I.

Illustration
Accounting Equation
a) Dr.
Assets = Liabilities + Owner's Equity Cr.
-P 15,000 -P 15,000
b) Dr.
Cr.
+ 15,000 = +P 10,000 + +P 5,000
+ 15,000 = +P 15,000 c) Dr.
Cr.

II. Illustration

Dr.
Cr.
Dr.
Cr.
Cr.

Dr.

Cr.
Illustration
Debit Credit
Ruiz, Capital 15,000.00
Allow. for Uncollectible Accounts 15,000.00

Prepaid Expenses 30,000.00

Ruiz, Capital 30,000.00

Ruiz, Capital 10,000.00

Salaries Payable 10,000.00

Illustration

Cash 700,000.00
Fernando, Capital 700,000.00
Land 1,300,000.00
Mortgage Payable 300,000.00
Java, Capital 1,000,000.00

Cash 700,000.00
Land 1,300,000.00
Fernando, Capital 700,000.00
Mortgage Payable 300,000.00
Java, Capital 1,000,000.00
To record initial investment of Fernando & Java
Problem #1
Two Sole Proprietors Form a Partnership

Lopez and Mapa form a partnership and invest the following assets and liabilities.

Fair Market Value Dr.

Lopez:
Cash 300,000.00 Cr.
Land 450,000.00

Mapa:
Cash 100,000.00 Dr.
Building 600,000.00
Mortgage Payable - 400,000.00 Cr.

The Partners will share profits and losses equally.

Required:

Prepare the opening journal entry in the books of the partnership.

Lopez Journal Entry

Cash 300,000.00 Dr. Cash 400,000.00

Land 450,000.00 Land 450,000.00
Lopez, Capital 750,000.00 Building 600,000.00
Cr. Mortgage Payable 400,000.00
Mapa: Lopez, Capital 750,000.00
Mapa, Capital 300,000.00
Cash 100,000.00
Building 600,000.00
Mortgage Payable 400,000.00
Mapa, Capital 300,000.00
Problem #2
Baluyot,
Formationas of
hera original investment in the firm of baluyot and Dinoy, contributes equipment that had been recorded in the
Partnership
books of her own business as costing P900,000, with accumulated depreciation of P620,000. The partners agreed on a
valuation of P400,000. They also agreed to accept Baluyot's accounts receivable of P360,000, realizable to the extent of 85
percent.

Required:
Baluyot's Investment
Prepare the journal entry to record Baluyot's investment in the partnership on June 13.
Accounts Receivable
Equipment
Allowance for Uncollectible
Baluyot's Capital
To record Baluyot's Inve
s Investment

s Receivable 360,000
400,000
Allowance for Uncollectible Accts. 54,000
Baluyot's Capital 706,000
To record Baluyot's Investment
Problem #3
A sole Proprietor and an Individual with No Business Form a Partnership.

On Apr. 8, 2020, Pascua who her own retail business and Dela Cruz, decided to form a partnership whwrein they will
divide profits in the ratio of 40:60, respectively. The statementof financial position of Pascua is as follows:

Pascua Marketing 1
Statement of Financial Position Pascua, Capital
April 8, 2020 Allowance for Uncollectible

Assets Pascua, Capital

Accumulated Dep.
Cash P 4,000
Accounts Receivable P160,000
Less: Allowance for Uncollectible Accounts 16,000 144,000 2
200,000 PASCUA
Inventory P 50,000 Cash
Less: Accumulated Depreciation 10,000 40,000 Accounts Receivables
Total Assets P388,000 Inventory
Equipment
Liabilities and Capital Allowance for Uncollectib
Accumulated Depreciatio
Accounts Payable P 36,000 Accounts Payable
Pascua, Capital 352,000 Pascua Capital
Total Liabilities and Capital P 388,000

DELA CRUZ
Conditions agreed upon before the formation of the partnership: Cash
Dela Cruz, Capital
a. The accounts receivable of Pascua is estimated to be 70% realizable.
b. The accumulated depreciation of the equipment will be increased by P10,000.
c. The accounts payable will be assumed by the partnership. JOURNAL ENTRY
d. The capital of the partnership is based on the adjusted capital balance of Pascua. Cash
Accounts Receivables
Dela Cruz is to contribute cash in order to make the partner's capital balances proportionate to the profit
and loss ratio. Inventory
Equipment
Required: Allowance for Uncollectib
Accumulated Depreciatio
1. Prepare the necessary journal entries in the books of Pascua. Accounts Payable
2. Prepare the opening journal entries in the books of the partnership. Pascua, Capital
Dela Cruz, Capital
 32,000
llowance for Uncollectible Accts. 32,000

10,000
Accumulated Dep. 10,000

4,000
s Receivables 160,000
200,000
50,000
Allowance for Uncollectible Accts. 48,000
Accumulated Depreciation 20,000
Accounts Payable 36,000
Pascua Capital 310,000

465,000
Dela Cruz, Capital 465,000

469,000
s Receivables 160,000
 200,000
50,000
Allowance for Uncollectible Accts. 48,000
Accumulated Depreciation 20,000
Accounts Payable 36,000
Pascua, Capital 310,000
Dela Cruz, Capital 465,000
Problem#4
A Sole Proprietor and an Individual with No Business Form a Partnership

Espanol operated a specialty shop that sold fishing equipment and accessories. Her post-closing trial balance on Dec.
31, 2019 is as follows:

Fish
Post-Closing Trial Balance
Dec. 31,2019
Debit
Cash ₱ 36,000.00
Accounts Receivable 150,000.00
Allowance for Uncollectible Accounts
Inventory 440,000.00
Equipment 135,000.00
Accumulated Depreciation
Accounts Payable
Espanol, Capital
₱ 761,000.00

Espanol plans to enter into a partnership with trusted associate, Quino, effective Jan. 1,2020. Profits or losses will be
shared equally. Espanol is to transfer all assets and liabilities of her shop to the partnership after revaluation.

Quino will invest cash equal to Espanol's investment after revaluation. The agreed values are as follows: accounts
receivable (net), P140,000; inventory, P460,000; and equipment (net), P124,000. The partnership will operate under
the business name of Fish R' Us.

Required:

1. Prepare the opening journal entries in the books of the partnership.

2. Prepare the partnership's statement of financial position as at the date of formation of the partnership.
ost-closing trial balance on Dec.

1
ESPANOL
Cash 36,000
Credit Accounts Receivable 150,000
Inventory 460,000
Equipment 124,000
₱ 16,000.00 Allowance for Uncollectible Accts. 10,000
Accounts Payable 30,000
Espanol, Capital 730,000
75,000.00
30,000.00 QUINO
640,000.00 Cash 730,000
₱ 761,000.00 Quino, Capital 730,000

1,2020. Profits or losses will be

rship after revaluation.

ues are as follows: accounts

partnership will operate under

2
FISH R' Us
STATEMENT OF FINANCIAL POSITION
Jan. 1, 2020
n of the partnership.
CURRENT ASSETS
Cash 766,000
Accounts Receivables 150,000
Less: Allowance for Uncollectible Accts. 10,000 140,000
Inventory 460,000
Total Current Assets ###

NON CURRENT ASSETS

Equipment 124,000
TOTAL ASSETS ###

LIABILITIES AND CAPITAL

Accounts Payable 30,000
Espanol, Capital 730,000
Quino, Capital 730,000
TOTAL LIABILITIES AND CAPITAL ###
Problem #6
Two Sole Proprietors Form a Partnership

The Business assets of Geron and Yumol appear below:

Geron

Cash ₱ 11,000.00
Accounts Receivable 234,536.00
Inventories 120,035.00
Land 603,000.00
Building -
Furniture and Fixtures 50,345.00
Other Assets 2,000.00
Total ₱ 1,020,916.00

Account Payable 178,940.00

Notes Payable 200,000.00
Geron, Capital 641,976.00
Yumol,Capital -
Total ₱ 1,020,916.00

Geron and Yumol agreed to form a partnership contributing their assets and equities subject to the following
adjustments:

a. Accounts receivable of P20,000 in Geron's books and P35,000 in Yumol's are uncollectible.
b. Inventories of P5,500 and P6,700 are worthless in Geron's and Yumol's respective books.
c. Other assets pf P2,000 for Geron and P3,600 for Yumol are to be written off.

Required:

Prepare the journal entries for the formation of the partnership as at July1.
 Yumol

₱ 22,354.00
567,890.00
260,102.00
-
428,267.00
34,789.00
3,600.00
₱ 1,317,002.00

243,650.00
345,000.00
-
728,352.00
₱ 1,317,002.00

ties subject to the following

ncollectible.
tive books.
Problem#8
Two Sole Proprietors Form a Partnership

Antonio and Gayas are fierce competitors who swll hunting equipment. They finally decided to join forces in order
to increase their business and reduce costs. An agreement is reached between the two to begin operations as a
partnership on Mar. 1, 2020.

ADJUSTMENTS
Antonio and Gayas have decided to share profits or losses in the ratio of 60:40 , respectively. a.
Antonio, Capital
The statements of financial position of Antonio and Gayas as at Mar. 1, 2010are as follows: Merchandising Inventory, Beginnin
Merchandising Inventory, Ending
Antonio Gayas Merchandising Inventory, Beginnin
Merchandising Inventory, Ending
Cash ₱ 42,000.00 ₱ 30,000.00 Gaya's Capital
Accounts Receivable 389,200.00 169,200.00
Allowance for Uncollectible Accounts (22,400.00) (14,400.00) b.
Merchandise Inventory 461,600.00 300,800.00 Land
Prepaid Rent - 6,000.00 Antonio, Capital
Office Supplies 30,400.00 4,000.00 Building
Land 40,000.00 - Antonio, Capital
Building 128,000.00 - Antonio, Capital
Accumulated Depreciation (32,000.00) - Office Equipment
Office Equipment 24,000.00 62,000.00 Repair Equipment
Accumulated Depreciation (6,000.00) (13,200.00) Antonio, Capital
Repair Equipment 172,000.00 - Gayas, Capital
Accumulated Depreciation (68,000.00) - Office Equipment

Total Assets ₱ 1,158,800.00 ₱ 544,400.00

c.
Notes Payable ₱ 120,000.00 Antonio, Capital
Accounts Payable 170,000.00 ₱ 111,600.00 Notes Payable
Mortgage Payable 200,000.00 -
Antonio, Capital 668,800.00 -
Gayas, Capital - 432,800.00
Total Liabilities and Owner's Equity ₱ 1,158,800.00 ₱ 544,400.00
Antonio
The name of the partnership will be Antonio and Gayas Hunting Gears. The partners have agreed to effect the
following adjustments: Cash
Accounts Receivables

a. Antonio's merchandise inventory is to be reduced by P105,200. The inventory is to be reduced by P105,200. The
inventory of Gayas will be increased by P7,200.
Merchandise Inventory
Office Supplies
b. The following are the fair market values of the various assets: Land
Building
Antonio Gayas Office Equipment
Repair Equipment
Land P108,000 - Allowance for Uncollectible Accts.
Building 192,000 - Notes Payable
Office Equipment 16,000 40,000 Accounts Payable
Repair Equipment 124,000 - Mortgage Payable
c. One-half of the notes payable of Antonio are personal notes. All other Antonio, Capital
liabilities of the partners are assumed by the partnership.
d. The prepaid rent in the books of Gayas will be consumed by the Gayas
partnership. Cash
Accounts Receivable
Required: Merchandise Inventory
Prepaid Rent
Prepare the journal entries to record the formation of the partnership. Office Supplies
Repair Supplies
Allowance for uncollectible accou
Accounts payable
Gayas, capital
 105,200
ndising Inventory, Beginning 105,200
nventory, Ending 356,400
ndising Inventory, Beginning 356,400
nventory, Ending 7,200
7,200

68,000
68,000
64,000
64000
800
800
48,000
48,000
22,000
22,000

60,000
60,000
 42,000
389,200

356,400
30,400
108,000
192,000
16,000
124,000
ce for Uncollectible Accts. 22,400
60,000
170,000
200,000
805,600

30,000
169,200
308,000
6,000
4,000
40,000
nce for uncollectible accounts 14,400
ts payable 111,600
apital 431,200