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Ch2 Suggested Answers
Ch2 Suggested Answers
1. F 6. F
2. T 7. T
3. F 8. F
4. T 9. F
5. T 10. F
1. D 6. D 11. A
2. C 7. C 12. A
3. C 8. C 13. B
4. C 9. B 14. B
5. C 10. A 15. D
Problem 1-4
1. P143,000
2. P1,800,000
3. P1,100,000
4. P450,000
5. Hero-P250,000; Anna-P115,000
6. P350,000
7. John-P12,500; Jay-P12,500
8. P200,000
9. P408,000
10. P100,000 (assumed to be equal to Hannah’s contribution)
ANSWERS TO CHAPTER 2
Exercise 2 – 1
______1.T It is possible to allocate profit or loss to partners based solely on the stated ratio.
______2. Losses shall not be divided among the partners in the absence of loss sharing
agreement.
______3.T The basis for distribution of profits or losses is a matter of agreement among the
partners and may be based on their capital contribution ratio.
______4.T A partner’s capital account may increase as a result of the allocation of a loss.
______5.T Salary allowances shall be provided even when operations yielded losses in the
absence of any agreement.
______6. A 3:3:2 ratio is the same as 30%, 30%, 20%.
______7.T Interest on partner’s capital is a profit sharing device.
______8. A statement of changes in partners’ equity include partners’ payment of loans.
______9. Interest on money borrowed by the partner from the partnership shall be treated as
operating expense.
______10. Partner’s share of the loss for the period is included in the statement of financial
position.
Exercise 2 – 2
1. FALSE 11.FALSE
2. TRUE 12.TRUE
3. TRUE 13.FALSE
4. TRUE 14.FALSE
5. FALSE 15.FALSE
6. TRUE 16.FALSE
7. FALSE 17.FALSE
8. TRUE 18.TRUE
9. TRUE 19.TRUE
10. TRUE 20.TRUE
Problem 2 – 1
1. JAMES MARK TOTAL
2/5 x P200,000 = P80,000 P80,000
3/5 X P200,000 = P120,000____120,000
Partners’ Profit Share P80,000 P120,000 P200,000
======= ======= ========
2. JAMES MARK TOTAL
2/5 x P200,000 = P80,000 P80,000
3/5 X P200,000 = P120,000____120,000
Partners’ Profit Share P80,000 P120,000 P200,000
======= ======= ========
Problem 2 - 2
ANA HELEN MARIE Total
1. a. Int. on Ave.Cap. @ 9% P P P 9,450 P
31,500 22,050 63,000
Salary allowances 54,000 60,000 --- 114,000
Bonus to Helen* --- 10,750 --- 10,7
50
Remainder, 4:3:3 44,900 33,675 33,675 112,250
Total share P130,400 P126,475 P43,125 P300,000
Problem 2-3
Requirement 1
Accounts Receivable 100,0
00
Merchandise Inventory 260,0
00
Prepaid Expenses 15,0
00
Office Equipment 280,0
00
Allowance for Uncollectible Accounts 10,000
Accounts Payable 190,000
Rockford, Capital 455,000
Investment of Rockford
Cash 455,000
Jewel, Capital 455,000
Investment of Jewel
Requirement 2
Jewel and Rockford
Statement of Financial Position
September 30, 2020
Assets
Cash P
455,000
Accounts Receivable P 100,000
Allowance for Uncollectible Accounts 10,000
90,000
Merchandise Inventory 260,000
Prepaid Expenses 15,000
Office Equipment 280,000
Accounts Payable P
190,000
Jewel, Capital 445,000
Rockford, Capital 445,000
Total Liabilities and Partners’ Equity P 1,100,000
Requirement 3
Income Summary 600,000
Jewel, Drawing 200,000
Rockford, Drawing 400,000
To close Income Summary account
Requirement 4
Rockford, Drawing 100,000
Jewel, Capital 20,000
Rockford, Capital 100,000
Jewel, Drawing 20,000
To close Drawing Accounts
Problem 2-4
Zachary and Xavier
Statement of Income
For the nine months ended December 31, 2020
Sales P 238,000
Less: Sales Returns 8,000
Net Sales P 230,000
Less: Cost of Goods Sold
Purchases P 200,000
Less: Ending Inventory 75,000 125,000
Gross Profit P 105,000
Less: Operating Expenses 68,000
Profit P 37,000
Problem 2-5
1. Val P195,000; Ruel P285,000 5. P3,000,000
2. Des P126,000 6. P19,400
Emery P 90,000 7. P41,000
3. Des P183,600 8. P8,000
Emery P176,400 9. P18,000
4. P74,000 debit balance 10. Dale P30,267 increase
Fritz P40,448 decrease