#AlagangWency

Partnership Formation

1. On January 1, 20x1, Mr. A and Ms. B formed a partnership. Mr. A contributed cash of ₱500,000
while Ms. B contributed a building with carrying amount of ₱400,000 and fair value of ₱800,000.
The building has an unpaid mortgage of ₱200,000 which is not assumed by the partnership.

Requirement: Provide the journal entry to record the contributions of the partners.

2. A and B formed a partnership. The following are their contributions:

  A B
Cash 500,000 -
Accounts receivable 100,000 -
Building 700,000
Total 600,000 700,000

A, capital 600,000
B, capital 700,000
Total 600,000 700,000

Additional information:
 The accounts receivable includes a ₱20,000 account that is deemed uncollectible.
 The building is over-depreciated by ₱50,000.
 The building has an unpaid mortgage ₱100,000, which is assumed by the partnership.

Requirement: Provide the journal entry to record the contributions of the partners in the partnership
books.

3. A and B agreed to form a partnership. A contributed₱40,000 cash while B contributed equipment

with fair value of ₱100,000. However due to the expertise that A will be bringing to the
partnership, the partners agreed that they should initially have an equal interest in the
partnership capital.

Requirement: Provide the journal entry to record the initial investments of the partners.

“Develop a passion for learning. If you do, you will never cease to grow.” - Anthony J. D'Angelo
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