PARTNERSHIP

MODULE 1
FISH R US

A Sole Proprietor and an Individual with NO Business Form a Partnership

Espanol Operated a specialty shop that sold fishing equipment and accessories. post- closing
trial balance on Dec. 31) 2007 is as follows:

Fish R Us

Post-Closing Trial Balance

Dec. 31, 2007

Debit Credit

Cash P 36,000

Accounts Receivable 150,000.

Allowance for Uncollectible Accounts P 16,000

Inventory 440,000

Equipment 135,000

Accumulated Depreciation 75,000

Accounts Payable 30,000

Espanol, Capital 640,000

P761,OOO P761,OOO

Espanol plans to enter into a partnership with trusted associate, Quino, effective Jan. 1, 2008. 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,OOO; inventory, P460,OOO; and equipment (net),
P124,OOO, 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.

This study source was downloaded by 100000833075284 from CourseHero.com on 02-07-2022 03:56:34 GMT -06:00

https://www.coursehero.com/file/91171512/PARTNERSHIP-REVIEWERdocx/
 MULTIPLE CHOICE-MODULE 1

BUDDY N SOL – MODULE 1

Buddy admits Sol to be a partner in his business. Accounts in the books a of Buddy on

October 3 1, 200 Y, prior to the admission of Sol shows the following balances:

Cash p 10,500.00

Accounts Receivable 41,600.00

Allowance for Bad Debts 3,000

Merchandise Inventory 89,400.00

Fixed Assets 70,000

Accumulated depreciation 16,700

Accounts Payable 40,350.00

Buddy, Capital 151,450.00

This study source was downloaded by 100000833075284 from CourseHero.com on 02-07-2022 03:56:34 GMT -06:00

https://www.coursehero.com/file/91171512/PARTNERSHIP-REVIEWERdocx/
 It is agreed that some accounts in the books of Buddy have to be revalued and the following
adjustment be made:

Merchandise Inventory is to be valued at PI 09,950.00

An allowance for bad debts of 5% is to provided for.
Accrued salaries for P 1,620.00 is to be recorded
Carrying value of the fixed asset is 55,000
Unused supplies was inventoried at 2,500
Sol is to invest Cash to give him 1/3 interest in the Buddy and Sol partnership.

Required:

Give the journal entries to adjust the books of Buddy.

Give the journal entries on new set of books of the partnership to record the investment of Buddy and
Sol.
Prepare the balance sheet of Buddy and Sol partnership.

ALLAN AND IRENE – MODULE 1

Problem Solving
On October l, 2001, Allan and Irene decide to pool their assets and form a partnership. The firm is to
take over business assets and assume business liabilities and capitals are to be based on net assets
transferred after the following adjustments:

1. Irene’s inventory is to be valued at 35,000

2. An allowance for doubtful accounts of 5% is to be established on the accounts receivable
of each party.

1. Accrued expenses ofP2,000 are to be recognized on Allan’ss books.

2. Irene is to be allowed goodwill of P25,000 and is to invest additional cash so that she will
have a 60% interest in the new firm.

Allan Irene
Cash P 18,750 P 11,250
Accounts Receivable 45,000 37,500
Merchandise
This Inventory
study source was downloaded 40,000
by 100000833075284 from CourseHero.com 30,000
on 02-07-2022 03:56:34 GMT -06:00

https://www.coursehero.com/file/91171512/PARTNERSHIP-REVIEWERdocx/
 Equipment 25,000 30,000
Accumulated Depreciation ( 11,250) ( 3,750)
Total Assets PI 17 500 PI 05 000

Accounts Payable P 34,500 P 25,000

Capital 83,000 80,000
Total Liabilities and Capital PI 17 500 P105 000

The books of Irene will be used by the new partnership.

Required:
Give the entries to adjust and close the books of Allan.
Give the entries required on the books of Irene upon the formation of the partnership
Prepare a balance sheet for the firms of Allan and Irene as of October 1

PARTNERSHIP
MODULE 2

PERIDA AND RHODA

The capital accounts for Perida and Rhoda at the end of fiscal year 2001 are as follows:

Perida

January I Balance P 21,000

May I Investment 9,000
October I Withdrawal P 6,000

Rhoda

January 1 Balance P 15,000

April 1 Withdrawal P 3,000

Net income for the year ended December 31, 2001 is P30,000.

Instructions: Give the journal entries to record the transfer of net income to the capital accounts under
each of the following assumptions: (Show the procedure used in calculating the respective amounts
asstudy
This an source
explanation forbyeach
was downloaded entry). from CourseHero.com on 02-07-2022 03:56:34 GMT -06:00
100000833075284

https://www.coursehero.com/file/91171512/PARTNERSHIP-REVIEWERdocx/
 1. Net income is divided 60% to Perida and 40% to Rhoda.
2. Net income is divided in the ratio of capital at the beginning of the period.
3. Net income is divided in the ratio of aVerage capital.
4. Interest at 8% is allowed on average capital and the balance of net income is
divided equally.
5. Salaries of P 12,000 and P9,600 are allowed to Perida and Rhoda respectively, and the balance of
net income is divided in the ratio of capital at the end of the period.
6. Rhoda is allowed a bonus of 33 1/3 %of net income after bonus, and the
balance of the net income is divided in the ratio of the average capital.

STV
The partners of STV Partnership are Sandy, Tammy and Vanny. During the current year, their average
capital balances are as follows:

Sandy P280,OOO Tammy 200,000 Vanny 120,000 The partnership agreement provides that
partners shall receive;
1. Annual allowance of 6% of their average capital balances;
2. Salary allowances as follows: Sandy - none; Tammy - P48,000; Vanny
P40,OOO•,
3. Tammy, who manages the business, is to receive a bonus of 25% of
income in excess of P72,000 after partners' interest and salary
allowances;

4. Residual profits will be divided in the ratio of 5:3:2

Instructions: Prepare separate schedules showing how income or loss will be divided among the
three partners in each of the following cases. The figure given is the income or loss for the year that is
available for distribution to partners.

1. 40,000 loss

2. 76,000 income

3. 260,000 income

TRUE AND FALSE – MODULE 2

MULTIPLE CHOICE – MODULE 1

This study source was downloaded by 100000833075284 from CourseHero.com on 02-07-2022 03:56:34 GMT -06:00

https://www.coursehero.com/file/91171512/PARTNERSHIP-REVIEWERdocx/
 SPEED
TEST

Pascuat
and
Alegrado created a partnership to own and operate
a natural
food store.

partnership agreement provided that Pascual

receives a salary of PIO,OOO and
Alegrado a salary of P5,OOO to recognize their
relative time spent in operating the store.
Remaining profits and losses were divided 60:40 to Pascual and Alegrado,
respectively. profit for 2008, the first year of operations, of P13,OOO was allocated
P8,800 to Pascual and P4,200 to Alegrado.
On Jan. 1, 2009, the partnership agreement was changed to reflect the fact that
Alegrado could no longer devote any time to the store's operations. The new
agreement allowed Pascual a salary of P18,OOO and the remaining profits and losses
are divided equally. In 2009, an error was discovered such that the 2008 reported
profit was understated by P4,OOO. The partnership profit of P25,OOO for 2009
included this P4,OOO related to 2008.
Required:
Prepare the schedule to allocate the P25,OOO profit to Pascual and Alegrado.

LEARNING EVIDENCE 1

The partnership agreement of Escano, Garcia and Sabater provided that profits are to be divided as
follows:
Escano is to receive a salary allowance of PIOO,OOO for managing the business. Partners are to
receive 10% interest on average capital balances.
Remaining profits are to be divided in the ratio of 30:30:40 to Escano, Garcia and Sabater,
respectively.
Escano
This had
study source was a capitalbybalance
downloaded of P600,OOO
100000833075284 at Jan.
from CourseHero.com 1, 2008
on 02-07-2022 andGMT
03:56:34 had drawings
-06:00 of P80,OOO during the

https://www.coursehero.com/file/91171512/PARTNERSHIP-REVIEWERdocx/
 year. Garcia's capital balance on Jan. 1, 2008 was P900,OOO and invested an additional P300,OOO
on Sept. 1, 2008. Sabater's beginning capital balance was n, 100,000, and she withdrew PIOO,OOO
on July 1 but invested an additional P200,OOO on Oct. 1, 2008.

The partnership had a loss of P120,OOO during the year. The bookkeeper allocated the Joss as
follows: P2,OOO to Escano; P(48,OOO) to Garcia and P(74,OOO) to Sabater.
Required:
1. Prepare the schedule to allocate the P120,OOO loss correctly.
2. Prepare the statement of changes in partners' equity.
3. Prepare the correcting journal entry at Dec. 31, 2008 assuming that the books
have been closed.

PARTNERSHIP
MODULE 3
OLIVER AND ZENY
1. Partners Oliver and Rommel are considering the admission of Dennis into the partnership. Oliver
and Rommel share income and loss in the ratio of 2:4, respectively. Oliver's capital balance is
P240,000 and Rommel's capital balance is PI 80,000.

Instructions: Prepare entries to record the admission of Dennis into the partnership under each of the
following independent assumptions:
1. Dennis acquired one-fourth of the interest of Oliver paying P80,000
2. Dennis acquired one-fourth of the interest of Rommel, paying P70,000.
3 Dennis acquired a one-fourth interest in the partnership from the old partners paying P 126,000.
Implied goodwill is recognized.

2. Zeny and Cecille share profits equally and have equal investments in their partnership. The
partnership's net assets are carried on the books at P50,000. Nitz is admitted into the partnership with
a one-third interest in profits and net assets. Nitz pays P22,500 cash into the partnership for her
interest.

Instructions: Prepare journal entries to show three possible methods of recording the admission of
Nitz on the partnership books.

This study source was downloaded by 100000833075284 from CourseHero.com on 02-07-2022 03:56:34 GMT -06:00

https://www.coursehero.com/file/91171512/PARTNERSHIP-REVIEWERdocx/

Powered by TCPDF (www.tcpdf.org)