cash 187,500
Accounts Receivable 450,000
Merchandise Inventory 400,000
Equipment 250,000

2. a. Merchandise Inventory 50,000

Arias, Capital 50,000

b. Arias, Capital 7,500

Allowance for Doubtful Accounts 7,500

c. Cash 357,500
Arias, Capital 357,500
P800,000  40% x 60% = P1,200,000 - (800,000 + 50,000 – 7,500) = 357,500
d. Accumulated Depreciation 37,500
Equipment 37,500
e. Cash 187,500
Accounts Receivable 450,000
Merchandise Inventory 400,000
Equipment 137,500
Allowance for Doubtful Accounts 9,000
Accounts Payable 345,000
Accrued Expenses 21,000
April, Capital 800,000
April and Arias
Statement of Financial Position
October 1, 2014
Assets
Cash P 657,500
Accounts Receivable P 825,000
Less Allowance For Doubtful Accounts 16,500 808,500
Merchandise Inventory 750,000
Equipment 400,000
Total Assets P2,616,000
Liabilities and Capital
Accounts Payable P 595,000
Accrued Expenses 21,000
Total Liabilities P 616,000
April, Capital P 800,000
Arias, Capital 1,200,000
Total Capital 2,000,000
Total Liabilities and Capital P2,616,000

P 2-3
1. Cash 70,000
Accounts Receivable 490,000
Merchandise Inventory 700,000
Equipment 70,000
Allowance for Doubtful Accounts 50,000
Accounts Payable 360,000
Albano, Capital 920,000

Cash 50,000
Accounts Receivable 460,000
Merchandise Inventory 950,000
Equipment 120,000
Furniture and Fixtures 90,000
Allowance for Doubtful Accounts 40,000
Accounts Payable 540,000
Abada, Capital 1,090,000

2. Abada, Capital 10,000

Allowance for Uncollectible Accounts 10,000

Merchandise Inventory 50,000

Abada, Capital 50,000

Accumulated Depreciation 36,000

Abada, Capital 24,000
Equipment 60,000

Accumulated Depreciation 24,000

Abada, Capital 6,000
Furniture and Fixtures 30,000

Cash 70,000
Accounts Receivable 490,000
Merchandise Inventory 700,000
Equipment 70,000
Allowance for Uncollectible Accounts 50,000
Accounts Payable 360,000
Albano, Capital 920,000
P 2-4
1. Abante, Capital 150,000
Allowance for Doubtful Accounts 150,000

Abante, Capital 200,000

Merchandise Inventory 200,000

Accumulated Depreciation 210,000

Abante, Capital 240,000
Furniture and Equipment 450,000

Goodwil 250,000
Abante, Capital 250,000
P2,000,000 – (P2,700,000 -150,000 – 200,000 – 240,000 –
360,000 = P1,750,000) = P250,000

Cash 3,000,000
Arevalo, Capital 3,000,000

Land 1,800,000
Mortgage Payable 300,000
Almonte, Capital 1,500,000

2. Accounts Receivable 840,000

Merchandise Inventory 1,000,000
Furniture and Equipment 600,000
Goodwill 250,000
Allowance for Uncollectible Accounts 240,000
Accounts Payable 450,000
Abante, Capital 2,000,000

Cash 3,000,000
Arevalo, Capital 3,000,000

Land 1,800,000
Mortgage Payable 300,000
Almonte, Capital 1,500,000

P 2-5
1. a. Cash 518,000
Merchandise Inventory 1,152,000
Abueva, Capital 1,670,000

b. Accounts Receivable 1,792,000

Merchandise Inventory 253,000
Office Equipment 206,000
Goodwill 145,000
Allowance for Doubtful Accounts 150,000
Accounts Payable 576,000
Alano, Capital 1,670,000
 Abueva and Alano Partnership
Statement of Financial Position
June 1, 2014
Assets
Cash P 518,000
Accounts Receivable P 1,792,000
Less Allowance For Doubtful Accounts 150,000 1,642,000
Merchandise Inventory 1,405,000
Office Equipment 206,000
Goodwill 145,000
Total Assets P 3,916,000
Liabilities and Capital
Accounts Payable P 576,000
Abueva, Capital P 1,670,000
Alano, Capital 1,670,000 3,340,000
Total Liabilities and Capital P 3,916,000

P 2-6
1. P1,080,000 P80,000 + P440,000 + P200,000 + P600,000 – P240,000 = P1,080,000
2. P1,100,000 (P1,080,000 + P1,120,000) / 2 = P1,100,000
3. P1,320,000 P2,200,000 x 60% = P1,320,000

Multiple Choice
1. B
2. A
3. B
4. D
5. D
6. B (P80,000 + P340,000 + P900,000) – P300,000 = P1,020,000
7. C Aster = P489,000 – P7,500 = P481,500
Amie = P273,000 - P9,000 – P5,400 = P258,600
8. C P9,000 + (P189,000 – P12,000) + P460,000 + P140,000 = P786,000 x 2 = P1,572,000
9. B (P600,000 x 1/2) – (P220,000 – P30,000) = P110,000
10. D Total partnership capital + Total partnership liabilities = Total partnership assets
P600,000 + (P30,000 + P20,000) = P650,000
11. A P600,000/2 = P300,000- (200,000-20,000)= P120,000.
12. B P90,000 + P30,000 + P130,000 – P100,000 = P150,000
13. C P240,000 + (P150,000 + P 100,000 = P250,000) = P490,000
14. B (P240,000 + P150,000) x 60% = P234,000
(P240,000 + P150,000) x 40% = P156,000- P150,000 =P6,000
15. B
16. B P600,000 + P120,000 = P720,000
17. C P720,000 + P1,200,000/2 = P960,000
18. C P960,000 – P720,000 = P240,000
19. B
20. D P720,000 + P1,200,000 = P1,920,000 x 75% = P1,440,000
TM 6
1. F 5. T 9. T 13. T 17. F
2. F 6. T 10. T 14. T 18. T
3. F 7. F 11. F 15. F 19. T
4. T 8. T 12. T 16. T 20. T
TM 7
1. Limited partnership 9. Agreed value
2. Industry, skill, talent or service 10. Nominal partner
3. Capitalist industrial partner 11. Articles of Co-Partnership
4. Mutual agency 12. Secret partner
5. De facto partnership 13. Securities and Exchange Commission
6. Memorandum entry 14. Limited or LTD.
7. Nontrading partnership 15. Limited partner
8. Partnership 16. Loan Payable
17. Capital share
18. Bonus
19. Arrive at Agreed value or FMV
20. General professional partnership

TM 8
1. A 5. C 9. C 13. C 17. B
2. A 6. D 10. C 14. A 18. C
3. D 7. D 11. A 15. B 19. D
4. B 8. B 12. C 16. A 20. D

TM 9
Problem A
1. Cash 800,000
Land 375,000
Building 1,200,000
Furniture and Fixtures 675,000
Accounts Payable 250,000
Alvis, Capital 1,375,000
Ancheta, Capital 1,425,000

2. Cash 800,000
Land 375,000
Building 1,200,000
Furniture and Fixtures 675,000
Accounts Payable 250,000
Alvis, Capital 1,400,000
Ancheta, Capital 1,400,000

3. Cash 800,000
Land 375,000
Building 1,200,000
Furniture and Fixtures 675,000
Accounts Payable 250,000
Alvis, Capital 1,680,000
Ancheta, Capital 1,120,000

Problem B

1. a. Ablan, Capital 50,000

Accounts Receivable 50,000
 b. Ablan, Capital 27,000
Inventories 27,000

c. Ablan, Capital 10,000

Other Assets 10,000

a. Amias, Capital 75,000

Accounts Receivable 75,000

b. Amias, Capital 35,000

Inventories 35,000

c. Amias, Capital 18,000

Other Assets 18,000

2. a. Accounts Payable 894,700

Notes Payable 1,000,000
Ablan, Capital (P3,209,880 – P50,000 – P27,000 – P10,000) 3,122,880
Cash 55,000
Accounts Receivable 1,122,680
Inventories 573,175
Land 3,015,000
Furniture and Fixtures 251,725

b. Accounts Payable 1,218,250

Notes Payable 1,725,000
Amias, Capital (P3,641,760 – P75,000 – P35,000 – P18,000) 3,513,760
Cash 111,770
Accounts Receivable 2,764,450
Inventories 1,265,510
Buildings 2,141,335
Furniture and Fixtures 173,945

3. a. Cash 55,000
Accounts Receivable 1,122,680
Inventories 573,175
Land 3,015,000
Furniture and Fixtures 251,725
Accounts Payable 894,700
Notes Payable 1,000,000
Ablan, Capital 3,122,880

b. Cash 111,770
Accounts Receivable 2,764,450
Inventories 1,265,510
Buildings 2,141,335
Furniture and Fixtures 173,945
Accounts Payable 1,218,250
Notes Payable 1,725,000
Amias, Capital 3,513,760
 Ablan and Amias Partnership
Statement of Financial Position
May 1, 2014
Assets
Current Assets
Cash P 166,770
Accounts Receivable 3,887,130
Inventories 1,838,685 P 5,892,585
Noncurrent Assets
Land P 3,015,000
Buildings 2,141,335
Furniture and Fixtures 425,670 5,582,005
Total Assets P 11,474,590
Liabilities and Capital
Notes Payable P 2,725,000
Accounts Payable 2,112,950
Total Liabilities P 4,837,950

Ablan, Capital P 3,122,880

Amias, Capital 3,513,760
Total Capital 6,636,640
Total Liabilities and Capital P 11,474,590