QUIZ 1 Partnership Formation

The statement of financial position of Mona Lisa on October 1, 2019 before accepting Paul Ivan as her partner
is shown below:

Mona Lisa
Statement of Financial Position
October 1, 2019

ASSETS
Cash 6,000.00
Notes Receivable 3,000.00
Accounts Receivable 24,000.00
Less: ADA 1,000.00 23,000.00
Merchandise Inventory 8,000.00
Furniture and Fixtures 6,000.00
Less: Accum Dep'n 600.00 5,400.00
TOTAL ASSETS 45,400.00

Liabilities & Capital

Notes Payable 4,000.00
Accounts Payable 10,000.00
Mona Lisa, Capital 31,400.00
TOTAL LIABILITIES & CAPITAL 45,400.00

Paul Ivan offers to invest cash to give him a capital credit equal to one-half (1/2) of Mona Lisa’s capital after
giving effect to the adjustment of the items below. Mona Lisa accepts the offer.
a. The merchandise is to be valued at P7,400
b. The accounts receivable is estimated to be 95% realizable
c. Interest accrued on the notes receivable enumerated below is to be reflected.
 P1,000, 6% dated July 1, 2016
 P2,000, 6% dated August 1, 2016
d. Interest accrued at 5% annually from notes payable dated April 1, 2016 is to be recorded
e. The furniture and fixtures is to be valued at P4,600
f. Office supplies on hand which have been charged to expense in the past amounted to P400. These
are still to be used by the partnership.

Requirements: Compute for the account balances immediately after partnership formation:
1. Total Current Assets
2. Total Noncurrent Assets
3. Total Liabilities
4. Mona Lisa, Capital
5. Paul Ivan, Capital
QUIZ 2 Partnership Formation

On June 30, 2019, Maja, the sole proprietor of the Maja Company, expands the company and establish a
partnership with Julia and Kim. The partners plan is to share profits and losses as follows: Maja, 50%; Julia,
25%; and Kim, 25%. They also agree that the beginning capital balances of the partnership will reflect this same
relationship. Maja asked Julia to join the partnership because her many business contacts are expected to be
valuable during the expansion. Julia is also contributing P28, 000 cash. Kim is also contributing P11, 000 cash
and marketable securities costing P42, 000 to Kim but are currently worth P 57,500. Maja’s investment in the
partnership is the Maja Company. She plans to pay off the notes with his personal assets. The other partners
have agreed that partnership will assume the accounts payable. The statement of financial position for the Maja
Company follows:

Maja Company
Statement of Financial Position
June 30, 2019

ASSETS
Cash 10,000.00
Accounts Receivable (net) 48,000.00
Merchandise Inventory 72,000.00
Equipment ( net of accum. dep'n: P20,000) 70,000.00
TOTAL ASSETS 200,000.00

Liabilities & Capital

Accounts Payable 53,000.00
Notes Payable 62,000.00
Maja, Capital 85,000.00
TOTAL LIABILITIES & CAPITAL 200,000.00

The partners agree that the inventory is worth P85, 000, and the equipment is worth half its original cost, and
the allowance established for doubtful accounts is correct. The partners agree to use the bonus method to record
the formation.

Requirements: Compute for the account balances immediately after partnership formation:

1. Total Current Assets

2. Total Noncurrent Assets
3. Total Liabilities
4. Maja, Capital
5. Julia, Capital
6. Kim, Capital