CHAPTER 2

Nature and Formation of a Partnership

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

b. Accounts Receivable 500,000

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

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

d. Equipment 540,000
Alonzo, Capital 540,000
P900,000 x 6/10 = P540,000

E 2-2
1. Cash 450,000
Accounts Receivable 180,000
Merchandise Inventory 270,000
Equipment 125,000
Allowance for Uncollectible Accounts 10,000
Accounts Payable 105,000
Notes Payable 90,000
Aquino, Capital 820,000

2. Cash 520,000
Asuncion, Capital 520,000

E 2-3
1. a. Amores, Capital 23,000
Allowance for Uncollectible Accounts 23,000

b. Merchandise Inventory 176,000

Amores, Capital 176,000

c. Prepaid Expenses 72,000

Accounts Payable 32,000
Amores, Capital 40,000

d. Cash 902,500
Andrada, Capital 902,500
(P1,612,000 – P23,000 + P176,000 + P40,000 = P1,805,000 ÷ 2/3 x 1/3 = P902,500)
PC – Chapter 2 page 2

2. a. Cash 208,000
Accounts Receivable 460,000
Merchandise Inventory 1,616,000
Prepaid Expenses 72,000
Allowance for Uncollectible Accounts 23,000
Accounts Payable 528,000
Amores, Capital 1,805,000

b. Cash 902,500
Andrada, Capital 902,500

Amores and Andrada Company

Statement of Financial Position
January 1, 2009

Assets
Cash P1,110,500
Accounts Receivable P460,000
Less Allowance for Uncollectible Accounts 23,000 437,000
Merchandise Inventory 1,616,000
Prepaid Expenses 72,000
Total Assets P3,235,500

Liabilities and Capital

Accounts Payable P528,000
Amores, Capital P1,805,000
Andrada, Capital 902,500 2,707,500
Total Liabilities and Capital P3,235,500

E 2-4
1. Cash 1,000,000
Land 800,000
Building 750,000
Aguirre, Capital 1,000,000
Aranas, Capital 1,550,000
2. Cash 1,000,000
Land 800,000
Building 750,000
Aguirre, Capital 1,275,000
Aranas, Capital 1,275,000

P 2-1
1. a. Merchandise, Inventory 150,000
Acosta, Capital 150,000
b. Acosta, Capital 75,000
Allowance for Uncollectible Accounts 75,000
PC – Chapter 2 page 3

c. Interest Receivable 3,750

Acosta, Capital 3,750
P375,000 x 6% x 2/12 = P3,750
d. Acosta, Capital 18,750
Interest Payable 18,750
P750,000 x 10% x 3/12 = P18,750
e. Accumulated Depreciation 450,000
Acosta, Capital 150,000
Furniture and Fixtures 600,000
f. Office Supplies 12,500
Acosta, Capital 12,500
g. Cash 1,311,250
Aguas, Capital 1,311,250
P2,700,000 + 150,000 – 75,000 + 3,750 – 18,750 -150,000 + 12,500 = 2,622,500/2 = 1,311,250

Acosta and Aguas

Statement of Financial Position
December 1, 2009

Assets
Cash P 1,911,250
Notes Receivable 375,000
Accounts Receivable P 2,250,000
Less Allowance For Uncollectible Accounts 225,000 2,025,000
Interest Receivable 3,750
Merchandise Inventory 750,000
Office Supplies 12,500
Furniture And Fixtures 1,200,000
Total Assets P 6,277,500

Liabilities and Capital

Notes Payable P 750,000
Accounts Payable 1,575,000
Interest Payable 18,750
Total Liabilities P 2,343,750

Acosta, Capital P 2,622,500

Aguas, Capital 1,311,250
Total Capital 3,933,750
Total Liabilities and Capital P 6,277,500

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

b. Abril, Capital 21,000

PC – Chapter 2 page 4

Accrued Expenses 21,000

c. Accumulated Depreciation 112,500
Accounts Payable 345,000
Accrued Expenses 21,000
Allowance for Doubtful Accounts 9,000
Abril, Capital 800,000
Cash 187,500
Accounts Receivable 450,000
Merchandise Inventory 400,000
Equipment 250,000

2. a. Merchandise Inventory 50,000

Arias, Capital 50,000

b. Arias, Capital 7,500

Allowance for Doubtful Accounts 7,500

c. Goodwill 357,500
Arias, Capital 357,500
P800,000 ÷ 40% x 60% - (800,000 + 50,000 – 7,500) = 357,500

d. Accumulated Depreciation 37,500

Equipment 37,500
e. Cash 187,500
Accounts Receivable 450,000
Merchandise Inventory 400,000
Equipment 137,500
Allowance for Doubtful Accounts 9,000
Accounts Payable 345,000
Accrued Expenses 21,000
Abril, Capital 800,000
Abril and Arias
Statement of Financial Position
October 1, 2009
Assets
Cash P 300,000
Accounts Receivable P 825,000
Less Allowance For Doubtful Accounts 16,500 808,500
Merchandise Inventory 750,000
Equipment 400,000
Goodwill 357,500
Total Assets P2,616,000
Liabilities and Capital
Accounts Payable P 595,000
Accrued Expenses 21,000
Total Liabilities P 616,000
Abril, Capital P 800,000
Arias, Capital 1,200,000
Total Capital 2,000,000
PC – Chapter 2 page 5

Total Liabilities and Capital P2,616,000

P 2-3
1. Merchandise Inventory 30,000
Accumulated Depreciation 9,000
Allowance for Doubtful Accounts 10,000
Equipment 20,000
Albano, Capital 9,000

2. Cash 50,000
Accounts Receivable 460,000
Merchandise Inventory 1,080,000
Equipment 120,000
Furniture and Fixtures 90,000
Allowance for Doubtful Accounts 40,000
Accounts Payable 540,000
Abada, Capital 1,220,000

P 2-4
1. Accounts Receivable 840,000
Merchandise Inventories 1,000,000
Furniture and Fixtures 600,000
Goodwill 250,000
Allowance for Doubtful Accounts 240,000
Accounts Payable 450,000
Abante, Capital 2,000,000

2. Cash 1,000,000
Arevalo, Capital 1,000,000

3. Land 800,000
Almonte, Capital 800,000

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

b. Accounts Receivable 1,792,000

Merchandise Inventory 256,000
Office Equipment 160,000
Goodwill 198,000
Allowance for Doubtful Accounts 160,000
Accounts Payable 576,000
Alano, Capital 1,670,000
PC – Chapter 2 page 6

Abueva and Alano Partnership

Statement of Financial Position
June 1, 2009

Assets
Cash P 518,000
Accounts Receivable P 1,792,000
Less Allowance For Doubtful Accounts 160,000 1,632,000
Merchandise Inventory 1,408,000
Office Equipment 160,000
Goodwill 198,000
Total Assets P 3,916,000

Liabilities and Capital

Accounts Payable P 576,000
Abueva, Capital P 1,670,000
Alano, Capital 1,670,000 3,340,000
Total Liabilities and Capital P 3,916,000

P 2-6
1. P1,080,000 P80,000 + P440,000 + P200,000 + P600,000 – P240,000 = P1,080,000
2. P1,100,000 (P1,080,000 + P1,120,000) / 2 = P1,100,000

Multiple Choice
1. B
2. A
3. A
4. D
5. D
6. A (P80,000 + P300,000 + P900,000) – P320,000 = P960,000
7. B Aster = P489,000 – P7,500 = P481,500
Amie = P273,000 + P9,000 – P5,400 = P276,600
8. D P9,000 + (P189,000 – P10,000) + P460,000 + P140,000 = P788,000 x 2 = P1,576,000
9. A (P600,000 x 1/2) – (P230,000 – P30,000) = P100,000
10. D Total partnership capital + Total partnership liabilities = Total partnership assets
P600,000 + (P30,000 + P20,000) = P650,000
11. C P600,000/2 = P300,000- (150,000-20,000)= P170,000.
12. B P90,000 + P30,000 + P130,000 – P100,000 = P150,000
13. C P240,000 + (P150,000 + P 100,000) = P490,000
14. B (P240,000 + P150,000) x 60% = P234,000
(P240,000 + P150,000) x 40% = P156,000- P150,000 =P6,000
15. B
16. C P280,000 + P440,000 + P800,000 – P320,000 = P1,200,000
17. C P720,000 + P1,200,000/2 = P960,000
18. C P960,000 – P720,000 = P240,000
19. B
20. D P720,000 + P1,200,000 = P1,920,000 x 75% = P1,440,000
PC – Chapter 2 page 7

TM 6
1. F 5. T 9. T 13. T 17. F
2. F 6. T 10. T 14. T 18. T
3. F 7. F 11. F 15. F 19. T
4. T 8. T 12. T 16. F 20. T

TM 7
1. Limited partnership 9. Agreed value
2. Industry, skill, talent or service 10. Dormant partner
3. Capitalist industrial partner 11. Articles of Co-Partnership
4. Mutual agency 12. Secret partner
5. De facto partnership 13. Securities and Exchange Commission
6. Memorandum entry 14. Limited or LTD.
7. Nontrading partnership 15. Limited partner
8. Partnership 16. Loan Payable
17. Capital share
18. Bonus
19. Arrive at Agreed value or FMV
20. General professional partnership

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

TM 9

Problem A

1. Cash 800,000
Land 375,000
Building 1,250,000
Furniture and Fixtures 625,000
Accounts Payable 250,000
Alvis, Capital 1,375,000
Ancheta, Capital 1,425,000

2. Cash 800,000
Land 375,000
Building 1,250,000
Furniture and Fixtures 625,000
Accounts Payable 250,000
Alvis, Capital 1,400,000
Ancheta, Capital 1,400,000

3. Cash 800,000
PC – Chapter 2 page 8

Land 375,000
Building 1,250,000
Furniture and Fixtures 625,000
Goodwill 50,000
Accounts Payable 250,000
Alvis, Capital 1,425,000
Ancheta, Capital 1,425,000

Problem B

1. a. Ablan, Capital 50,000

Accounts Receivable 50,000

b. Ablan, Capital 27,500

Inventories 27,500

c. Ablan, Capital 10,000

Other Assets 10,000

a. Amias, Capital 75,000

Accounts Receivable 75,000

b. Amias, Capital 33,500

Inventories 33,500

c. Amias, Capital 18,000

Other Assets 18,000

2. a. Accounts Payable 894,700

Notes Payable 1,000,000
Ablan, Capital (P3,209,880 – P50,000 – P27,500 – P10,000) 3,122,380
Cash 55,000
Accounts Receivable 1,122,680
Inventories 572,675
Land 3,015,000
Furniture and Fixtures 251,725

b. Accounts Payable 1,218,250

Notes Payable 1,725,000
Amias, Capital (P3,641,760 – P75,000 – P33,500 – P18,000) 3,515,260
Cash 111,770
Accounts Receivable 2,764,450
Inventories 1,267,010
Buildings 2,141,335
Furniture and Fixtures 173,945

3. a. Cash 55,000
Accounts Receivable 1,122,680
Inventories 572,675
PC – Chapter 2 page 9

Land 3,015,000
Furniture and Fixtures 251,725
Accounts Payable 894,700
Notes Payable 1,000,000
Ablan, Capital 3,122,380

b. Cash 111,770
Accounts Receivable 2,764,450
Inventories 1,267,010
Buildings 2,141,335
Furniture and Fixtures 173,945
Accounts Payable 1,218,250
Notes Payable 1,725,000
Amias, Capital 3,515,260

Ablan and Amias Partnership

Statement of Financial Position
May 1, 2009

Assets
Current Assets
Cash P 166,770
Accounts Receivable 3,887,130
Inventories 1,839,685 P 5,893,585
Noncurrent Assets
Land P 3,015,000
Buildings 2,141,335
Furniture and Fixtures 425,670 5,582,005
Total Assets P 11,475,590

Liabilities and Capital

Notes Payable P 2,725,000
Accounts Payable 2,112,950
Total Liabilities P 4,837,950

Ablan, Capital P 3,122,380

Amias, Capital 3,515,260
Total Capital 6,637,640
Total Liabilities and Capital P 11,475,590