chapter1aa1sol _ advanced accounting

CHAPTER 1Partnership Formation and Operations

EXERCISES

Exercise 1 –1

1.a Campos, Capital 14,000 Allowance for Uncollectible Accounts 14,000

Goodwill 30,000 Campos, Capital 30,000

Accumulated Depreciation 6,000Campos, Capital 6,500 Furniture and Fixtures 12,500

Campos, Capital 40,000 Cash 40,000

1.b Cash (P83,500 x 1/2) 41,750 Tomas, Capital 41,750 To record contributions of Tomas

Req. 2.Campos and Tomas PartnershipStatement of financial Position

July 1, 2008

Assets Liabilities & Owners’ EquityCash P41,750 Accounts Payable P90,000Accounts Rec’l P60,000 Campos, Capital 83,500 Less Allowance for Uncol Accts. 24,000 36,000

Tomas, Capital 41,750

Inventory 100,000Furniture 7,500Goodwill 30,000 ________

TOTAL ASSETS P215.250TOTAL LIABILITIES & OWNERS’ EQUITY P215,250

Exercise 1-2

1. Cash 90,000Accounts Receivable 36,000Merchandise Inventory 54,000Equipment 25,000 Allowance for Uncollectible Accounts 2,000 Accounts Payable 21,000 Notes Payable 18,000 Bernal, Capital 164,000

2. Cash 100,000

AA 1 - Chapter 1 (2008 edition) page 2

Camino, Capital 100,000

Exercise 1 –3

1. Cash 800,000Land 540,000Building 900,000 Legaspi, Capital 800,000 Sabino, Capital 1,440,000

2. Cash 800,000Land 540,000Building 900,000 Legaspi, Capital 1,120,000 Sabino, Capital 1,120,000

Exercise 1 - 4 1. Income Summary 238,000

Santos, Capital (P238,000 x 260/425) 145,600 Abad, Capital (P238,000 x 165/425) 92,400

2. Income Summary 238,000 Santos, Capital (P238,000 x 3,125/5,000) 148,750 Abad, Capital (P238,000 x 1,875/5,000) 89,250

Santos:

Jan. 1 – Mar. 31 P260,000 x 3 P780,000Apr. 1 – Apr. 30 290,000 x 1 290,000May 1 – July 31 360,000 x 3 1,080,000Aug. 1 – Dec. 31 320,000 x 5 1,600,000

P3,750,000/12 P312,500 Abad:

Jan. 1 – May 31 P165,000 x 5 P825,000June 1 – Aug. 31 215,000 x 3 645,000Sept.1 – Dec. 31 195,000 x 4 780,000

P2,250,000/12 P187,500

3. Income Summary 238,000 Santos, Capital 147,750 Abad, Capital 90,250

Santos Abad TotalInterest on ave. capital P 18,750 P 11,250 P 30,000Salaries to partners 150,000 100,000 250,000Balance - equally ( 21,000) ( 21,000) (42,000)Net Profit P 147,750 P 90,250 P238 000

4. Income Summary 238,000


Santos, Capital 164,840 Abad, Capital 73,160

Santos Abad TotalBonus to Santos 25% (P238,000 - B) P 47,600 P 47,600Interest of 6% on excess average investment 6% (P312,500 - P187,500) 7,500 7,500Balance - 3:2 109,740 73,160 182,900Net Profit P 164,840 P73,160 P238,000

5. Income Summary 238,000 Santos, Capital (P238,000 x 15/25) 142,800 Abad, Capital (P238,000 x 10/25) 95,200

Exercise 1 – 5Sanchez and Gomez

Schedule of Distribution of Net ProfitDecember 31, 2008

Sanchez Gomez Total6% interest on average capital P 6,246 P 14.440 P 20,68610% bonus on net profit after interest 8,331 8,331Salaries 20,000 30,000 50,000Balance – 70%, 30% 17,488 7,495 24,983Net Profit P52,065 P51,935 P104,000

Computation of average capital:Sanchez, Capital Gomez, Capital

Jan. 1 P81,600 x 3 P 244,800 Jan. 1 P224,000 x 7 P1,568,000Apr. 1 P111,600 x 9 1,004,400 Aug. 1 P264,000 x 5 1,320,000

P1,249,200 P2,888,000

Ave. capital (P1,249,200/12) P104,100 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’ CapitalFor the Year Ended December 31, 2008

Sanchez Gomez TotalCapital, January 1 P 81,600 P224,000 P305,600Additional investment 30,000 40,000 70,000Net profit 52,065 51,935 104,000Drawings ( 41,600) ( 41,600) ( 83,200) Capital, December 31 P122,065 P274,335 P396,400

3. Sanchez Gomez Total

6% interest on average capital P 6,246 P14.440 P 20,686


10% bonus on net profit after interest 8,331 8,331 Balance – Salary ratio 34,083 40,000 74,983Net Profit P48,660 P 55,340 P104,000

Exercise 1-6

1. Mercado Puzon Total8% interest on beg capital P 48,000 P 54.000 P102,000Salaries 225,000 112,500 337,500 Balance 3:2 ( 38,700) ( 25,800) ( 64,500)Net Profit P234,300 P140,700 P375,000

2. Mercado Puzon Total8% interest on beg capital P 48,000 P 54.000 P102,000Balance – Salary ratio 182,000 91,000 273,000 Net Profit P230,000 P145,000 P375,000

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 P374,000Interest P200,000 x 10% P20,000Salary P8,000 x 12 96,000 116,000

Net profit before interest and salary P490,000Bonus rate x 25%Amount of bonus to Lirio 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 = .25 (P500,000 - Tax) T = .35 x P500,000 = P175,000

B = .25 (P500,000 – P175,000)B = P 81,250

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

Exercise 1 - 9


1. Estrella Felipe Garcia Jimenez Total

Salary P40,000 P20,000 P 60,000Bonus 6,000 4,000 10,000*Interest 10,000 9,000 P 4,000 P 9,400 32,400Balance 26,900 26,900 26,900 26,900 107,600Total P82,900 P59,900 P30,900 P36,300 P210,000

*B = 5% (P210,000 – B) = P10,0002.

Estrella Felipe Garcia Jimenez TotalSalary P40,000 P20,000 P 60,000Interest 10,000 9,000 P 4,000 P 9,400 32,400Balance ( 43,100) ( 43,100) ( 43,100) ( 43,100) (172,400)Total P 6,900 (P 14,100) (P39,100) (P33,700) (P 80,000)

3.Estrella Felipe Garcia Jimenez Total

Interest P10,000 P 9,000 P 4,000 P 9,400 P 32,400Bonus 6,000 4,000 10,000Salary 25,067 12,533 _______ ________ 37,600*Total P41,067 P25,533 P 4,000 P 9,400 P 80,000

*P37,600 x 4/ 6 = P25,067; P37,600 x 2/ 6 = P12,533

Exercise 1-10

1. Fees Earned 750,000Joseph, Capital 50,000 Luis, Capital 200,000 Operating Expenses 100,000 Income Summary 500,000

2. Income Summary 500,000 Joseph Capital 150,000 Luis, Capital 250,000 Nicolas, Capital 100,000

Exercise 1 – 11

1.Benito Cabral Duenas Total

Capital balances before payment of cash P120,000 P100,000 P100,000 P320,000Required capital balances based on on profit and loss ratio 128,000 112,000 80,000 320,000Cash received (paid) (P 8,000) (P 12,000) P 20,000 -

Journal entry on the partnership books

Duenas, Capital 20,000


Benito, Capital 8,000 Cabral, Capital 12,000

2.Benito Cabral Duenas Total

Capital balances before additional cash investment P120,000 P100,000 P100,000 P320,000Required capital balances based on lowest possible cash investment* 160,000 140,000 100,000 400,000Required 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 80,000 Benito, Capital 40,000 Cabral, Capital 40,000

3. Benito Cabral Duenas Total

Capital balances P120,000 P100,000 P100,000 P320,000Required capital 120,000 105,000 75,000 300,000Additional investment(withdrawals) -------- 5,000 (P

25,000)P 20,000

Duenas, Capital 25,000 Cash 20,000 Cabral, Capital 5,000

Exercise 1 – 12Enriquez and Flores

Schedule Showing Adjustments in CapitalFor the Year Ended December 31, 2008

Reported net profit P400,000Adjustments: Equipment purchased charged to expense P200,000 Depreciation on equipment ( 20,000) Overstatement of 2008 ending inventory ( 24,000) P156,000 x 65% 101,400Corrected net profit P501,400

Distribution of 2008 net profitEnriquez Flores Total

Salaries P120,000 P120,000 P240,000


Interest 30,000 45,000 75,000 Balance 51,000 34,000 85,000

P201,000 P199,000 P400,000

Distribution of 2008 corrected net profit Salaries P120,000 P120,000 P240,000 Interest 30,000 45,000 75,000 Balance 111,840 74,560 186,400

P261,840 P239,560 P501,400Adjustments P 60,840 P 40,560 P101,400

2. Equipment 200,000 Enriquez, Capital 60,840 Flores, Capital 40,560 Accumulated Depreciation 20,000 Inventory 24,000 Income Tax Payable 54,600

PROBLEMSProblem 1 – 1

1. a. Merchandise, Inventory 60,000 Ruiz, Capital 60,000

b. Ruiz, Capital 30,000 Allowance for Uncollectible Accounts 30,000

c. Interest Receivable 1,500 Ruiz, Capital 1,500 P150,000 x 6% x 2/12 = P1,500

d. Ruiz, Capital 7,500 Interest Payable 7,500 P300,000 x 10% x 3/12 = P7,500

e. Accumulated Depreciation 180,000Ruiz, Capital 60,000 Furniture and Fixtures 240,000

f. Office Supplies 5,000 Ruiz, Capital 5,000

g. Cash 524,500 Santos, Capital 524,500

Ruiz and SantosStatement of Financial Position

December 1, 2008


AssetsCash P 764,500Notes Receivable 150,000Accounts Receivable P900,000 Less Allowance for Uncollectible Accounts 90,000 810,000Interest Receivable 1,500Merchandise Inventory 300,000Office Supplies 5,000Furniture and Fixtures 480,000Total Assets P2,511,000

Liabilities and CapitalNotes Payable P300,000Accounts Payable 630,000Interest Payable 7,500Total Liabilities P 937,500Ruiz, Capital P1,049,000Santos, Capital 524,500Total Capital 1,573,500Total Liabilities and Capital P2,511,000

Problem 1-2

1. Cash 518,000Merchandise Inventory 1,152,000 Tomas, Capital 1,670,000

2. Accounts Receivable 1,792,000Merchandise Inventory 256,000Office Equipment 160,000Goodwill 198,000 Allowance for Uncollectible Accounts 160,000 Accounts Payable 576,000 Vicente, Capital 1,670,000

Tomas and VicenteStatement of Financial Position

June 1, 2008

AssetsCash P 518,000Accounts Receivable P1,792,000 Less Allowance for Uncollectible Accounts 160,000 1,632,000Inventories 1,408,000Office Equipment 160,000Goodwill 198,000Total Assets P3,916,000

Liabilities and CapitalAccounts Payable P 576,000Tomas, Capital P1,670,000Vicente, Capital 1,670,000 3,340,000


Total Liabilities and Capital P3,916,000

Problem 1 – 3

1. Merchandise Inventory 3,000Goodwill 3,000Accumulated Depreciation 900 Allowance for Uncollectible Accounts 1,000 Equipment 2,000 Rosas, Capital 3,900

Cash 5,000Accounts Receivable 46,000Merchandise Inventory 108,000Equipment 12,000Furniture and Fixtures 9,000Goodwill 3,000 Allowance for Uncollectible Accounts 4,000 Accounts Payable 54,000 Perlas, Capital 125,000

2. Cash 5,000Accounts Receivable 46,000Merchandise Inventory 108,000Equipment 12,000Furniture and Fixtures 9,000Goodwill 3,000 Allowance for Uncollectible Accounts 4,000 Accounts Payable 54,000 Perlas, Capital 125,000

Cash 7,000Accounts Receivable 49,000Merchandise Inventory 75,000Equipment 7,000Goodwill 3,000 Allowance for Uncollectible Accounts 5,000 Accounts Payable 36,000 Rosas, Capital 100,000

Problem 1 – 41. Cash 900,000

Inventories 1,500,000Equipment 3,000,000 Notes Payable 1,050,000 Serrano, Capital 4,350,000Cash 600,000Land 6,000,000 Mortgage Payable 1,950,000 Torres, Capital 4,650,000


Torres, Capital 150,000 Serrano, Capital 150,000

Purchases 900,000 Accounts Payable 900,000

Accounts Payable 720,000 Cash 720,000

Mortgage Payable 300,000Interest Expense 120,000 Cash 420,000

Notes Payable 225,000Interest Expense 75,000 Cash 300,000

Accounts Receivable 3,450,000 Sales 3,450,000

Cash 3,150,000 Accounts Receivable 3,150,000

Selling and General Expenses 870,000 Cash 630,000 Accumulated Depreciation 150,000 Accrued expenses 90,000

Serrano, Drawing 351,000Torres, Drawing 351,000 Cash 702,000

Income Tax 204,750 Income Tax Payable 204,750

Inventories, end 600,000Sales 3,450,000 Inventories, beginning 1,500,000 Purchases 900,000 Selling and General Expenses 870,000 Interest Expense 195,000 Income Tax 204,750 Income Summary 380,250

Income Summary 380,250 Serrano, Capital 192,150 Torres, Capital 188,100


Serrano Torres Total Interest on beginning capital P180,000 P180,000 P360,000 Salaries 150,000 100,000 250,000 Remainder – 60%, 40% ( 137,850) ( 91,900) ( 229,750) Net Profit P192,150 P188,100 P380,250

Serrano, Capital 351,000Torres, Capital 351,000 Serrano, Drawing 351,000 Torres, Drawing 351,000

Serrano and Torres PartnershipStatement of Recognized Income and Expenses

For the Year Ended December 31, 2008

Sales P3,450,000Cost of Goods Sold: Inventories, beginning P1,500,000 Purchases 900,000 Cost of Goods Available for Sale P2,400,000 Less Inventories, end 600,000 1,800,000Gross Profit P1,650,000Selling and General Expenses 870,000Operating Income P 780,000Interest Expense 195,000Net Profit before Income Tax P 585,000Income Tax 204,750Net Profit P 380,250

Serrano and Torres PartnershipStatement of Financial Position

December 31, 2008

AssetsCurrent Assets: Cash P1,878,000 Accounts Receivable (P3,450,000 – P3,150,000) 300,000 Inventories 600,000 P 2,778,000Property, Plant and Equipment: Land P6,000,000 Equipment P3,000,000 Less Accumulated Depreciation 150,000 2,850,000 8,850,000Total Assets P11,628,000

LiabilitiesCurrent Liabilities: Accounts Payable (P900,000 – P720,000) P180,000 Accrued Expenses 90,000 Income Tax Payable 204,750 P 474,750


Long-term Liabilities: Notes Payable (P1,050,000 – P225,000) P 825,000 Mortgage Payable (P1,950,000 – P300,000) 1,650,000 2,475,000Total Liabilities P 2,949,750

CapitalSerrano, Capital P4,341,150Torres, Capital 4,337,100Total Capital 8,678,25

0Total Liabilities and Capital P11,628,000

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 Bernabe, Capital 505,800 Burgos, Capital 194,200

Bernabe Burgos TotalInterest on beg. capital P 28,800 P 35,200 P 64,000Balance – 3:1 477,000 159,000 636,000Net Profit P 505,800 P 194,200 P700 000

2. Income Summary 700,000

Bernabe, Capital 284,000 Burgos, Capital 416,000

Bernabe Burgos TotalSalaries P 140,000 P 260,000 P400,000Interest on end capital 48,000 60,000 P108,000Balance – Equally 96,000 96,000 96,000Net Profit P 284,000 P 416,000 P700 000


Bernabe Burgos TotalSalaries P 90,000 P 170,000 P260,000Interest on average. cap 49,000 50,800 99,800Balance – 3:1 255,150 85,050 340,200Net Profit P 394,150 P 305,850 P700 000

Bernabe:Jan. 1 – May 31 P360,000 x 5 P1,800,00

0June 1 – Oct. 31 460,000 x 5 2,300,000Nov, 1 – Dec. 31 400,000 x 2 800,000


P4,900,000/12 P408,333 Burgos:

Jan. 1 – June 30 P440,000 x 6 P2,640,000

July 1 – Oct. 31 360,000 x 4 1,440,000Nov.1 – Dec. 31 500,000 x 2 1,000,000

P5,080,000/12 P423,333


Bernabe Burgos TotalSalaries P 100,000 P 200,000 P300,000Interest on average. cap 40,833 42,333 83,166Balance – 40%, 60% 126,734 190,100 316,834Net Profit P 267,567 P 432,433 P700 000


Bernabe Burgos TotalSalaries P 100,000 P 100,000 P220,000Interest on beg. cap 28,800 35,200 64,000Bonus 43,600 43,600Balance – 2:3 156,960 235,440 392,400Net Profit P 329,360 P 370,640 P700 000

B = 10%(NI –S – I)

Problem 1 – 7Sandy Tammy Manny Total

1. 6% interest on capital P 16,800 P 12,000 P 7,200 P 36,000Salaries 48,000 40,000 88,000Balance – 5:3:2 ( 74,500) ( 44,700) ( 29,800) (149,000)Net Profit P(57,700) P 15,300 P 17,400 P(25,000)

2. 6% interest on capital P 16,800 P 12,000 P 7,200 P 36,000Salaries 48,000 40,000 88,000Balance – 5:3:2 ( 32,000) ( 19,200) ( 12,800) ( 64,000)Net Profit P( 15,200) P 40,800 P 34,400 P 60,000

3. 6% interest on capital P 16,800 P 12,000 P 7,200 P 36,000Salaries 48,000 40,000 88,000Bonus 13,500 13,500Balance – 5:3:2 56,250 33,750 22,500 112,500Net Profit P 73,050 P107,250 P 69,700 P250,000

B = (P250,000 – P36,000 – P88,000 – P72,000)25% = P13,500

Problem 1 - 8


1. Delmar Pilar Total5% interest on capital P 2,500 P 1,500 P 4,000Salaries 12,000 8,000 20,00020% bonus on net profit 22,100 22,100Balance – capital ratio 40,250 24,150 64,400Net Profit P76,850 P33,650 P110,500

2. Sales 480,000 Cost of Goods Sold 210,000 Operating Expenses 100,000 Income Taxes 59,500 Income Summary 110,500

Income Summary 110,500 Delmar, Capital 76,850 Pilar, Capital 33,650

Delmar, Capital 6,000Pilar, Capital 10,000 Delmar, Drawing 6,000 Pilar, Drawing 10,000

Delmar and Pilar CompanyStatement of Changes in Partners’ CapitalFor the Year Ended December 31, 2008

Delmar Pilar TotalCapital balances, January 1, 2008 P 50,000 P30,000 P 80,000Add Distribution of net income for 2008: Interests P 2,500 P 1,500 P 4,000 Salaries 12,000 8,000 20,000 Bonus 22,100 22,100 Balance - capital ratio 40,250 24,150 64,400 Total share in net profit P 76,850 P33,650 P110,500

Total P126,850 P63,650 P190,500Less Drawings 6,000 10,000 16,000Capital balances, December 31, 2008 P120,850 P53,650 P174,500

Problem 1 - 9

Ramos, Gonzales and Martinez


Statement of Changes in Partners’ CapitalFor Three Years Ended December 31, 2008

Ramos Gonzales Martinez TotalCapital, January 1, 2006 P 80,000 P 48,000 P 40,000 P 168,000Distribution of net loss (Sch. 1) ( 2,000) ( 1,520) ( 2,000) ( 5,520)Withdrawals (12,000) (14,480) (16,000) (42,480)Capital, December 31, 2006 P 66,000 P 32,000 P 22,000 P120,000Distribution of net profit (Sch. 2) 7,960 8,320 7,720 24,000Withdrawals (13,960) (16,320) (17,720) (48,000)Capital, December 31, 2007 P 60,000 P 24,000 P12,000 P 96,000Distribution of net profit (Sch. 3) 21,840 18,840 18,120 58,800Withdrawals (20,400) (24,000) (21,200) (65,600)Capital, December 31, 2008 P 61,440 P 18,840 P 8,920 P 89,200

Schedule 1 - Distribution of 2006 net loss

Ramos Gonzales Martinez TotalSalaries to partners P 9,600 P 12,000 P 12,000 P 33,600Interest of 6% on beg. Capital 4,800 2,880 2,400 10,080Balance – equally (16,400) (16,400) (16,400) P 49,200Net income P( 2,000) P( 1,520) P( 2,000) P( 5,520)

Schedule 2 - Distribution of 2007 net profit

Ramos Gonzales Martinez TotalSalaries to partners P 9,600 P 12,000 P 12,000 P 33,600Interest of 6% on beg. Capital 3,960 1,920 1,320 7,200Balance – equally ( 5,600) ( 5,600) ( 5,600) (16,800)Net income P 7,960 P 8,320 P 7,720 P 24,000

Schedule 3 - Distribution of 2008 net profit

Ramos Gonzales Martinez TotalSalaries to partners P 9,600 P 12,000 P 12,000 P 33,600Interest of 6% on beg. Capital 3,600 1,440 720 5,760Bonus - 20% (P58,800 - P39,360 - B) 3,240 3,240Balance – equally 5,400 5,400 5,400 16,200Net income 21,840 18,840 18,120 58,800

Problem 1 -10Robles, Bernal and Reyes

Statement of Partners’ CapitalFor the Year Ended December 31, 2008


Robles Bernal

Reyes Total

Capital balances before closing the nominal accounts P120,000 P ( 2,000) P20,000 P138,000Add Distribution of net profit: Drawing allowance 20,000 14,000 10,000 44,000 Interest on average capital 7,200 240 560 8,000 Balance - 60%, 30%, 10% 58,800 29,400 9,800 98,000Total P206,000 P41,640 P40,360 P288,000Deduct Cash distribution 122,720 26,480 149,200Capital, December 31, 2008 P 83,280 P41,640 P13,880 P138,800

P206,000 / 60% = P343,333; P40,360 / 10% = P403,600P41,640 / 30% = P138,800 (required total capital)

Problem 1 - 11Chavez, Roman, and Valdez

Statement of Changes in Partners’ CapitalJanuary 1 to November 1, 2008

ChavezLoan

ChavezCapital

RomanCapital

ValdezCapital Total

Beginning balances P 80,000 P 80,000 P 80,000 P240,000Loan from Chavez P 60,000 60,000Transfer of equipment to Valdez ( 16,000) ( 16,000)Balances P 60,000 P 80,000 P 80,000 P 64,000 P284,000Distribution of loss on realization* Salary to Valdez 24,000 24,000 Int. to Chavez for 7 months 2,100 2,100 Balance divided equally* ( 76,700) ( 76,700) ( 76,700) ( 230,100) Balances P 60,000 P 5,400 P 3,300 P 11,300 P 80,000 Dist. of cash in final settlement 60,000 5,400 3,300 11,300 80,000

*Total partners’ equity as shown above P284,000 Less Cash available for distribution 80,000 Loss on realization P204,000 Less Salary and interest 26,100 Total loss to be divided equally P230,100

Problem 1 - 12Canlas, David, Estrella and Fajardo

Statement of Changes in Partners’ Capital AccountsFor the Year Ended December 31, 2008


Canlas David Estrella Fajardo TotalInvestment P309,000 P159,000 P327,000 ------- P 795,000Net profit 237,700 186,230 140,310 P 24,010 588,250Total P546,700 P345,230 P467,310 P 24,010 P1,383,250Less: Excess rent (P225 x 6) P 13,500 P 13,500 Withdrawals P 78,000 P 66,000 87,000 P 37,500 268,500 Uncollectible accounts 18,000 6,750 24,750

P 96,000 P 72,750 P100,500 P 37,500 P 306,750Capital, December 31 P450,700 P272,480 P366,810 P(13,490) P1,076,500

Supporting computations:

Revenue from fees P 900,000Expenses: Total expenses, excluding depreciation and uncollectible accounts (P290,000 - P13,500) P 276,500 Depreciation [(P195,000 x 10%) + (P75,000 x 5%) 23,250 Doubtful accounts (P24,000 x 50%) 12,000 311,750Net profit P588,250

Distribution of net income

Canlas David Estrella Fajardo Total20% of gross fees from respective clients P 66,000 P 36,000 P 33,000 P135,00020% of fees after April 1 after expenses but before bad debts P24,010* 24,010Balance -Canlas-40%, David-35%, Estrella-25% 171,700 150,230 107,310 429,240Total P237,700 P186,230 P140,310 P24,010 P588,250

After April 1Revenues P 180,000Expenses before uncollectible accounts (P276,500 + P23,250) x 180 / 900 59,950

P120,050 20%Share of Fajardo P 24,010

Problem 1-13

1. Equipment 13,500 Accumulated Depreciation 1,350 Profit and Loss 12,150

2. Profit and Loss 4,375 Interest Payable 4,375 P87,500 x 6% x 10/12 = P4,375

3. Profit and Loss 159,025


Abaya, Capital 63,700 Reyes, Capital 95,505

Abaya Reyes Total Salaries P 39,000 P 58,500 P 97,500 Bonus [25% x (NI – B – S) ] 12,305 12,305 Balance – equally 24,610 24,610 49,220 Total P 63,610 P 95,415 P159,025

4. Abaya, Capital 36,000Reyes, Capital 62,500 Abaya, Drawing 36,000 Reyes, Drawing 62,500

Problem 1-14

1. Jaime = 5/10 x 80% = 40% Soriano = 2/10 x 80% = 16%Madrid = 3/10 x 80% = 24% Matias = 20%

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 Soriano = P240,250 x 16% = P38,440Madrid = P240,250 x 24% = P57,660 Matias = P240,250 x 20% = P48,050

MULTIPLE CHOICE

1. D2. D3. A4. C

TotalAbena (60%)

Buendia (40%)

Abena – MV – Cost (P90,000 – P60,000) P30,000 P18,000 P12,000Buendia – MV – Cost (P60,000 – P70,000) ( 10,000) ( 6,000) ( 4,000)Actual P20,000 P12,000 P 8,000Inequity ( 20,000) ( 30,000) 10,000

P 0 (P18,000) P18,000

5. A6. C7. B8. B Molina’s contribution (P190,000 – P60,000) P130,000

Nuevo’s tangible contribution 100,000Total capital contributions P230,000

x 60%Capital credit of Molina P 138,000Contribution of Molina 130,000Bonus to Molina P 8,000

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

11. Roxas = P650,000 – P590,700 = P59,300Bernardo = 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%) P172,500Non-cash contributions of Esteban (P125,000 – P30,000) 95,000Cash contribution P 77,500

17. Contribution of Diaz P115,000Contribution of Esteban (P125,000 – P30,000 + P50,000) 145,000Total partnership capital P260,000

18. C P115,000 + P95,000 = P210,000/2 P105,000

19. A Net increase (decrease) in capital (P120,000)Add Withdrawals 260,000Total (P140,000)Less Additional investments 50,000Profit share P 90,000Profit share percentage ÷ 30%Total partnership net profit P300,000

20. C21. B22. C Net profit (exclusive of salary, interest and bonus) P 93,500

Salary (P2,000 x 12) 24,000Interest (P50,000 x 5%) 2,500Net profit after deduction of bonus P120,000Bonus = .20 (P120,000 + Bonus) = P24,000 + .20 Bonus = P24,000/.80 = P30,000

23. D24. C Alberto Bustos Cancio Total

10% x P1,000,000 P 100,000 P 100,00020% x P1,500,000 300,000 300,0005% (P1M – P400,000) P30,000 P30,000 60,000Balance – equally 680,000 680,000 680,000 2,040,000


Net income P1,080,000

25. A Ramos Campos Ocampo TotalInterest P24,000 P12,000 P 8,000 P 44,000Salaries 60,000 40,000 100,000Balance – equally ( 70,000) (70,000) ( 70,000) ( 210,000)

P14,000

26. C Sison Torres Velasco TotalBonus - 10%(P44,000 - B) P 4,000 P 4,000Interest on capital in excess of P100,000 P 1,000 1,000Salaries to partners P10,000 12,000 22,000Balance - 4:4:2 6,800 6,800 3,400 17,000

P19,400 P44,000

27. B Sison Torres Velasco TotalBonus - 10%(P22,000 - B) P 2,000 P 2,000Interest on capital in excess of P100,000 P 1,000 1,000Salaries to partners P10,000 12,000 22,000Balance - 4:4:2 (1,200) (1,200) (600) (3,000)

P13,400 P22,000

28. D Sison Torres Velasco TotalBonus - 10%(P22,000 - B) P 2,000 P 2,000Interest on capital in excess of P100,000 P 1,000 1,000Balance – Salary ratio P8,636 10,364 19,000

P12,364 P22,000

29. A Average capital of Tamayo Average capital of Vidal P100,000 x 6 = P 600,000 P225,000 x 9 = P2,025,000 160,000 x 6 = 960,000 155,000 x 3 = 465,000 P1,560,000/12 P2,490,000/12 P130,000 P207,500

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 P 48,750Salaries to partners 144,000Balance - divided equally 9,000

P 201,750

31. B Total capital before net income (P475,000 + P60,000 – P70,000) P465,000


Add Net profit 201,750Total capital, Dec. 31, 2008 P666,750

32. D Andal Briones Camba TotalInt. on average capital P 47,250 P 23,865 P 16,235 P 87,350Salaries to partners 122,325 82,625 204,950Balance - equally (139,308) (139,308) (139,308) (417,924)Net increase (decrease) P 30,267 P(115,443) P( 40,448) P(125,624)

33. C Net income = Net sales - CGS - Depr. - Oper. exp. Others) = P228,000 - P123,000 - P7,500 - P58,100 x 65%

P25,610

Mariano Lucas totalSalary to partner for 10 mos. P10,000 P 10,000Bonus to managing partner 1,561 1,561Balance – based on orig. cap. 8,781 P 5,268 14,049TOTAL share in profit P 20,342 P 5,268 P 25,610

34. A TOTAL share in profit P 20,342 P 5,268 P 25,610Add Capital, beginning 125,000 75,000 200,000TOTAL P145,342 P 80,268 P 225,610Less Withdrawals 20,000 30,000 50,000Capital, end P125,342 P 50,268 P 175,610

35. D Belen Lorna Ursula Edna Total36. A Interest P 5,000.00 P 2,500.00 P 2,500.00 P2,000.00 P12,000.0037. A Salaries 10,000.00 6,000.00 16,000.00

Balance 10,000.00 10,000.00 6,666.67 6,666.67 33,333.34Add’l profit for Edna ________ ________ _________ 3,333.33 3,333.33

Net profit P25,000.00 P18,500.00 P9,166.67 P12,000.00 P64,666.67

38. B Puno Quirino Romero TotalSalaries P40,000 P36,000 P13,650 P 89,650Bonus 13,000 13,000Interest 1,000 750 4,600 6,350Balance 7,000 7,000 7,000 21,000Total P61,000 P43,750 P25,200 P130,000

Computation of average capital: Puno, capital Jan. 1 – P10,000 x 3 P 30,000 Apr 1 - 9,000 x 3 27,000 July 1 - 11,000 x 3 33,000 Oct. 1 - 10,000 x 3 30,000

P120,000 / 12 P10,000


Quirino, capital Jan. 1 – P 6,000 x 6 P 36,000 July 1 - 10,000 x 3 30,000 Oct. 1 - 8,000 x 3 24,000

P 90,000 / 12 P 7,500

Romero, capital Jan. 1 – P40,000 x 3 P120,000 Apr. 1 - 38,000 x 3 114,000 July 1 - 53,000 x 6 318,000

P552,00 / 12 P46,000

Let X = Net IncomeP40,000 + 10% X + P1,000 + 1/3 (X – P89,650 – 10% X – P6,350 = P61,000P40,000 + 10% X + P1,000 + 1/3 (90% X – P96,000) = P61,000P40,000 + 10% X + P1,000 + 30% X – P32,000 = P61,00010% X + 30% X = P61,000 – P40,000 – P1,000 + P32,00040% X = P52,000 X = P130,000

39. D Legarda- 5/10 x 80% = 40% Sotto - 2/10 x 80% = 16%Madrigal-3/10 x 80% = 24% 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 Toledo2008 Net income (P50,000 – P8,000) P42,000Salary to Serrano ( 36,000) P36,000Remainder P 6,000Divided equally ( 6,000) 3,000 P 3,000

Understatement in 2007 NI P8,000Divided 60:40 ( 8,000) 4,800 3,200

Income allocation P43,800 P 6,200

chapter1aa1sol _ advanced accounting

Documents

income summary

income summary

fixtures goodwill

torres partnership

benito capital

capital salaries

net income

uncollectible