solution manual - partnership & corporation, 2014-2015.pdf
TRANSCRIPT
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Partnership and Corporation
Solution Manual
2014-2015
Chapter 1
Review of the Accounting Process
** Quizzers
Problems **
I. B 25,000 B100,000
II. Maria Julieta Lopez Allera-Alegrado
Assets = Liabilities + Capital
Cash A/RAccruedIncome =
=
AccountsPayable
AccruedExpense +
+
AlegadoCapital Revenue Expenses
Beg. Bal. 150,000 80,000 48,000 100,000 122,000 (40,000)
AJE#1
5,000 (5,000)
(6,000) (6,000)#2 (3,000) (3,000)
#3 15,000 (15,000)
8,000 8,000149,000 72,000 8,000 42,000 15,000 100,000 130,000 (58,000)
A - 229,000 = 57,000 + 172,000
III. P. Amandoron Company
Current Assets 350,000Property and Equipment 1,200,000 1,550,000
Less: Current Liabilities 125,000Long Term Liabilities 575,000 700,000
Owners Equity 850,000 - D
IV. Ruben Realty Co.
36,000 = P3,000 x 5 = P15,000 - A
12
36,000 = P3,000 x 7 = P21,000 - B
12
V. Evelyn T. Alegre
Assets = Liability + Owners Equity
Cash in Bank 850,000 + 30,000
Office Equipment 300,000 1,150,000 + 30,000
Office Furniture 60,000 = 60,000
1,240,000 = 60,000 + 1,180,000 - D
VI. Raul Langbid Co.
truck P18,000 = P1,500 x 3 = P4,500
12
building P15,000 = P1,250 x 3 = 3,750
12 P 8,250 -A
VII. Blas Sardido Co.
Sales (250,000 x P 15) 3,750,000
Cost of Sales:
Beg. Inventory -
Purchases (400,000 x P11) 4,400,000
Available for Sale 4,400,000
Less: Ending Inventory (150,000 x P11) 1,650,000 2,750,000
Gross Profit 1,000,000 - none of the choices
VIII. Alfredo Yao Co.
ERRATUM: Available for Sale P26,000 instead of P6,000
Beg. Inventory 15,000 - D
Purchases 10,000
Freight In 1,000
Available for Sale 26,000
Ending Inventory 5,000 - D
Cost of Sales 21,000
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IX. Rolando Ibaez Enterprises
Accounts Payable Accounts Receivable
P35,000 BB BB 350,000 5,000 Write-off
Payment 25,000 20,000 On acct. Billing 100,000 145,000 - A
30,000 - A 300,000
X. Vicente Chotangco, Jr.
Accounts ReceivableBB 50,000 36,000
60,000 4,000 - A
110,000 40,000
70,000
XI. E. Detoya & Sons
Accounts Receivable
BB 100,000 2,000
67,000
100,000 69,000
31,000
80,000 Sales
49,000 Account Sales
90,000 Cash Sales
139,000 - B
XII. L. Caminade Enterprises
Accounts Payable
20,000 70,000 BB
50,000 Account Purchases
80,000 Cash Purchases
130,000 Total Purchases - B
XIII. Laureano Cacho Trading
1,240,000100,000 = 1,140,000 = 228,000
5 years 5
Cost of Machine P1,240,000
Less: Acc. Depn. 228,000
Net Book Value P1,012,000
Sold at 960,000
Loss on disposal (P 52,000) - A
XIV. Santos Advertising Agency
130 days 3160 days 61 days and over
Gomezano 10,000 20,000
SM Marketing 15,000 30,000 20,000
Yu and Sons 35,000 45,000 5,000
60,000 95,000 25,000x 5% x 8% x 10%
3,000 7,600 2,500 = 13,1008,000 = 5,100 - A
XV. Leopoldo Medina Trading
250 units x P31 = P7,750 P27,605 835 x 315 = P10,413.86 Average
65 x 33 = 2,145 - 9,895.00
FIFO P9,895 - C P 518.86 bigger - B
XVI. Lucky Strike Co.
Beg. Inventory P 3,450,000
Purchases 2,740,000
Freight In 20,000
Purchase Ret. & Allow. ( 25,000)
Available for Sale P 6,185,000
Cost of Goods Sold:
Sales P4,500,000
Less: Gross Profit (40%) 1,800,000 2,700,000
Estimated Inventory, end P3,485,000 - A
Less: Actual Inventory after fire 2,948,000
Damaged by fire P 537,000 - C
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XVII. Universal Financing Co.
Principal P50,000 x 15% 90 days = P 1,875
360 50,000
P 51,875 MV -C
P 1,875 3 x 2 = P1,250 - A
Interest Expense 1,250
Accrued Interest Expense 1,250
** Quizzers **
Test III
Manufacturing Income Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr.
1) Finished Goods, Beg.
2) Finished Goods, End
3) Goods in Process, Beg.
4) Goods in Process, End
5) Raw Materials, Beg.
6) Raw Materials, End
7) Factory Supplies Inventory
8) Factory Supplies Used
9) Salaries - Office
10) Salaries - Factory
11) Repair - Office Equipment
12) Repairs - Factory Equipment
13) Light and Water - Office
14) Light and Water - Factory
15) Tools Used
16) Patents
17) Amortization of Patents
18) Purchases, Raw Materials 19) Freight In
20) Sales
Test IVMultiple Choice (Problem)
1. Raw Materials, Beg. P 120,000
Purchases, Raw Materials 110,000
Freight In 5,000
Available for Sale P 235,000
Less: Raw Materials, End 105,000
Direct Materials P 130,000 (B)
2. Direct Materials P 130,000Direct Labor 308,000
Prime Cost P 438,000 (A)
3. Manufacturing Overhead:
Indirect Labor P 45,000
Indirect Materials 65,000
Amortization of Trademark 50,000
Real Expense - Factory 25,000
Depreciation - Factory 40,000
Factory Overhead P 225,000 (A)
4. Conversion Cost:
Direct Labor P 308,000
Manufacturing Overhead 225,000
P 533,000 (A)
5. Factory Cost:
Direct Materials P 130,000
Direct Labor 308,000
Manufacturing Overhead 225,000
P 663,000 (C)
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6. Cost of Goods Manufactured:
Direct Materials P 130,000
Direct Labor 308,000
Manufacturing Overhead 225,000
Factory Cost P 663,000
Add: Work in Process, Beg. 250,000
Total cost placed in process P 913,000
Less: Work in Process, End 275,000
Cost of Goods Manufactured P 638,000 (A)
7. Cost of Goods Manufactured P 638,000
Finished Goods, Inventory 170,000
Goods Available for Sale P 808,000
Less: Finished Goods, End 290,000
Cost of Goods Manufactured and sold P 518,000 (A)
Chapter 2
PartnershipNature and Information
** Exercises/Problems **
2-1. Sanada and Estrebilla
Requirement 1: Cash 250,000
Merchandise Inventory 160,000
Saada, Capital 410,000
Cash 380,000
Delivery Car 950,000
Estrebilla, Capital 1,330,000
Requirement 2:
Current Assets: Partners Equity
Cash P 630,000
Merchandise 160,000 P 790,000 Saada, Capital P 410,000
Estrebilla, Capital 1,330,000
Non-Current Assets:
Delivery Equipment 950,000
Total Assets P1,740,000 P1,740,000
2-2. Maula, Montecina and Maceda
Requirement 1a: Cash P200,000
Furniture and Fixtures 120,000
Transportation Equipment 850,000
Accounts Payable P 100,000
Maula, Capital 270,000
Montecina, Capital 800,000
Jeremy Maceda was admitted in the partnership as anindustrial partner with a 15% share in profit.
Requirement 1b: Cash P200,000
Furniture and Fixtures 120,000
Transportation Equipment 850,000
Maula, Capital 270,000
Montecina, Capital 900,000
** (Same notation for Maceda)
Requirement 2:
Assets Current Liabilities
Current Assets Accounts Payable 100,000
Cash 200,000
Non-Current Assets Partners Equity
Furniture & Fixtures 120,000 Maula, Capital 270,000
Transportation Equipment 850,000 970,00 Montecina, Capital 800,000
Maceda, Capital -
Total Partners Equity 1,070,000
Total Assets 1,170,000
Total Liability &
Partners Equity 1,170,000
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2-3. Malquisto and Rocabo
Requirement 1: Debits:
Cash P 375,000
Accounts Receivable 90,000
Merchandise 420,000
Equipment 250,000 P1,135,000
Credits:
Estimated Uncollectible P 1,000Accumulated Depreciation 50,000
Accounts Payable 75,000 126,00
Account balance of Malquisto P1,009,000
Requirement 2: a) Malquisto, Capital 4,000
Estimated Uncollectible Account 4,000
b) Malquisto, Capital 30,000
Merchandise 30,000
c) Malquisto, Capital 20,000
Accumulated Depreciation 20,000
d) Malquisto, Capital 1,500
Accrued Utilities 1,500
Requirement 3: Est. Uncollectible Accounts 5,000
Accumulated Depreciation 70,000
Accounts Payable 75,000
Accrued Utilities Expense 1,500
Malquisto, Capital 953500
Cash 375,000
Accounts Receivable 90,000
Merchandise 390,000
Equipment 250,000
Requirement 4: Malquisto and Rocabo
Statement of Financial Position
As of _________
Assets Liabilities
Current Assets: Accounts Payable 75,000
Cash 851,750 Accrued Utilities Expense 1,500 76,500
Accounts Receivable 90,000
Est. Uncollectible Account 5,000 85,000 Partners Equity
Merchandise 390,000 Malquisto, capital 953,500
Non-Current Assets: Rocabo, Capital 476,750 1,430,750
Equipment (Net) 180,000
Total Liabilities & Owners Equity 1,506,750Total Assets 1,506,750
(the account Accumulated Depreciation is no longer carried in the book of the partnership)
2-4. Malquisto, Beringuel and Alemanza
Requirement 1:
Adjusting entries in their respective Sole Proprietorship Book
Malquisto Beringuel Alemanza
1) Malquisto, Capital 4,000 Est. Uncoll. Acct. 500 Alemanza, Capital 1,500
Est. Uncoll. Acct. 4,000 Beringuel, Capital 500 Est. Uncoll. Acct. 1,500
2) Malquisto, Capital 42,000 Beringuel, Capital 60,000 Alemanza, Capital 45,000
Merchandise 42,000 Merchandise 60,000 Merchandise 45,000
3) Malquisto, Capital 5,000 Beringuel, Capital 100,000 Alemanza, Capital 5,000Acc. Depn. 5,000 Acc. Depn. 100,000 Acc. Depn. 5,000
4) Cash 50,000 Cash 150,000 Cash 250,000
Malquisto, Capital 50,000 Beringuel, Capital 150,000 Alemanza, Capital 250,000
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Requirement 2: Closing Entries in their respective sole proprietorship book.
Malquisto Beringuel Alemanza
Est. Uncoll. Acct. 7,000 Est. Uncoll. Acct. 4,500 Est. Uncoll. Acct. 3,500
Acc. Depn. 185,000 Acc. Depn. 330,000 Acc. Depn. 180,000
Malquisto, Capital 1,556,000 Beringuel, Capital 1,625,500 Alemanza, Capital 1,246,500
Cash 950,000 Cash 850,000 Cash 750,000
A/R 70,00 A/R 90,000 A/R 25,000
Merchandise 378,000 Merchandise 540,000 Merchandise 405,000Equipment 350,000 Equipment 480,000 Equipment 250,000
Requirement 3: Compound Opening Journal Entry
Cash 3,000,000
Accounts Receivable 185,000
Merchandise 1,323,000
Equipment 358,000
Estimated Uncollectible Account 15,000
Malquisto, Capital 1,606,000
Beringuel, Capital 1,775,500
Alemanza, Capital 1,496,500
(Accumulated Depreciation-Equipment is no longer shown in the opening-entry)
2-5. Laureto and Auditor Partnership
Assumption 1
Requirement 1: Journal Entries to close their Respective Sole Proprietorships Book
Laureto Auditor
Accounts Payable 50,000 Accounts Payable 75,000
Notes Payable 20,000 Allow. for Doubtful Accounts 12,000
Interest Payable 500 Acc. Depn. Equipment 40,000
Allow. for Doubtful Accounts 10,000 Auditor, Capital 389,000
Accumulated Depreciation 15,000 Cash 186,000
Laureto, Capital 275,500 Accounts Receivable 120,000Cash 125,000 Merchandise 150,000
Accounts Receivable 80,000 Equipment 60,000
Notes Receivable 50,000
Interest Receivable 1,000
Merchandise 75,000
Equipment 40,000
Requirement 2: Journal Entries to record investment in the Partnership Book
Laureto Auditor
Cash 125,000 Cash 186,000
Accounts Receivable 80,000 Accounts Receivable 120,000
Notes Receivable 50,000 Merchandise 150,000
Interest Receivable 1,000 Equipment 20,000Merchandise 75,000 Accounts Payable 75,000
Equipment 25,000 Allowance for Doubtful Accounts 12,000
Allowance for Doubtful Accounts 10,000 Auditor, Capital 389,000
Accounts Payable 50,000
Notes Payable 20,000
Interest Payable 500
Laureto, Capital 275,000
Assumption 2
Requirement 1: Adjusting Entries
Book of Laureto Book of Auditor
Laureto, Capital 6,000 Auditor, Capital 12,000
Allowance for Doubtful Acct. 6,000 Allowance for Doubtful Acct. 12,000
Laureto, Capital 3,750 Auditor, Capital 7,500
Merchandise 3,750 Merchandise 7,500
Laureto, Capital 17,000 Auditor, Capital 8,000
Acc. Depn. Equipment 17,000 Acc. Depn. Equipment 8,000
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Closing Entries in their Respective Sole Proprietorship Book
Book of Laureto Book of Auditor
Allowance for Doubtful Acct. 16,000 Allowance for Doubtful Acct. 24,000
Acc. Depn. Equipment 32,000 Acc. Depn. Equipment 48,000
Accounts Payable 50,000 Accounts Payable 75,000
Notes Payable 20,000 Auditor, Capital 361,500
Interest Payable 500 Cash 186,000
Laureto, Capital 248,750 Accounts Receivable 120,000
Cash 125,000 Merchandise 142,500
Accounts Receivable 80,000 Equipment 60,000
Notes Receivable 50,000
Interest Receivable 1,000
Merchandise 71,250
Equipment 40,000
Requirement 2: Journal Entries to record investment in the Partnership Book
Laureto Auditor
Cash 125,000 Cash 186,000
Accounts Receivable 80,000 Accounts Receivable 120,000
Notes Receivable 50,000 Merchandise 142,000
Interest Receivable 1,000 Equipment 12,000
Merchandise 71,250 Allowance for Doubtful Accts. 24,000Equipment 8,000 Accounts Payable 75,000
Allowance for Doubtful Accts. 16,000 Auditor, Capital 361,500
Accounts Payable 50,000
Notes Payable 20,000
Interest Payable 500
Laureto, Capital 248,750
2-6. Mendez and Salazar
ERRATUM: P300,000 cost of building was Salazars investment
Requirement 1a: Cash 300,000
Building 300,000
Furniture 70,000Mendez, Capital 140,000
Salazar, Capital 530,000
Requirement 1b: Cash 300,000
Accounts Receivable 30,000
Building 300,000
Furniture 70,000
Accounts Payable 20,000
Mendez, Capital 170,000
Salazar, Capital 510,000
2-7. Dabucol and Miranda
Compound Journal Entry
Cash 220,000
Computer 550,000
Furniture & Fixtures 200,000
Prepaid Rental 6,000 566,000
Dabucol, Capital 410,000
Miranda, Capital
Computations:
Dabucol Miranda Total
Cash 100,000 120,000 220,000
Computer 300,000 250,000 550,000
Furniture & Fixtures 160,000 40,000 200,000
Prepaid Rental 6,000 - 6,000
566,000 410,000 976,000
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2-8. Torralba and Rosada
Requirement 1:
Debits:
Cash 85,000
Accounts Receivable 60,000
Merchandise 120,000
Equipment 150,000 415,000
Credits:Allow. For Doubtful Accounts 4,000
Acc. Depreciation 30,000
Accounts Payable 80,000 114,000
Torralba, Capital 301,000
Requirement 2:
Allow. for Doubtful Accounts 3,000
Torralba, Capital 3,000
Torralba, Capital 15,000
Merchandise 15,000
Torralba, Capital 15,000
Accumulated Depreciation 15,000
Accounts Payable 4,000
Torralba, Capital 4,000
Requirement 3:
Allow. for Doubtful Accounts 1,000
Accumulated Depreciation 45,000
Accounts Payable 76,000
Torralba, Capital 278,000
Cash 85,000
Accounts Receivable 60,000
Merchandise 105,000
Equipment 150,000
Requirement 4:
Cash (85,000+1/2 of P278,000) 224,000
Accounts Receivable 60,000
Merchandise 105,000
Equipment 105,000
Allow. for Doubtful Accounts 1,000
Accounts Payable 76,000
Torralba, Capital 278,000
Rosada, Capital (1/2 of P278,000) 139,000
Requirement 5:
Torralba and Rosada PartnershipStatement of Financial Position
As of _________
Assets Liabilities
Cash 224,000 Accounts Payable 76,000
Accounts Receivable 60,000
Less: Allow. For Doubtful Accounts 1,000 59,000 Partners Equity
Merchandise 105,000 Torralba, Capital 278,000
Current Assets 338,000 Rosada, Capital 139,000 417,000
Non-Current Assets:
Equipment 105,000 Total Liability & Partners Equity 493,000
Total Assets 493,00
2-9. Galbog and Torrequemada
Requirement 1:
Glabog, Capital 15,000
Estimated Uncollectible Account 15,000
Glabog, Capital 30,000
Merchandise 30,000
Glabog, Capital 20,000
Accumulated Depreciation 20,000
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Requirement 2: Journal Entries to close the books of Glabog
Allow. for Doubtful Accounts 15,000
Accumulated Depreciation 20,000
Accounts Payable 60,000
Glabog, Capital 670,000
Cash 320,000
Accounts Receivable 75,000
Merchandise 220,000
Equipment 150,000
Requirement 3:
Assets Liability
Current Assets:
Cash (P320,000 + P500,000) 820,000 Accounts Payable 60,000
Accounts Receivable 75,000
Allow. for Doubtful Accounts 15,000 60,000 Partners Equity
Merchandise 220,000 Glabog, Capital 670,000
Non-Current Asset: Torrequemada, Capital 500,000 1,170,000
Equipment 130,000 Total Liability &
Total Assets 1,230,000 Partners Equity 1,230,000
2-10. Angie Aguilon Company
Requirement 1: Capital Contribution of Zulueta
Unadjusted capital of Aguilon 267,000
Accounts Receivable to be derecognized ( 25,000 )
Recognized prepaid expenses 13,000
Revaluation of Equipment 25,000
Adjusted Aguilon Capital 280,000
Capital contribution of Zulueta is equal to P280,000,Matching the adjusted capital of Aguilon.
Requirement 2:
Angie Aguilon Company
Statement of Financial Position
As of June 30 __________
Assets Liability
Accounts Payable 45,000
Cash 35,000 Accrued Expenses 18,000
Merchandise 185,000 Total Liabilities 63,000
Prepaid Expense 13,000 233,000
Non-Current Asset:
Equipment 120,000 Partners Equity
Acc. Depreciation 10,000 110,000 A. Aguilon, Capital 280,000
Total Assets 343,000 Total Liability & Partners Equity 343,000
2-11. Misamis Construction Supply
Requirement A: Hingcos Capital Balance
Debits:Cash in Bank 420,000
Accounts Receivable 82,000
Merchandise Inventory 100,000
Equipment 130,000
Total Debit 732,000
Credits:
Allow. for Doubtful Accounts 8,500
Acc. Depreciation 15,000
Total Credit 23,500
Hingco's Capital Balance 708,500
Barillo's Capital Balance
Debits:Cash in Bank 450,000
Accounts Receivable 60,000
Merchandise Inventory 250,000
Total Debit 760,000
Credits:
Allow. for Doubtful Accounts 7,500
Barillo's Capital Balance 752,500
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Requirement B: a) Allow. for Doubtful Accounts 8,500
Hingco, Capital 73,500
Accounts Receivable 82,000
Allow. for Doubtful Accounts 7,500
Barillo, Capital 52,500
Accounts Receivable 60,000
b) Hingco, Capital 10,000
Merchandidse 10,000
Barillo, Capital 20,000
Merchandidse 20,000
c) Acc. Depreciation 5,000
Hingco, Capital 5,000
Requirement C: Cash in Bank 420,000
Merchandise Inventory 90,000
Equipment 120,000
Hingco, Capital 630,000
Cash in Bank 450,000
Merchandise Inventory 230,000
Barillo, Capital 680,000
Requirement D: Hingco and Barillo
Statement of Financial Position
As of July 31 20__
Assets Partners Equity
Cash in Bank 870,000 Hingco, Capital 630,000
Merchandise Inventory 320,000 Barillo, Capital 680,000
Equipment 120,000
Total 1,310,000 Total 1,310,000
2-12. Janulgue and Rota
Requirement 1:
Janulque's Book:
Janulgue, Capital 30,000
Allow. for Doubtful Accounts 30,000
Janulgue, Capital 10,000
Acc. Depreciation 10,000
Rota's Book:
Rota, Capital 30,000
Merchandise 30,000
Accounts Payable 25,000
Rota, Capital 25,000
Requirement 2:
To record the contribution of Janulgue
Cash 180,000
Accounts Receivable 200,000
Merchandise 500,000
Prepaid Insurance 6,000
Equipment 70,000
Allow. for Doubtful Accounts 50,000
Janulgue, Capital 906,000
To record the contribution of Rota
Cash 150,000Accounts Receivable 100,000
Merchandise 620,000
Allow. for Doubtful Accounts 2,000
Rota, Capital 868,000
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2-13. Medina and Loqueloque
Adjusting Entries in the books of Medina
Requirement 1: a) Medina, Capital 4,750
Allow. for Doubtful Accounts 4,750
b) Medina, Capital 25,000
Merchandise 25,000
c) Acc. Depreciation 90,000Medina, Capital 90,000
d) Medina, Capital 60,000
Accrued Rental Expense 60,000
e) Prepaid Expenses 25,000
Medina, Capital 25,000
Requirement 2: Loqueloque should contribute cash of P3,795,250 equal to the capital balance of Medina
computed as follows:
Capital balance of Medina before adjustment 3,770,000
Add: Adjustment 25,250
3,795,250
Journal Entries to open the book of the Partnership:
Requirement 3: Cash 4,845,250
Accounts Receivable 65,000
Merchandise 2,325,000
Prepaid Expenses 25,000
Store Equipment 850,000
Allow. for Doubtful Accounts 9,750
Accounts Payable 450,000
Accrued Rental Expense 60,000
Medina, Capital 3,795,250
Loqueloque, Capital 3,795,250
2-14. Pamulagan and Salec-Amer
Requirement 1: a) Amer, Capital 10,000
Allow. for Doubtful Accounts 10,000
b) Amer, Capital 2,000
Accrued Expense Payable 2,000
c) Amer, Capital 10,000
Merchandise P10,000
Requirement 2: Cash in Bank 543,000
Pamulagan, Capital 543,000
Cash in Bank 250,000
Accounts Receivable 100,000
Merchandise Inventory 95,000
Furniture and Fixtures 130,000
Allow. for Doubtful Accounts 10,000
Accrued Expense 2,000
Accounts Payable 20,000
Amer, Capital 543,000
Requirement 3:
Assets Liabilities
Cash in Bank 793,000 Accounts Payable 2,000
Accounts Receivable 100,000 Accrued Expense 20,000
Allow. for Doubtful Account 10,000 90,000 Total Liabilities 22,000
Merchandise Inventory 95,000
Furniture and Fixtures 130,000 Partners Equity
Total Assets 1,108,000 Amer, Capital 543,000
Pamulagan, Capital 543,000
Total Partners Equity 1,086,000
Total Liabilities and
Partners Equity 1,108,000
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2-15. Degracia and Mascarias
Mascarias offered Investment:
Cash 200,000
Equipment 80,000
Total 280,000
Degracia's Adjusted Capital Balance:
Cash 80,000
Merchandise 175,000
Total 255,000
1/2 of P280,000 140,000
Degracia's adjusted investment 255,000
Reduction from Degracia's Investment 115,000
Composed of:
Cash 80,000
Merchandise 35,000
115,000
Requirement 1: 1/2 of Mascarias offered Investment of P280,000 140,000
Degracia's Investment 255,000
Reduction from Degracia's Investment 115,000
Cash 80,000
Merchandise 35,000
115,000
Requirement 2: Estimated Uncollectible Accounts 15,000
Degracia, Capital 85,000
Accounts Receivable 100,000
Accounts Payable 60,000
Degracia, Capital 60,000
Degracia, Capital 115,000Cash 80,000
Merchandise 35,000
Requirement 3: To record contribution of Degracia:
Merchandise (175,000-35,000) 140,000
Degracia, Capital 140,000
To record contribution of Mascarias:
Cash 200,000
Equipment 80,000
Mascarias, Capital 280,000
2-16. Estalilla, Fortuna and Sonsona
Requirement A:
Capital balance prior to formation of the partnership:
Estalilla Fortuna Sonsona
Cash 30,000 70,000 40,000
Accounts Receivable 105,000 90,000 70,000
Allow. of Accounts Receivable (6,000) (4,000) (15,000)
Merchandise 150,000 280,000 120,000
Transportation Equipment 350,000
Acc. Depreciation (80,000)
Building 650,000
Acc. Depreciation (100,000)
Land 800,000Accounts Payable (40,000) (50,000) (45,000)
Capital balances prior to formation 789,000 1,186,000 440,000
Just to complywith the
requirements,
these adjustingentries were
prepared. The
receivable and
payable accountsremain in the sole
proprietors
records.
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Requirement B:
The new Capital balance after the revaluation of non-cash assets:
Estalilla Fortuna Sonsona
Cash 30,000 70,000 40,000
Accounts Receivable 105,000 90,000 70,000
Allow. of Accounts Receivable (10,000) (9,000) (10,500)
Merchandise 130,000 220,000 100,000
Transportation Equipment 350,000
Acc. Depreciation (100,000)Building 650,000
Acc. Depreciation (50,000)
Land 850,000
Accounts Payable (40,000) (50,000) (45,000)
Capital balances prior to formation 815,000 1,171,000 404,500
Requirement C: a) Estalilla, Capital 4,000
Allow. for Doubtful Accounts 4,000
Fortuna, Capital 5,000
Allow. for Doubtful Accounts 5,000
Allow. for Doubtful Accounts 4,500
Sonsona, Capital 4,500
b) Estalilla, Capital 20,000
Merchandise 20,000
Fortuna, Capital 60,000
Merchandise 60,000
Sonsona, Capital 20,000
Merchandise 20,000
c) Sonsona, Capital 20,000
Acc. Depn.-Transportation Equipment 20,000
d) Acc. Depreciation.- Building 50,000
Estalilla, Capital 50,000
e) Land 50,000
Fortuna, Capital 50,000
Requirement D: Cash 140,000
Accounts Receivable 265,000
Merchandise 450,000
Transportation Equipment 350,000
Building 650,000
Land 850,000
Allow. for Doubtful Accounts 29,500
Acc. Depn.Transportation Equipment 100,000
Acc. Depreciation.Building 50,000
Accounts Payable 135,000
Estalilla, Capital 815,000
Fortuna, Capital 1,171,000
Sonsona, Capital 404,500
Requirement E: Estalilla, Fortuna, Sonsona
Statement of Financial Position
As of 31 March 20A
Assets
Cash 140,000
Accounts Receivable 265,000Allow. for Doubtful Accounts 29,500 235,500
Merchandise 450,000
Transportation Equipment 350,000
Acc. Depreciation - Transportation Equip. 100,000 250,000
Building 650,000
Acc. Depreciation - Building 50,000 600,000
Land 850,000
Total 2,252,000
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Liabilities and Partners Equity
Liabilities
Accounts Payable 135,000
Partners Equity
Estalilla, Capital 815,000
Fortuna, Capital 1,171,000
Sonsona, Capital 404,500 2,390,500
Total Liabilities & Partners Equity 2,252,000
** Multiple Choice (Problem) **
2-I. JJ Pawnshop
Q1 B
Q2 A
Solution:
Assets 100% - 800,000 P480,000 60% = P800,000 (B)
Liabilities 40% - 320,000 P800,000 - P480,000 = P320,000 (A)
Owner's Equity 60% - 480,000
2-II. Edulan, Tabarranza and Labasan
Q3 C
Q4 C
Solution:
75,000 1/5 = 375,000 (C) - equal to total capitalization of the partnership
- 75,000 - contribution of Tabaranza300,000
2
150,000 (C) - each contribution of Labasan and Edulan
2-III. Santos and Bombeo
Q5 C 350,000 - the cost of land when sold in that date is considered the fair market value
of the land
Q6 200,000 cash
120,000 fair market value of equipment
320,000 (C)
2-IV. Kudemus and Rendon
Q7 Kudemus Rendon
Cash 400,000 600,000
Accounts Receivable 120,000
Allowance for Doubtful Accounts (1,200)
Merchandise 50,000 60,000
Building 1,050,000
Accounts Payable ( 300,000)
Total 558,000 + 1,410,000 = 1,968,000 (A)
Q8 Rendon
Rendon, Capital 1,410,000
Add: Liability 120000
1,710,000 (B)
2-V. Dolor and Aleman
Q9 The land should be valued in the partnership book at P200,000 (C)
Q10 Alemans capital account should be credited in the amount of P187,500 (B)
Q11 The capital account balances of Dolors capital account during the partnership formation would be P250,000 (D)
2-VI. Awayan and Nadua
Q12 Awayan Nadua
Accounts Receivable 80,000 95,000
Allowance 8,000 14,250
72,000 80,750 (A)
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Q13 Awayan
Cash 150,000
Accounts Receivable 72,000
Merchandise 125,000
Prepaid Expense 15,000
362,000 (A)
Q14 Nadua
Cash 120,000Accounts Receivable 80,750
Accrued Expense 170,000
Prepaid Expense (10,000)
360,750 (A)
2-VII. Beceira and Obeso
Q15 Capital contribution of Obeso:
2 units Altis taxi 1,950,000
Less: Liability assumed by partnership 200,000
Obeso, capital 1,750,000
required additional contribution of Beceira x 20%
additional cash that Beceira should contribute350,000 (C)
Q16 Cost of 2 units Altis 1,950,000
Less: Liability assumed by the partnership 200,000
Capital contribution of Obeso 1,750,000 (B)
Q17 Partners Capital Balances:
Cash (P350,000 + P350,000 700,000
2 units Corolla 1,340,000
2 units Altis 1,950,000
Accounts Payable (P250,000 + P200,000) 450,000
Beceira, Capital 1,790,000
Obeso, Capital 1,750,000
Beceira, Capital 1,790,000
Obeso, Capital 1,750,000
3,540,000 (D)
2-VIII. Rada and Besinan
Q18 Accounts Receivable 40,000
x Probability of Collection 70%
Estimated Realizable Value 28,000
Original balance of Allowance 3,000
Increased by 9,000 (A)
New balance of Allowance 12,000
Q19 At fair market value of P100,000 (B)
Q20 Cash 65,000
Accounts Receivable 28,000
Laundry Equipment 100,000
Accounts Payable (15,000)
Net Assets 178,000 (A)The amount of cash to be contributed by Besinan
2-IX. Basa and Alfeche
Q21 429,000(C)
Q22 390,000(B)
Basa Alfeche
Cash 145,000 160,000
Accounts Receivable 64,000 45,000
Merchandise 200,000 190,000
Prepaid Expense 20,000
Accrued Expense (5,000)
(C) 429,000 390,000 (B)
390,000
(39,000) Amount of cash to be deducted from Basa
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Q23
Cash Balance of Basa 145,000
Excess Capital Contribution of Alfeche -39,000
Cash Balance of Basa 106,000
Cash Balance of Alfeche 160,000 (D)
Chapter 3
Partnership Operations
** Exercises and Problems **
3-1 Cebu Grocers
Requirement 1
Agreed Ratio
Matero 30% x 120,000 = 36,000
Bernacer 20% x 120,000 = 24,000
Selisana 50% x 120,000 = 60,000
Profit distributed 120,000
Requirement 2
Proportional RatioMatero 60/160 x 120,000 = 45,000
Bernacer 80/160 x 120,000 = 60,000
Selisana 20/160 x 120,000 = 15,000
120,000
Requirement 3
Income and Expense Summary 120,000
Matero, Drawing 36,000
Bernacer, Drawing 24,000
Selisana, Drawing 60,000
3-2 Cotabato Micro-Appliance Center
Cogollo Eruela PedrosaP/L Ratio ( in proportion to capital) 62.5% 37.5%
Profit P80,000
Share of Pedrosa (80,000 x 8%) (2) 6,400 (1)
Share of Cogollo (80,0006,400 x 62.5%) 46,000
Share of Eruela (80,0006,400 x 37.5%) 27,600
Profit distributed 46,000 + 27,600 + 6,400 = 80,000 (3)
3-3 Steve and Raymund
Income & Expense Summary P450,000
Steve, Drawing P229,500
Raymund, Drawing 220,500
Steve Raymund
Bonus to Raymund P67,500
Balance:
Steve (P450,000 - 67,500 x 3/5) = P229,500
Raymund (P450,00067,500 x 2/5) = 153,000
Total P229,500 P220,000
3-4 Musuan Supermarket
Requirement 1a
800,000x 279,500 = 149,066.67
1,500
700,000x 279,500 = 130,433.33
1,500
279,500.00
Journal Entry
Income & Expense Summary 279,500
Japad, Drawing 149,066.67
Ayuban, Drawing 130,433.33
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Requirement 1b:
810,000x 279,500 = 149,435.64
1,515
705,000x 279,500 = 130,064.36
1,515
279,500.00
Journal Entry
Income & Expense Summary P279,000Japad, Drawing 149,435.64
Ayuban, Drawing 130,064.36
Requirement 1c:
No. of Months
Debit Credit Balances Unchanged Peso Unit
Jan. 1 800,000 x 3 2,400,000
Apr.1 820,000 x 6 4,920,000
Oct.1 10,000 810,000 x 3 . 2,430,000
12 9,750,000
12
Average Capital of Japad 812,500
No. of Months
Debit Credit Balances Unchanged Peso Unit
Jan. 1 700,000 x 3 2,100,000
Apr.1 20,000 680,000 x 7 4,760,000
Nov.1 25,000 705,000 x 2 . 1,410,000
12 8,270,000
12
Average Capital of Ayuban 689,166.67
P 812,500x P279,500 = 151,227.80
1,501.6667
P689,166.67
x P279,500 = 128,272.201,501.6667
279,500.00
Journal Entry
Income & Expense Summary 279,500
Japad, Drawing 151,227.80
Ayuban, Drawing 128,272.20
Requirement 1d:
Japad - P279,500 x 3/5 = 167,700
Ayuban - P279,500 x 2/5 = 111,800
279,500
Journal Entry
Income & Expense Summary 279,500
Japad, Drawing 167,700
Ayuban, Drawing 111,800
Requirement 1e:
Japad - P279,500 x = 139,750
Ayuban - P279,500 x = 139,750279,500
Journal Entry
Income & Expense Summary 279,500
Japad, Drawing 139,750
Ayuban, Drawing 139,750
3-5 Mallari and Asuncion
Requirement 1a
Beg. Capital Ratio:
Mallari P 85,000 85,000/205,000 x P20,000 = P 8,292.68
Asuncion 120,000 120,000/205,000 x P20,000 = 11,707.32
P205,000 P20,000.00
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Journal Entry
Income & Expense Summary 20,000
Mallari, Drawing 8,292.68
Asuncion, Drawing 11,707.32
Requirement 1b
Ending Capital Ratio:
Mallari P100,000 100,000/195,000 x P20,000 = P10,256.41Asuncion 95,000 95,000/195,000 x P20,000 = 9,743.59
P195,000 P20,000.00
Journal Entry
Income & Expense Summary P20,000
Mallari, Drawing P10,256.41
Asuncion, Drawing 9,743.59
Requirement 2a:
Mallari
No. of Months
Debit Credit Balances Unchanged Peso Unit
Jan.1 85,000 x 2 170,000
Mar.1 P15,000 100,000 x 10 . 1,000,000
12 1,170,000
12
97,500
Asuncion
No. of Months
Debit Credit Balances Unchanged Peso Unit
Jan.1 120,000 x 9 1,080,000
Oct.1 P25,000 95,000 x 3 . 285,000
12 1,365,000
12
113,750
Mallari P 97,500 97,500/211,250 x P30,000 = P(13,846.15)
Asuncion 113,750 113,750/211,250 x P30,000 = (16,153.85)
P211,250 Loss P(30,000.00)
Journal Entry
Mallari, Drawing P13,846.15
Asuncion, Drawing 16,153.85
Income & Expense Summary P30,000
To distribute loss.
Requirement 2b:Mallari - P30,000 x 4/5 = P(24,000)
Asuncion - P30,000 x 1/5 = (6,000)
P(30,000)
Journal Entry
Mallari, Drawing P24,000
Asuncion, Drawing 6,000
Income & Expense Summary P30,000
To distribute loss.
3-6 Esmeralda and Besino
Requirement 1Total Esmeralda Besino
Salaries 60,000 36,000 24,000
Interest on Beg. Capital 82,500 30,000 52,500
142,500
Remainder (60%-40%) 65,500 39,300 26,200
208,000 105,300 102,700
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Requirement 2
Journal Entry
Income & Expense Summary P208,000
Esmeralda, Drawing P 105,300
Besino, Drawing 102,700
3-7 Gabayan and Domingo
Requirement 1:Gabayan - P150,000/P330,000 x P110,000 = 50,000
Palatino - P180,000/P330,000 x P110,000 = 60,000
110,000
Requirement 2:
Total Gabayan Palatino
Salaries P 39,000 P 24,000 P 15,000
Remainder: 3/52/5 71,000 42,600 28,400
P110,000 P 66,600 P 43,400
Requirement 3:
Total Gabayan Palatino
10% interest P33,000 P 15,000 P 18,000Remainder, Equally 77,000 38,500 38,500
P110,000 P 53,500 P 56,500
3-8 Cebu Vintage Car
Requirement A:
Total Deriquito Searez
Annual Salaries P 75,000 P 45,000 P 30,000
Interest on Beg. Capital 114,560 60,160 54,400
Remainder, Equally 260,440 130,220 130,220
P450,000 P235,380 P214,620
Requirement B:
Total Deriquito SearezInterest based on Ending Capital P288,400 P146,400 P142,000
Annual Salaries 70,000 50,000 20,000
Remainder, Equally 91,600 45,800 45,800
P450,000 P242,200 P207,800
Requirement C:
Total Deriquito Searez
Annual Salaries P220,000 P120,000.00 P100,000.00
Bonus to Deriquito 112,500 112,500.00
Remainder, Average Capital 117,500 58,368.08 59,131.92
P450,000 P242,200.00 P159,131.92
Average Capital - DERIQUITONo. of Months
Debit Credit Balances Unchanged Peso Unit
Jan.1 P752,000 x 9 P 6,768,000
Oct.1 P70,000 682,000 x 2 1,364,000
Dec.1 P50,000 732,000 x 1 . 732,000
12 P8,864,000
12
P738,666.67
Average Capital - SEAREZ
No. of Months
Debit Credit Balances Unchanged Peso Unit
Jan.1 P680,000 x 2 P 1,360,000
Mar.1 P80,000 760,000 x 8 6,080,000Nov.1 P10,000 750,000 x 1 750,000
Dec.1 40,000 790,000 x 1 . 790,000
12 P 8,980,000
12
Average Capital P 748,333.33
Deriquito - P738,666.67 P738,666.67/1,487,000 x P117,500 = P 58,368.08
Searez - P748,333.33 P748,333.33/1,487,000 x P117,500 = 59,131.92
P117,500.00
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3-9 Universal Dry Cleaning Services
Requirements:
Case A: Total Espaol Rosada
Salaries Allowed P110,000 P60,000 P50,000
15% Interest 45,000 30,000 15,000
Remainder, Equally 5,000 2,500 2,500
P160,000 P92,500 P67,500
Case B: Total Espaol Rosada
Salaries Allowed P110,000 P60,000 P50,000
15% Interest 45,000 30,000 15,000
Remainder, Equally (25,000) (12,500) (12,500)
P130,000 P77,500 P52,500
Case C: Total Espaol Rosada
Salaries Allowed P110,000 P60,000 P50,000
15% Interest 45,000 30,000 15,000
Remainder, Equally (185,000) (92,500) (92,500)
P(30,000) P(2,500) P(27,500)
Case A:
Journal Entry
Income & Expense Summary P160,000
Espaol, Drawing P92,500
Rosada, Drawing 67,500
Journal Entry
Income & Expense Summary P130,000
Espaol, Drawing P77,500
Rosada, Drawing 52,500
Journal Entry
Espaol, Drawing P 2,500
Rosada, Drawing 27,500
Income & Expense Summary P30,000
3-10 Aana, Beltran and Ventic
Total Aana Beltran Ventic
Annual Salaries P 75,000 P 30,000 P 25,000 P 20,000
20% Interest 20,000 20,000
Remainder 45,000 18,000 18,000 9,000
P140,000 P 48,000 P 43,000 P 49,000
3-11 Matuguinas and Rovelero
Total Matuguinas Rovelero
Annual Salaries P 80,000 P 30,000 P 50,000
10% Bonus after Salaries 10,000 10,000
18% Interest based on Average 101,250 17,250 84,000Remainder, Equally (11,250) (5,625) (5,625)
P180,000 P 41,625 P138,375
Matuguinas
No. of Months
Debit Credit Balances Unchanged Peso Unit
Jan.1 P100,000 x 5 500,000
June 1 P20,000 80,000 x 4 320,000
Oct.1 P30,000 110,000 x 3 . 330,000
12 1,150,000
12
95,833.33
RoveleroNo. of Months
Debit Credit Balances Unchanged Peso Unit
Jan.1 P150,000 x 4 600,000
May 1 P50,000 200,000 x 6 1,020,000
Nov.1 P10,000 190,000 x 2 . 3,800,000
12 5,600,000
12
466,666.67
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Matuguinas - P 95,833.33 x 18% = 17,250
Rovelero - P466,666.67 x 18% = 84,000
101,250
3-12 Robles, Saromines and Tiempo
Total Robles Saromines Tiempo
Bonus (20% of P250,000) 50,000 50,000
Interest:
10% x P100,000 10,000 10,00010% x P300,000 30,000 30,000
10% x P200,000 20,000 20,000
Salary Allowed 38,000 38,000
148,000 98,000 30,000 20,000
Remainder: (2:3:5) 102,000 20,400 30,600 51,000
As distributed 250,000 118,400 60,600 71,000
3-13 Gadiano and Alisuag
Requirement A:
Total Gadiano Alisuag
Salary to Gadiano P20,000 P20,000
10% bonus to Alisuag (10% x P60,000) 6,000 6,000
Interest:10% x P 85,000 8,500 8,500
10% x P150,000 15,000 15,000
Remainder: P49,500 P28,500 P21,000
Equally (Less than P30,000) 10,500 5,250 5,250
As distributed P60,000 P33,750 P26,250
Requirement B:
Total Gadiano Alisuag
Salary, Bonus and Interest
(same as in Req. A) P49,500 P28,500 P21,000
Remainders:
P30,000 (equally) 30,000 15,000 15,000
in excess of P30,000 (30%-70%) 500 150 350
As distributed P80,000 P43,650 P36,350
3-14 Comval Supermarket
Case 1:
Separis Barroga Total
Salary Allowance P 50,000.00 P 30,000.00 P 80,000
Bonus (5% of profit after bonus) 21,428.00 21,428
Interest Allowed on Beg. Capital 45,000.00 60,000.00 105,000
Remainder: (2:3) 97,428.80 146,143.20 243,572
As distributed P213,856.80 P236,143.20 P450,000
Bonus Computation:
Profit before Bonus P450,000 105% OR B = 5% (P - B)Profit after Bonus P428,572 = 100%
Bonus P 21,428 = P22,500 - .05B
B + .05B = P22,500
1.05B = P22,500
B = P22,500 = P21,428
1.2
Interest on Beginning Capital Balances
Separis = 15% x P300,000 = P 45,000
Barroga = 15% x P400,000 = 60,000
P105,000
Case 2: Separis Barroga Total
Bonus (20% ProfitP140,000-Bonus) P 81,666.00 P 30,000.00 P 80,000
Salaries 60,000.00 21,428
Interest Allowed (10% of Ending
Capital Balance 28,000.00 60,000.00 105,000
Remainder: (4:3) 194,476.57 145,857.43 340,334
As distributed P364,142.57 P265,587.43 P630,000
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Bonus Computation:
Profit before Bonus P 630,000 B = .20 (630,000 - 140,000B)
Less: Salaries (60,000 + 80,000) 140,000 = .20 (490,000 - B)
Profit after Bonus P 490,000 120% OR = P98,000 - .20B
408,334 = P98,000
Bonus P 81,666 1.2
B = P81,666
Interest on Beginning Capital Balances
Separis = 10% x P280,000 = P 28,000
Barroga = 10% x P400,000 = 40,000
P 68,000
Case 3:
Separis Barroga Total
Interest Allowed on Average Capital @ 10% P 30,667 P 40,833 P 71,500
Salaries Allowed 80,000 70,000 150,000
Bonus 33,636 33,636
Remainder: 50%-50% 132,432 132,432 264,864
As distributed P276,735 P243,265 P520,000
Separis Barroga
Jan.1 P300,000 x 12 = P3,600,000 Jan.1 P400,000 x 12 = P4,800,000
May 1 40,000 x 8 = 320,000 Sept. 1 50,000 x 8 = 200,000
Sept. 1 60,000 x 4 = (240,000) Nov. 1 50,000 x 2 = (100,000)
P3,680,000 P4,900,000
12 12
P 306,667 P 408,333
x 10% x 10%
P 30,667 P 40,833
Bonus Computation:
Profit before Salaries & Bonus P 520,000 B = 10% (PSB)
Less: Salaries (80,000 + 70,000) 150,000 = .10 (P520,000P150,000 - B)Profit after Salaries & Bonus P 370,000 110% OR = .10 (P370,000B)
336,364 = 100% = P370,000 - B
Bonus P 33,636 P370,0001.1
B = P33,636
Case 4:
Separis Barroga Total
Bonus (20% of Profit) P 80,000 P 80,000
Salaries Allowed 50,000 50,000
Interest Allowed on Beg. Capital at 10% 30,000 30,000
Remainder: (2:8) 48,000 P192,000 240,000
As distributed P208,000 P192,000 P400,000
3-15 Ceniza, Barredo and Labata
Requirement 1:
As 30% share is given to Labata, what is left is 70% which will be shared between Ceniza
and Barredo based on their old P/L Ratios. Therefore:
Old P/L Ratio
New P/L
Ratio
Ceniza (3/5) = 60% x 70% 42%
Barredo (2/5)= 40% x 70% 28%
Labata 30%
Total 100%
Requirement 2:
Reported Profit P300,000
Overstatement of Inventory End, overstates Profit (30,000)
Understatement of Prepaid Expense (asset) results to
overstatement of Expenses (P10,000 - 1,000) 9,000
Understatement of Accrued Expense (liability) results to
understatement of Expenses (P8,000 - 5,000) (3,000)
Corrected Profit P276,000
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Schedule of Profit Distribution:
Ceniza = 3/5 or 60% of P276,000 = P165,600
Barredo = 2/5 or 40% of P276,000 = 110,400
P276,000
3-16 Sorima and Magalso
Requirement 1:
Reported Profit P150,000
1) Understatement of Inventory at the end results to Profit understatement 20,000
2) Non-recognition of Accrued Expense understates Expense and overstates Profit (5,000)
3) Non-recognition of Supplies Expense overstates Profit (8,000)
Corrected Profit P157,000
Requirement 2:
Total Sorima Magalso
PartnersEquityJan. 1, 2009 P450,000 P250,000 P200,000
Add: Net Interest in Equity
Share in Profit 157,000 (40%) 62,800 (60%) 94,200
P607,000 P312,800 P294,200
Less: Permanent Withdrawal (50,000) (20,000) (30,000)
Partners Equity Dec. 31, 2009 P557,000 P292,800 P264,200
3-17 Dipolog Grocers
Requirement 1:
Closing Entries
Merchandise Inventory, End 480,000
Sales 960,000
Purchase Return & Allowances 6,000
Merchandise Inventory, Beg. 510,000
Sales Discount 4,000
Purchases 700,000
Freight In 3,000
Income & Expense Summary 229,000
Income & Expense Summary 108,000
Salaries Expense 50,000
Freight Out 1,000
Taxes & Licenses 7,000
Supplies Expense 10,000
Depreciation 40,000
Income & Expense Summary 121,000
Pugoy, Drawing 49,880
Gargar, Drawing 41,950
Anguit, Drawing 29,170
Requirement 2:
Total Pugoy Gargar Anguit
Salaries to Partners P 50,000 P 30,000 P 10,000 P 10,000
10% Bonus (P121,000 - P50,000) 7,100 7,100
Remainder:
Pugoy - 20% x P63,900 12,780 12,780
Gargar - 50% x P63,900 31,950 31,950
Anguit - 30% x P63,900 19,170 19,170
As distributed P121,000 P 49,880 P 41,950 P 29,170
Requirement 3:
Statement of Changes in Partners Equity
Total Pugoy Gargar Anguit
Partners Equity July 1, 2009 P215,000 P 75,000 P 80,000 P 60,000
Add: Net Increase in EquityRemainder:
Share in Profit 121,000 49,880 42,950 29,170
Less: Drawing (30,000) (15,000) (5,000) (10,000)
P 91,000 P 38,880 P 36,950 P 19,170
Partners Equity June 30, 2010 P306,000 P109,880 P116,950 P 79,170
Operating Expenses 211,000
Income & Expense Summary 284,000
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** Multiple Choice Problems **
3-I Q-1. B 32,000/80,000 = 40%
3-II Q-2. A 3/P = 75000
P = 75,000 x 5/3= 125,000
125,00075,000 = P50,000
Q-3. A 125,000
3-III Q-4. A Kenneth Peras120,000 x 33/3 = 40,000
Q-5. A Mark Peras60,000 + 40,000 = 100,000
Q-6. B Jean Pila120,000 x 20% (40/200) = 24,000
3-IV Q-7. A Zamora - 150,000/450,000 = 33 1/3
3-V Q-8 & 9 Torres Un Ardina
Profit 100,000 x 10% 9-B 10,000 8-B
100,00010,000 x 35% 31,500
100,00010,000 x 65% 58,500
3-VI Q-10. C 5,000 x 12 months = 60,000
Q-11 to Q-13 Total Diane Ysabelle
Salaries 120,000 60,000 60,000
Interest 8,400 5,250 3,150 (11 - A)
128,400 65,250 63,150
Bonus (200,000128,430 x 10%) 7,160 7,160 (12A)
135,560 72,410 63,150
Remainder 64,440 38,664 25,776
200,000 111,074 88,926 (13 - A)
3-VII Q-14. C 98,000 + 3,0005,000 = P96,000
Q-15. B 15/35 x 96,000 = P41,143
3-IV Q-16. A
Partners Salaries Interest Balance Total
Gregorio P15,000 P20,000 P 6,000 P 41,000
Jumawan 20,000 45,000 14,000 79,000
Totals P35,000 P65,000 P20,000 P120,000
Q-17. D
Partners Salaries Interest Balance Total
Gregorio P15,000 P20,000 ( 3,000) P 32,000
Jumawan 20,000 45,000 ( 7,000) 58,000
Totals P35,000 P65,000 (10,000) P 90,000
Q-18. A
Partners Salaries Interest Balance Total
Gregorio P15,000 P20,000 ( 31,500) P 3,500
Jumawan 20,000 45,000 ( 73,500) ( 8,500)
Totals P35,000 P65,000 (105,000) ( 5,000)
3-V Q-19. B
P20,000 + 30% (86,00060,000)
3-VI Q-20. A
Sales P1,250,000
Inventory 100,000 P1,350,000
Cost of Sales ( 685,000)
Operating Expenses ( 450,000)Profit P 215,000
Q-21. A
Partners
Bidad 2/10 x 215,000 = 43,000
Mondejar 5/10 x 215,000 = 107,500
Sarceno 3/10 x 215,000 = 64,500
215,000
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Q-22. D
Partners Salaries Interest Balance Total
Bidad P 60,000 P45,000 ( 4,000) P101,000
Mondejar 60,000 - ( 2,000) ( 58,000
Sarceno 60,000 - ( 4,000) 56,000
Totals P180,000 P65,000 ( 10,000) P 215,000
3-VII Q-23. C
B = 20%
B = 20% (240,000b)
B = 48,000 - .28
B = .2B = P48,000
B = P48,000/1.2
B = P40,000
Q-24. C
Partners Bonus Balance Total
Carpeso P 40,000 P100,000 P140,000
Cabreros - 100,000 100,000
Totals P 40,000 P200,000 P240,000
3-VIII Q-25. B
Partners P/L Before New P/L
Zabalo .60 .18 .42
Perez .40 .12 .28
Delmonte .30
Q-26. B
Understated inventories 15,000
Accrued Expense ( 5,000)
Prepaid Expense 4,000
Increase in Net Income P14,000
Q-27. C
Reported Net Income P 450,000
Increase in Net Income 14,000
Corrected Net Income P464,000
Q-28. C
Partners P/L Ratio Net Income Share in Net Income
Zabalo .42 P464,000 P194,880
Perez .28 464,000 129,920
Delmonte .30 464,000 139,200
P464,000
3-IX Q-29. B
B = 25% (NIB)
B = 25% (240,000B)B = 60,000 - .25B
B = 60,000 / 1.25
B = P48,000
3-IX Q-30. A
Partners Average Capital Salaries Balance Total
Linobo P24,000 P 60,000 ( 70,000) P14,000
Manansala 12,000 - ( 70,000) ( 58,000)
Aguillon 8,000 40,000 ( 70,000) ( 22,000)
Totals P44,000 P100,000 (210,000) ( 66,000)
3-XI Q-31. C
B = 20% (NIB)
B = 20% (240,000B)
B = 48,000 - .2B
B = 48,000 / 1.2
B = P40,000
3-XII Q-32. C
Reported Net Income P105,000
Understatement of Inventory End 50,000
Unrecorded Expense ( 5,000)
Corrected Net Income P150,000
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3-XIII Q-33. A
Partners Old P/L New P/L
Go .50 .10 .40
Adia .50 .10 .40
Pactana .20
Q-34. C 40% x P150,000 = P60,000
Chapter 4Partnership DissolutionChange in Ownership structure
** Exercises and Problems **
4-1 Tan and Esparaguera
Esparaguera, Capital 200,000
Carreon, Capital 200,000
4-2 CSCV
Caete, Capital 62,500
Saletrero, Capital 87,500
Cajegas, Capital 112,500
Villaplaza, Capital 262,500
4-3 Abuzo and Edulan
1. P187,500
2. Abuzo-Selling Partners
3. P12,500 personal gain
4. P187,500
5. P17,500 personal loss
Book Value of Interest Sold P187,500
Selling Price of Interest Sold 170,000
Loss on Sale of Interest P 17,500
4-4 Badoy and Yee
Total Partnership Interest P 300,000
Portion of Interest Sold 25%
1. Book Value of Interest Sold P 75,000
Selling Price of Interest Sold 85,000
2. Gain on Sale of Interest Sold P 10,000
Badoy, Capital 25,000
Yee, Capital 50,000
Gatmaitan, Capital 75,000
4-5 Hernandez and Gementiza
1. Hernandez, Capital 75,000
Santos, Capital 75,000
2. Gementiza, Capital 112,500Santos, Capital 112,500
3. Hernandez, Capital 150,000
Gementiza, Capital 150,000
Santos, Capital 300,000
(converted into a sole-proprietorship)
4-6 JAR Partnership
Contributed Capital:
J P 250,000
A 250,000
R 500,000
Orbita 20,000
P1,200,000 x 20% = P240,000capital credit of Orbita
Contribution of Orbita 200,000
Bonus to New partner P 40,000
Cash P200,000
J 10,000
A 10,000
R 20,000
Orbita, Capital P246,000
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4-7 Ursua and Halangdon
Requirement 1: Ursua P 80,000
Halangdon 100,000
Gondales 70,000
Contributed Capital P 250,000
Requirement 2:
P250,000 x 40% = P100,000P70,000 = P30,000 bonus to new partner
(Her capital credit is bigger than her capital contribution, so bonus is given to the new partner)
Requirement 3:
Journal Entry
Cash 70,000
Ursua, Capital 9,000
Halangdon, Capital 21,000
Gondales, Capital 100,000
Requirement 4: Ursua P 80,000
Halangdon 100,000
Gondales 150,000
Contributed Capital P 330,000
P330,000 x 35% = P115,500P150,000 = P34,500 bonus to old partners
(His capital credit is smaller than his capital contribution, so bonus is given to the old partners)
Requirement 5:
Journal Entry
Cash 150,000
Ursua, Capital 10,350
Halangdon, Capital 24,150
Gondales, Capital 115,500
4-8 Beceira and Ytac
Requirement 1:
Casulla, Capital 120,000
Ytac, Capital 130,000
Sarno, Capital 250,000
Requirement 2:
Casulla, Capital 180,000
Ytac , Capital 195,000
Sarno, Capital 375,000
Requirement 3:
Casulla, Capital 48,000
Ytac, Capital 52,000
Sarno, Capital 100,000
Requirement 4:
Casulla, Capital 60,000
Sarno, Capital 60,000
Requirement 5:
Casulla, Capital 80,000
Sarno, Capital 80,000
Requirement 6:
Casulla, Capital 120,000
Sarno, Capital 120,000
Requirement 7: Casulla, Capital 240,000
Ytac, Capital 260,000
Sarno, Capital 300,000
Contributed Capital 800,000
800,000 x 1/3 = 266,667300,000 = 33,333 bonus to old partners
(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)
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Cash 300,000
Casulla, Capital 12,500
Ytac, Capital 20,833
Sarno, Capital 266,667
Requirement 8: Contributed Capital - 800,000
800,000 x 1/4 = 200,000300,000 = 100,000 bonus to old partners
(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)
Cash 300,000
Casulla, Capital (3/8 x 100,000) 37,500
Ytac, Capital (5/8 x 100,000) 62,500
Sarno, Capital 200,000
Requirement 9: Contributed Capital - 800,000
800,000 x 40% = 320,000300,000 = 20,000 bonus to new partners
(Her capital credit is bigger than her capital contribution, so bonus is given to the new partner)
Cash 300,000
Casulla, Capital 7,500Ytac, Capital 12,500
Sarno, Capital 320,000
Requirement 10: Casulla, Capital 240,000
Ytac, Capital 260,000
Sarno, Capital 350,000
Contributed Capital 850,000
850,000 x 30% = 255,000350,000 = 95,000 bonus to old partners
(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)
Cash 350,000
Casulla, Capital 35,625Ytac, Capital 59,375
Sarno, Capital 255,000
4-9 San Carlos Industries
Case 1: Nemenzo 200,000
Kwan 100,000
Gimena 100,000
Total Contributed Capital 400,000
400,000 x 1/4 = 100,000100,000 = No bonus
(His capital credit is equal to his capital contribution, so theres no bonus to both)
Cash 100,000
Gimena, Capital 100,000
Case 2: Nemenzo 200,000
Kwan 100,000
Gimena 120,000
Total Contributed Capital 420,000
420,000 x 1/4 = 105,000120,000 = 15,000 bonus to old partners
(His capital credit is less than his capital contribution, so bonus is given to the old partners)
Cash 120,000
Nemenzo, Capital 9,000
Kwan, Capital 6,000
Gimena, Capital 105,000
Case 3: Nemenzo 200,000
Kwan 100,000
Gimena 100,000
Total Contributed Capital 400,000
400,000 x 30% = 120,000100,000 = 20,000 bonus to new partner
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(His capital credit of P120,000 is greater than his capital contribution of P100,000, so, bonus is
given to the new partner)
Cash 100,000
Nemenzo, Capital 12,000
Kwan, Capital 8,000
Gimena, Capital 120,000
Case 4: Nemenzo 200,000 x 25% = 50,000Kwan 100,000 x 25% = 25,000
Nemenzo, Capital 50,000
Kwan, Capital 25,000
Gimena, Capital 75,000
Case 5:
Nemenzo, Capital 100,000
Kwan, Capital 50,000
Gimena, Capital 150,000
4-10 Carcar Ampao Factory
Assumption 1: Lapu-lapu 180,000 x 1/3 = 60,000
Lapu-lapu, Capital 60,000
Besario, Capital 60,000
Assumption 2: Lim 140,000 x 1/8 = 17,500
Lim, Capital 17,500
Besario, Capital 17,500
Assumption 3: Lapu-lapu 180,000
Lim 140,000
Besario 160,000
Total Contributed Capital 480,000
480,000 x 25% = 120,000160,000 = 40,000 bonus to old partners
(Her capital credit is lesser than her capital contribution of P100,000, so, bonus is given to the
old partners)
Cash 160,000
Lapu-lapu, Capital 24,000
Lim, Capital 16,000
Besario, Capital 120,000
Assumption 4: Lapu-lapu, Capital 180,000
Lim, Capital 140,000
Besario, Capital 72,000Total Contributed Capital 392,000
392,000 x 25% = 98,00072,000 = 26,000 bonus to new partner
(Her capital credit is greater than her capital contribution of P100,000, so, bonus is given to
the new partner)
Cash 72,000
Lapu-lapu, Capital 15,600
Lim, Capital 10,400
Besario, Capital 98,000
4-11 Cacdac, Lopez and Cruz
Requirement A:
1. Capital Adjustments 6,000
Allow. for Doubtful Accounts 6,000
2. Capital Adjustments 7,000
Merchandise Inventory 7,000
3. Capital Adjustments 4,000
Accumulated Depreciation 4,000
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4. Cacdac, Capital 6,800
Lopez, Capital 10,200
Capital Adjustments 17,000
Capital Adjustments
(1) 6,000 17,000 (4)
(2) 7,000
(3) 4,000
17,000 17,000
Requirement B:
Post-Closing Trial Balances
Debit Credit
Cash in Bank 40,000
Accounts Receivable 50,000
Allow. for Doubtful Accounts 10,000
Merchandise 63,000
Store Equipment 80,000
Acc. Depreciation 20,000
Accounts Payable 40,000Cacdac, Capital 93,200
Lopez, Capital 69,800
Total 233,000 233,000
Requirement C:
a) Cruz is going to pay 40,750
Computed as follows:
Refugio, Capital (P93,200 x 25%) 23,300
Berhay, Capital (P69,800 x 25%) 17,450
40,750
b) Cacdac, Capital 23,300
Lopez, Capital 17,450
Cruz, Capital 40,750
4-12 Jadulco, Mabad and Anghag
Instruction No. 1:
a. Capital Adjustments 20,000
Allowance for Doubtful Accounts 20,000
b. Capital Adjustments 20,000
Merchandise 20,000
c. Capital Adjustments 50,000
Accumulated Depreciation 50,000
d. Capital Adjustments 10,000
Accrued Expenses 10,000
e. Jadulco, Capital (30%) 30,000
Mabad, Capital (20%) 20,000
Anghag, Capital (50%) 50,000
Capital Adjustments 100,000
Instruction No.2:
New Capital of the Partnership
Jadulco, Capital (P400,000 30,000) = 370,000
Mabad, Capital (P280,000 20,000) = 260,000
Anghag, Capital (P150,000 50,000) = 100,000
730,000
a) P730,000 x 1/3 = P243,333
Jadulco, Capital 123,333
Mabad, Capital 86,667
Anghag, Capital 33,333
Caete, Capital 243,333
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b) Cash 200,000
Jadulco, Capital 9,250
Mabad, Capital 6,500
Anghag, capital 16,250
Caete, Capital 232,500
Jadulco, Capital 370,000
Mabad, Capital 260,000
Anghag, Capital 100,000Caete, Capital 200,000
Total Contribution 930,000
x 25%
Capital Credit of New Partner 232,500
Capital Contribution of New Partner 200,000
Bonus to New Partner 32,500
c) Cash 200,000
Jadulco, Capital 4,200
Mabad, capital 2,800
Anghag, Capital 7,000
Caete, Capital 186,000
Jadulco, Capital 370,000
Mabad, Capital 260,000
Anghag, Capital 100,000
Caete, Capital 200,000
Total Contribution 930,000
20%
Capital of New Partner 186,000
Capital Contribution of New Partner 200,000
Bonus to Old Partners 14,000
4-13 Bartolome, tan and de los Santos
Instruction No.1:
1. Capital Adjustments 10,000
Inventory 10,000
2. Prepaid Insurance 7,000
Capital Adjustments 7,000
3. Accumulated Depreciation 2,000
Capital Adjustments 2,000
4. Bartolome, Capital (50%) 500
Tan, Capital (40%) 400
Delos Santos, Capital (10%) 100
Capital Adjustments 1,000
Capital Adjustment
(1) 10,000 7,000 (2)
2,000 (3)
1,000 (4)
10,000 10,000
Instruction No.2:
2a) Adjusted Capital Account of the old partners
Bartolome (200,000500) = 199,500
Tan (180,000400) = 179,600
de los Santos ( 60,000100) = 59,900
439,000
Bartolome, Capital 49,875
Chua, Capital 49,875
(P199,500 x = P49,875 - Interest Purchased)
2b) Bartolome 199,500
Tan 179,600
de los Santos 59,900
Chua 80,000
519,000
519,000 x 30% = 155,70080,000 = 75,700 bonus to new partner
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(Her capital credit is bigger than her capital contribution so, bonus is given to the new partner)
Journal Entry;
Cash 80,000
Bartolome, Capital 37,850
Tan, Capital 30,280
Delos Santos, Capital 7,570
Chua, Capital 155,700
4-14 Davao Commodity Sales
Requirement 1:
a) Allowance for Doubtful Accounts 2,000
Capital Adjustments 2,000
b) Capital Adjustments 8,000
Merchandise 8,000
c) Capital Adjustments 2,000
Accumulated Depreciation 2,000
d) Accounts Payable 7,000
Cash 7,000
e) Unused Supplies 5,000
Capital Adjustments 5,000
f) Capital Adjustments 100
Unearned Interest Income 100
g) Saburnido, Capital 1,550
Cervantes, Capital 1,550
Capital Adjustments 3,100
Requirement 2:
Statement of Financial Position
Assets Liabilities and Partners' Equity
Current Assets:
Cash in Bank 233,000 Liabilities
Accounts Receivable 30,000 Current Liabilities:
Allow. for Doubtful Accounts 3,000 27,000 Accounts Payable 33,000
Notes Receivable 10,000 Unearned Int. Income 100 33,100
Merchandise Inventory 72,000
Unused Supplies 5,000 347,000
Partners' Equity
Property And Equipment Calimpusan, Capital 178,450
Furniture and Fixture 50,000 Sala, Capital 165,450 343,900
Accu. Depreciation 20,000 30,000 Total Liabilities and
Total Assets 377,000 Partners' Equity 377,000
Requirement 3:
Cash in Bank 171,950
Banta, Capital 171,950
Computed as follows:
Saburnido, Capital (178,450 x 50%) 89,225
Cervantes, Capital (165,450 x 50%) 82,725
171,950
4-15 Ruben, Lacierda and Ordoez
Requirement 1: V. Ruben, Capital 80,000
O. Lacierda, Capital 40,000
B. Ordoez, Capital 30,000
Total Contributed Capital 150,000
150,000 x 30% = 50,00030,000 = 20,000 bonus to new partner, Ordoez
Capital Adjustments
(b) 8,000 2,000 (a)
(c) 2,000 5,000 (e)
(f) 100 3,100 (g)
10,100 10,100
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Requirement 2:
The capital accounts of Ruben and Lacierda were decreased by P12,000 and 8,000 respectively
because of the bonus they gave to Ordoez.
Requirement 3:
Ruben Lacierda Ordoez
Capital 80,000 40,000 30,000
Bonus to Ordoez ( 12,000) ( 8,000) 20,000
Balance 68,000 32,000 50,000
Requirement 4:
Cash 30,000
Ruben, Capital 12,000
Lacierda, Capital 8,000
Ordoez, Capital 50,000
4-16 Mendez, Tirol and Lupot
Requirement 1: Mendez 200,000
Tirol 100,000
Lupot 125,000Total Contributed Capital 425,000
425,000 x 20% = 85,000125,000 = 40,000 bonus to old partners
Mendez P 40,000 x .75 = 30,000
Tirol 40,000 x .25 = 10,000
Bonus as distributed 40,000
Requirement 2:
Capital Bonus Total
Mendez 200,000 + 30,000 = 230,000
Tirol 100,000 + 10,000 = 110,000
Capital Account balance after the bonus 340,000
Requirement 3:
Mendez 200,000 + 30,000 = 230,000
Tirol 100,000 + 10,000 = 110,000
Lupot 125,000 - (40,000) = 85,000
425,000
Requirement 4:
Cash 125,000
Mendez, Capital 30,000
Tirol, Capital 10,000
Lupot, Capital 85,000
4-17 Jay, Mamaril and Chung
Requirement 1: Total Contributed Capital
Jay 120,000
Mamaril 100,000
Chung 80,000
Total Contributed Capital 300,000
300,000 x 1/3 = 100,000 80,000 = 20,000 bonus to Chung
Requirement 2:
Jay Mamaril Chung
Capital 120,000 100,000 80,000
Bonus to Chung (12,000) (8,000) 20,000Balance 108,000 92,000 100,000 = 300,000
Requirement 3:
Cash 80,000
Jay, Capital 12,000
Mamaril, Capital 8,000
Chung, Capital 100,000
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4-18 Butuan Internet Cafe
Case 1: Basarte, Capital 265,000
Silverio, Capital 185,000
Jostol, Capital 160,000
Total (3/4 capital after admission) 610,000
New capitalization after admission
(610,000/.75) 813,333
Required contribution of Balibay 203,333
Case 2: Basarte, Capital 265,000
Silverio, Capital 185,000
Jostol, Capital 160,000
Bonus 24,000
Total 634,000
75%
Share of New Partner after admission 845,333
610,000
Required contribution of Balibay 235,333
Case 3: Basarte, Capital 265,000
Silverio, Capital 185,000
Jostol, Capital 160,000
Bonus to new partner 10,000
Total 600,000
New capital after admission 800,000
Share of new partner after bonus 200,000
Less: Bonus to new partner 10,000
Required contribution of Balibay 190,000
Case 4: Basarte, Capital 265,000
Silverio, Capital 185,000
Jostol, Capital 160,000
Asset Revaluation 80,000
Total 690,000
New capital after admission 920,000
Share of new partner after bonus 230,000
Case 5: Basarte, Capital 265,000
Silverio, Capital 185,000
Jostol, Capital 160,000
Assets write down (50,000)
Bonus to new partner (40,000)
Total 520,000
New capital after admission 693,333
Share of the new partner after bonus 173,333
Less: Bonus to new partner (40,000)
Contribution of new partner 133,333
4-19 Independents Cases
Case 1
Lopez 800,000
Baya 1,200,000
Maguid 500,000
Total Contributed Capital 2,500,000
2,500,000 x 20% = 500,000 = 0 (No Bonus)
Journal Entry
Cash 500,000
Maguid, Capital 500,000
Case 2
Solis 40,000
Orbita 50,000
Tangaro 25,000
Total Contributed Capital 115,000
115,000 x 1/5 = 23,00025,000 = 2,000 bonus to old partners
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Journal Entry
Cash 25,000
Solis, Capital 23,000
Orbita, Capital 1,000
Tangaro, Capital 1,000
Case 3
Sison 45,000
Laranjo 40000Morales 35,000
Total Contributed Capital 120,000
120,000 x 30% = 36,00035,000 = 1,000 bonus to new partners
Journal Entry
Cash P 35,000
Laranjo, Capital 600
Sison, Capital 400
Morales, Capital 36,000
*** Multiple Choice Problems ***
Admission of a Partner in an Existing Partnership
4 - I City Travel and Tours
Q-1 P800,000 x 1/4 = P200,000 (A)
Q-2 to be distributed to the selling partners (D)
Q-3 Gevera 1/5 x 75% = 15%
Tropico 2/5 x 75% = 30% (B)
Canque 2/5 x 75% = 30%
Aguilar 1/4 = 25%
= 100%
Q-4 210,000 x 25% = 52,500 - 210,000 = 157,500 (A)
4 - II Panganiban, Salisana and Berhay
Q-5 414,375 (C)
Q-6 Panganiban and Salisana (C)
Q-7 1,835,000 (B)
Solutions
a) Capital Adjustments 5,000
Allow. for Doubtful Accounts 5,000
b) Capital Adjustments 15,000
Merchandise 15,000
c) Accumulated Depreciation 15,000
Capital Adjustments 15,000
d) Panganiban, Capital 2,500
Salisana, Capital 2,500
Capital Adjustments 5,000
Panganiban, Capital950,0002,500 = 947,500 x .25 = 236,875
Salisana, Capital 890,0002,500 = 887,500 x .20 = 177,500
1,835,000 414,375 (C)
Panganiban Salisana Berhay
Capital after adjustments 947,500 887,500
Acquired by Berhay (236,875) (177,500) 414,375
710,625 P710,000 414,375 =1,835,000 (B)
4 - III Southwxpressway Merchandising
Q-8 450,000 x 1/2 =225,000 (B)
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Q-9 Book Value of Igaos interest sold to Estroso 225,000
Cash proceeds from the sale 220,000
Personal loss to Igao 5,000 (C)
Q-10 Estroso should be credited by P225,000equal to the book value of interest she acquired. (B)
4 - IV Southwxpressway Merchandising
Q-11 Espero 30,000
Aduana 45,000Gelacio 20,000
Total Contributed Capital 95,000 (B)
Q-12 95,000 x 1/5 = 19,00020,000 = 1,000 bonus to old partners (B)
Q-13 Espero 1,000 x 40% = 400
Aduana 1,000 x 60% = 600 (A)
1,000
4 - V Ligsay, Emperado and Balagot
Q-14 Ligsay Emperado Balagot
Capital Balances 150,000 100,000 120,000
Understatement of Inventory 4,000 4,000 2,000
Understatement of depreciation (2,400) (2,400) (1,200)Adjusted Balance 151,600 101,600 120,800
Q-15 Selling Price of share sold 35,000
Book Value of interest purchased 30,200
Gain on sale of share sold 4,800 (A)
Q-16 Balagot will share a capital credit of P30,200 (B)
4 - VI Galos and Villarido
Q-17 Galos 200,000
Villarido 160,000
Villanueva 110,000
470,000
470,000 x 1/4 = 117,500110,000 = 7,500 bonus to new partner (C)
Q-18 Galos 7,500 x 60% = 4,500
Villarido 7,500 x 40% = 3,000 (A)
7,500
** Exercise and Problems **
Retirement or Withdrawal/Death, Bankruptcy or Incapacity of a Partner
4 - 1 Lacson, Joe and Ajoc
Requirement 1:a) Joel Jo, Capital 85,000
Alex Ajoc, Capital 85,000
b) Joel Jo, Capital 85,000
Heginio Lacson, Capital 63,750
Alex Ajoc, Capital 21,250
c) Joel Jo, Capital 85,000
Marco Ocenar, Capital 85,000
Requirement 2:
Heginio Lacson 60,000
Alex Ajoc 140,000
200,000
Heginio Lacson 123,750
Alex Ajoc 76,250
200,000
Heginio Lacson 60,000
Alex Ajoc 55,000
Marco Ocenar 85,000
200,000
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4 - 2 Esparaguera, Supapo and Ceniza
1. Ceniza, Capital 650,000
Cash 600,000
Esparaguera, Capital (2/6 x P 50,000) 16,667
Supapo, Capital (4/6 x P 50,000) 33,333
2. Ceniza, Capital 650,000
Esparaguera, Capital 16,667
Supapo, Capital 33,333Cash 700,000
4 - 3 Tea for Snack House
Requirement 1:
Orcullos Withdrawal
Orcullo, Capital 80,000
Reyes, Capital 7,500
Lopez, Capital 7,500
Cash 95,000
Capital Balances
Reyes, Capital 92,500
Lopez, Capital 82,500
175,000
Requirement 2:
Orcullo, Capital 80,000
Cash 75,000
Reyes, Capital 2,500
Lopez, Capital 2,500
4 - 4 Long Live Enterprises
Requirement 1:
Mr. Dimamatays interest, Dec. 31, 2009 50,000
Add: Share in Net Income from Jan. 1-Feb.29 (20,000 x ) 10,000
60,000
Requirement 2:
Dimamatay, Capital 60,000
Cash 60,000
Requirement 3:
Dimamatay, Capital 60,000
Buhay, Capital 60,000
4 - 5 Walangbuhay and Maylangit
Requirement 1:
Capital Adjustment 5,000
Allow. for Doubtful Account 5,000
Inventories 15,000
Capital Adjustment 15,000
Accumulated Depreciation 50,000
Capital Adjustment 50,000
Capital Adjustment 10,000
Accrued Expense 10,000
Capital Adjustment 50,000
Walangbuhay, Capital (60%) 30,000
Maylangit, Capital (40%) 20,000
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Requirement 2:
Effects of Adjustments:
Decrease in Account Receivable (5,000)
Increase in Inventory 15,000
Increase in Equipment 50,000
Increase in Expense (10,000)
Total 50,000
P/L Ratio of Walangbuhay x 60%
Share of Walangbuhay on the adjustments 30,000Add: Feb. 14 balance of Walangbuhay 950,000
Walangbuhays adjusted capital balance 980,000
Requirement 3:
Walangbuhay, Capital 980,000
Cash 980,000
Requirement 4:
Walangbuhay, Capital 980,000
Maylangit, Capital 20,000
Cash 1,000,000
4 - 6 Sianosa, Rosete and Facturan
Requirement 1:
Non-Cash Assets 56,000
Gatmaitan, Capital (25%) 14,000
Barroga, Capital (25%) 14,000
Dorado, Capital (50%) 28,000
Requirement 2:
Gatmaitan, Capital 56,000
Gatmaitan, Loan 9,000Cash 16,200
Barroga, Capital 16,267
Dorado, Capital 32,533
4 - 7 Lopez, Albios and Aguhob
ERRATUM: Accounts Payable should be 90,000
Requirement 1:
a) Inventory 30,000
Lopez, Capital 13,500
Albios, capital 7,500
Aguhob, Capital 9,000
b) Equipment 20,000
Lopez, Capital 9,000
Albios, capital 5,000
Aguhob, Capital 6,000
c) Lopez, Capital 9,000
Albios, capital 5,000
Aguhob, Capital 6,000
Accrued Salaries 20,000
Requirement 2:
Lopez, Capital 114,500
Cash in Bank 50,000Albios, Capital (25/55) 29,318
Aguhob, Capital (30/55) 35,182
(Note: Since this only a retirement of a partner, a partners deficiency will be considered as
his own loss and become the advantage of the remaining partners.)
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Requirement B:
Centerpoint Commercial
Statement of Partnership Liquidation
40% 20% 40%
Cash
Non-
Cash Liabilities
Dizon,
Loan
Dizon,
Capital
Tamala,
Capital
Dimalanta,
Capital
Balance before realization 30,000 340,000 49,000 20,000 95,000 100,000 106,000
Realization and Loss 200,000 (340,000) - - (56,000) (28,000) (56,000)
Balances 230,000 49,000 20,000 39,000 72,000 50,000Payment of Liabilities (49,000) (49,000) - - - -
Balance 181,000 20,000 39,000 72,000 50,000
Payment to Partners Loan (20,000) (20,000) - - -
Balances 161,000 39,000 72,000 50,000
Payment to Partners Capital (161,000) (39,000) (72,000) (50,000)
Journal Entries
a) Cash 200,000
Dizon, Capital 56,000
Tamala, Capital 28,000
Dimalanta, Capital 56,000
Non-Cash Assets 340,000
b) Liabilities 49,000
Cash 49,000
c) Dizon, Loan 20,000
Cash 20,000
d) Dizon, Capital 39,000
Tamala, Capital 72,000
Dimalanta, Capital 50,000
Cash 161,000
Requirement C:
Centerpoint Commercial
Statement of Partnership Liquidation
40% 20% 40%
Cash
Non-
Cash Liabilities
Dizon,
Loan
Dizon,
Capital
Tamala,
Capital
Dimalanta,
Capital
Balance before realization 30,000 340,000 49,000 20,000 95,000 100,000 106,000
Realization and Loss 90,000 (340,000) - - (100,000) (50,000) (100,000)
Balances 120,000 49,000 20,000 (5,000) 50,000 6,000
Payment of Liabilities (49,000) (49,000) - - - -
Balance 71,000 20,000 (5,000) 50,000 6,000
Right of Offset - (5,000) 5,000 - -
Balance 71,000 15,000 50,000 6,000
Payment to Partners Loan (15,000) (15,000) - -
Balances 56,000 50,000 6,000
Payment to Partners Capital (56,000) (50,000) (6,000)
Journal Entries
a) Cash 90,000
Dizon, Capital 100,000
Tamala, Capital 50,000
Dimalanta, Capital 100,000
Non-Cash Assets 340,000
b) Liabilities 49,000
Cash 49,000
c) Dizon, Loan 5,000
Dizon, Capital 5,000
d) Dizon, Loan 15,000
Cash 15,000
e) Tamala, Capital 50,000
Dimalanta, Capital 6,000
Cash 56,000
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Requirement D:
40% 20% 40%
Cash
Non-
Cash Liabilities
Dizon,
Loan
Dizon,
Capital
Tamala,
Capital
Dimalanta,
Capital
Balance before realization 30,000 340,000 49,000 20,000 95,000 100,000 106,000
Realization and Loss 60,000 (340,000) - - (112,000) (56,000) (112,000)
Balances 90,000 49,000 20,000 (17,000) 44,000 (6,000)
Payment of Liabilities (49,000) (49,000) - - - -
Balance 41,000 20,000 (17,000) 44,000 (6,000)
Right of Offset - (17,000) 17,000 - -
Balance 41,000 3,000 44,000 (6,000)
Payment to Partners Loan (3,000) (3,000) - -
Balances 38,000 44,000 (6,000)
Deficiency of Dimalanta
absorbed by Tamala - (6,000) 6,000
Balances 38,000 38,000
Payment to Partners Capital (38,000) (38,000)
Journal Entries
a) Cash 60,000
Dizon, Capital 112,000
Tamala, Capital 56,000Dimalanta, Capital 112,000
Non-Cash Assets 340,000
b) Liabilities 49,000
Cash 49,000
c) Dizon, Loan 17,000
Dizon, Capital 17,000
d) Dizon, Loan 3,000
Cash 3,000
e) Tamala, Capital 6,000
Dimalanta, Capital 6,000
f) Tamala, Capital 38,000
Cash 38,000
Requirement E:
40% 20% 40%
Cash
Non-
Cash Liabilities
Dizon,
Loan
Dizon,
Capital
Tamala,
Capital
Dimalanta,
Capital
Balance before realization 30,000 340,000 49,000 20,000 95,000 100,000 106,000
Realization and Loss 40,000 (340,000) - - (120,000) (60,000) (120,000)
Balances 70,000 49,000 20,000 (25,000) 40,000 (14,000)
Payment of Liabilities (49,000) (49,000) - - - -
Balance 21,000 20,000 (25,000) 40,000 (14,000)
Right of Offset - (20,000) 20,000 - -
Balance 21,000 (5,000) 40,000 (14,000)
Deficiency of Dizon & Tamala
absorbed by Dimalanta - 5,000 (19,000) 14,000
Balances 21,000 21,000
Payment to Partners Capital (21,000) (21,000)
Journal Entries
a) Cash 40,000
Dizon, Capital 120,000
Tamala, Capital 60,000
Dimalanta, Capital 120,000
Non-Cash Assets 340,000
b) Liabilities 49,000
Cash 49,000
c) Dizon, Loan 20,000
Dizon, Capital 20,000
d) Tamala, Capital 19,000
Dimalanta, Capital 14,000
Dizon, Capital 5,000
e) Tamala, Capital 21,000
Cash 21,000
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5 - 2 WatinVeloso Partnership
Requirement A1:
(SOVENT)
WatinVeloso Partnership
Statement of Partnership Liquidation
60% 40%
Cash
Non-
Cash Liabilities
Watin,
Loan
Watin,
Capital
Veloso,
Capital
Balance before realization 20,000 180,000 60,000 10,000 40,000 90,000Realization and Loss 85,000 (180,000) - - (57,000) (38,000)
Balances 105,000 60,000 10,000 (17,000) 52,000
Payment of Liabilities (60,000) (60,000) - - -
Balance 45,000 10,000 (17,000) 52,000
Right of Offset - (10,000) 10,000 -
Balances 45,000 (7,000) 52,000
Additional Cash - Watin 7,000 7,000 -
Balances 52,000 52,000
Payment to Veloso (52,000) (52,000)
Requirement A2:
(INSOVENT)
60% 40%
Cash
Non-
Cash Liabilities
Watin,
Loan
Watin,
Capital
Veloso,
Capital
Balance before realization 20,000 180,000 60,000 10,000 40,000 90,000
Realization and Loss 85,000 (180,000) - - (57,000) (38,000)
Balances 105,000 60,000 10,000 (17,000) 52,000
Payment of Liabilities (60,000) (60,000) - - -
Balance 45,000 10,000 (17,000) 52,000
Right of Offset - (10,000) 10,000 -
Balances 45,000 (7,000) 52,000
Deficiency of Watin
Absorbed by Veloso 7,000 (7,000)
Balances 45,000 45,000
Payment to Veloso (45,000) (45,000)
Requirement B1: SOLVENT
Journal Entries
a) Cash 85,000
Watin, Capital 57,000
Veloso, Capital 38,000
Non-Cash Assets 180,000
b) Accounts payable 60,000
Cash 60,000
c) Watin, Loan 10,000
Watin, Capital 10,000
d) Cash 7,000
Watin, Capital 7,000
e) Veloso, Capital 52,000
Cash 52,000
Requirement B2: INSOLVENT
Journal Entries
a) Cash 85,000
Watin, Capital 57,000
Veloso, Capital 38,000
Non-Cash Assets 180,000
b) Accounts payable 60,000Cash 60,000
c) Watin, Loan 10,000
Watin, Capital 10,000
d) Veloso, Capital 7,000
Watin, Capital 7,000
e) Veloso, Capital 45,000
Cash 45,000
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5 - 3 Sanciangko Commercial
Requirement 1:
SanciangkoCommercial
Statement of Partnership Liquidation
30% 30% 40%
Cash
Non-
Cash
Accounts
Payable
Pozon,
Loan
Pozon,
Capital
Selisana,
Capital
Teque,
Capital
Balance before realization 45,000 127,000 62,000 5,000 35,000 35,000 35,000
Customers Collection 50,000 (57,000) - - (2,100) (2,100) (2,800)
Balances 95,000 70,000 62,000 5,000 32,900 32,900 32,200
Sale of Mdse. at a Loss 59,500 (70,000) - - (3,150) (3,150) (4,200)
Balances 154,500 62,000 5,000 29,750 29,750 28,000
Payment of Liabilities (62,000) (62,000) - - - -
Balances 92,500 5,000 29,750 29,750 28,000
Payment to Loan (5,000) (5,000) - - -
Balance 87,500 29,750 29,750 28,000
Payment to Partners (87,500) (29,750) (29,750) (28,000)
Requirement 2:
1) Cash 50,000
Allowance for doubtful Accounts 3,000
Pozon, Capital 2,100
Selisana, Capital 2,100
Teque, Capital 2,800
Accounts Receivable 60,000
To record collection from cus