Problems #1:

On September 30, BAD admits COMPANY for an interest in his business. On this date, BAD's capital account
BAD’s capital account shows a balance of ₱158,400. The following were agreed upon before adjustment
before the formation of the partnership: Prepaid Expenses
Accrued Expenses
• Prepaid expenses of ₱17,500 and accrued expenses of ₱5,000 are to be recognized. Allowance for D.A
• 5% of the outstanding accounts receivable of Bad amounting to ₱100,000 is to be BAD's capital account
recognized as uncollectible. after adjustment
• Company is to be credited with a one-third interest in the partnership and is to invest Total Partnership Cap.
cash aside from the ₱50,000 worth of merchandise.
The partners agreed to divide profits and losses in the ratio of 70:30, respectively. 1/3 intrest of Company
How much cash is to be invested by COMPANY?
Less: MDSE cont. by
a. ₱32,950 Company
b. ₱82,950 Cash to be invested by
c. ₱55,300 Company
d. ₱281,800
BAD's capital account
before adjustment 158,400
Prepaid Expenses 17,500
Accrued Expenses - 5,000
Allowance for D.A - 5,000 (100k x 5%)
165,900 (2/3 interest)
BAD's capital account
after adjustment x 3/2
Total Partnership Cap. 248,850
x 1/3
1/3 intrest of Company 82,950
Less: MDSE cont. by
Company - 50,000
Cash to be invested by 32,950
Company
Problem #2:
ALJUR and AJ agreed to form a partnership by contributing the assets of their separate
businesses. The partners agreed to an equal capital credit on the total contributed capital.
Cash settlements will be made among them to even out the difference. The abridged
statement of financial positions of ALJUR and AJ is are follows:

ALJUR AJ
Total assets ₱ 120,000 ₱ 80,000
Total liabilities 40,000 20,000
The partnership formation results in
a. ₱10,000 bonus to AJ
b. ₱10,000 cash settlement to AJ.
c. ₱10,000 goodwill to AJ
d. ₱10,000 cash settlement from AJ.
 ALJUR AJ
Total assets 120,000 80,000
Total Liabilities - 40,000 - 20,000 Total
Capital before Adjustments 80,000 60,000 140,000
Transfer of Capital Interest - 10,000 10,000
Capital after adjustments 70,000 70,000

*Cash Settlement among the partners for the transfer of

Capital Interest
Therefore, Partner AJ will pay 10,000 to Partner Aljur in
exchanged for the capital interest transferred by ALJUR.
Problem #3:
Duterte, Duque, and Roque are partners with average capital balances during 2020 of
₱472,500, ₱238,650, and ₱162,350, respectively. In 2020, the partnership had a net
loss of ₱125,624 before the interest and salaries to partners. Partners Duterte, Duque, Interest
and Roque profit or loss agreement are as follows: Salaries
a) 10% interest on their average capital balances Balance
b) Salaries of ₱122,325 to A and ₱82,625 to C
c) Residual profits or loss is divided equally.

By what amount should Duterte’s and Roque’s capital account change – increase *You should also practice on
(decrease)? in the CPALE, nangyayari din
*Answer 1 = Duterte and Answer 2 = Roque
a. ₱ 30,267 (₱40,448)
b. (₱ 40,844) ₱31,325
c. ₱ 29,476 ₱ 17,536
d. (₱41,875) (₱41,875)
 A B C PL's
DUTERTE DUQUE ROQUE - 125,624
47,250 23,865 16,235 - 87,350
122,325 - 82,625 - 204,950
- 139,308 - 139,308 - 139,308 - 417,924
30,267 - 115,443 - 40,448
Increase Decrease

*You should also practice on how to answer defective questions. (even

in the CPALE, nangyayari din po ito)
Problem #4:

GERALD and JULIA are partners in merchandising business. During 2020, the withdrew
their salary allowances of ₱40,000 and ₱60,000, respectively. Profits and losses are
shared in the ratio of 3:2. The income summary account has a credit balance of
₱120,000 before any income allocation. Their capital accounts reflect the following:

GERALD JULIA
Beginning balance………………………………………₱50,000 ₱30,000
Additional investments……………………………… ₱30,000 ₱40,000
Withdrawals other than for salary allowances……... (₱10,000) (₱15,000)
Ending Capital………………………………………… ₱70,000 ₱55,000

The capital balance of each partner on December 31, 2020 after closing the
income summary and withdrawals accounts.
a. GERALD, ₱82,000; JULIA, ₱63,000
c. GERALD, ₱70,000; JULIA, ₱55,000
b. GERALD, ₱122,000; JULIA, ₱123,000
d. GERALD, ₱82,000; JULIA, ₱123,000
 GERALD JULIA
END CAPITAL BEFORE SHARE
IN NET INCOME 70,000 55,000
*Share in Net Income 52,000 68,000
Less: Drawings (Salaries) - 40,000 - 60,000
End Capital of each partner 82,000 63,000
ALD JULIA

GERALD JULIA
Salaries 40,000 60,000
Excess (120k - 100k salaries) 12,000 8,000
*Gerald = 20k x 3/5 52,000 68,000 *Share in Net Income
*Julia = 20k x 2/5
Problem #5:
The following statement of financial position summary, together with residual profit-
sharing ratios, was developed on April 1, 2020 when the AAA, BBB and CCC
partnership began its liquidation:

Cash ₱140,000
Accounts receivable 60,000
Inventories 85,000
Plant assets-net 200,000
Loan to AAA 25,000
Liabilities 60,000
Loan from BBB 20,000
AAA capital (20%) 75,000
BBB capital (40%) 200,000
CCC capital (40%) 155,000

If available cash except for a ₱5,000 contingency fund is distributed immediately,

AAA, BBB, and CCC, respectively, should receive:
a. ₱-0-, ₱80,000, and ₱15,000
b. ₱-0-, ₱70,000, and ₱5,000
c. ₱16,000, ₱32,000, and ₱32,000
d. ₱-0-, ₱72,500 and ₱7,500
 AAA BBB CCC
LOAN TO AAA - 25,000
LOAN FROM BBB 20,000
CAPITAL BAL. 75,000 200,000 155,000 TOTAL
TOTAL INTEREST 50,000 220,000 155,000 425,000
- 70,000 - 140,000 - 140,000 - 350,000 *Maximum Possible Loss
- 20,000 80,000 15,000 75,000
*CASH AVAILABLE
Capital Def of AAA 20,000 - 10,000 - 10,000 TO PARTNERS
- 70,000 5,000
*Beg. Cash 140,000
Payment of Liab - 60,000
contingency fund - 5,000
*CASH AVAILABLE TO 75,000
PARTNERS
Problem #6:
The partnership agreement of CHINA, JAPAN and KOREA provides for the division of
net income as follows: (1) JAPAN, who manages the partnership, is to receive a salary
of ₱16,500 monthly. (2) Each partner is to be allowed interest at 15% on ending capital.
(3) Balance is to be divided 25:30:45.

During 2020, CHINA invested an additional ₱96,000 in the partnership. JAPAN made
an additional investment of ₱60,000 and withdrew ₱90,000, and KOREA withdrew
₱70,000. No other investments or withdrawals were made during 2020. On January 1,
2020, the capital balances were CHINA, ₱280,000; JAPAN, ₱300,000; and KOREA,
₱170,000. Total capital at year-end was ₱975,000.

Compute the share of each partner in the net income at year-end: (CHINA, JAPAN
and KOREA respectively)

a. ₱ 36,175 ₱214,230 ₱ 21,405

b. ₱ 57,250 ₱ 68,700 ₱103,050
c. ₱ 36,175 ₱214,230 (₱21,405)
d. ₱36,175 ₱ 54,230 ₱148,595
 Total PP
CHINA JAPAN KOREA 229,000
Interest on Cap. 56,400 40,500 15,000 - 111,900
*Salaries to Japan 198,000 - 198,000
*16,500 x 12
Balance (25:30:45) - 20,225 - 24,270 - 36,405 - 80,900
Share of each partners 36,175 214,230 - 21,405

CHINA JAPAN KOREA

280,000 300,000 170,000
96,000 60,000 - 70,000
- - 90,000 - TOTAL
Ending cap before share 376,000 270,000 100,000 746,000
in net income 15% 15% 15%
Interest on Cap. 56,400 40,500 15,000

Total cap before PP 746,000

VS: Total Cap after PP - 975,000
Difference (PP) 229,000
Problem #7:
RANZ and NIANA who share profits and loss equally admit NATALIA into a partnership upon the investme
by NATALIA of P125,000 for a 1/3 interest. Account balances for RANZ and NIANA on June 30, 2000, just
before the admission of NATALIA are as follows:

Cash 60,000 Accounts payable P85,000

Accounts receivable 90,000 RANZ CAPITAL 120,000
Notes receivable 10,000 NIANA CAPITAL 80,000
Merchandise inventory 120,000
Prepaid insurance 5,000

It is agreed that for purposes of establishing the interests of the former partners the following adjustments
shall be made:
(1)  An allowance for doubtful accounts of 2-1/2% is to be established.
(2)  The merchandise inventory is to be valued at P110,000.
(3)  Accrued expenses of P4,000 are to be recognized.
(4)  Prepaid insurance is to be valued at P9,250.

The capital balances of RANZ, NIANA and NATALIA, respectively after NATALIA’s admission is:
a.    P120,000; P 80,000; P125,000
b.    P144,000; P 74,000; P125,000
c.     P104,333; P104,333; P104,333
d.    P124,333; P 84,334; P104,333
nership upon the investment RANZ NIANA TOTAL
NA on June 30, 2000, just CAPITAL OF OLD PARTNERS
BEF. ADJ. 120,000 80,000 200,000
Allowance for D.A -
(90,000 x 2.50%) - 1,125 - 1,125 - 2,250
Inventory writedown -
(120k - 110k) - 5,000 - 5,000 - 10,000
Accrued Expenses - 2,000 - 2,000 - 4,000
prepaid Insurance 2,125 2,125 4,250
CAPITAL OF OLD PARTNERS aft. 114,000 74,000 188,000
he following adjustments ADJ.
TCC BONUS TAC
RANZ 114,000 10,333 124,333
NIANA 74,000 10,333 84,333
NATALIA 125,000 - 20,667 104,333
313,000 313,000

ALIA’s admission is:

A summary of balance sheet for ABC Co. appears below. Partners LU ANG, HEE RAP
and NAH MAN share profits and losses in the ratio of 2:3:5, respectively. Some account NOTE: LU ANG (A); HEE RAP
with their respective balances are as follows:
A
Cash 100,000 B
LU ANG, capital 425,000 C
Inventory 125,000 D
HEE RAP, capital 400,000
Marketable Securities 200,000
NAH MAN, capital 200,000
Land 100,000
Building-net 500,000

The partners agree to admit D for a 1/5 interest. The fair value of partnership land is
appraised at P200,000 and the fair value of inventory is P175,000.
The assets are to be revalued prior to the admission of D and there is a decrease of
P30,000 in the capital interest of the new partner after his admission.
Q1: The increase (decrease) in the capital interest of C after admission of D.
a. P60,000
b. P90,000
c. P75,000
d. P36,000

Q2: The amount of cash investment of D to acquire 1/5 interest in the partnership?
a. P301,250
b. P256,250
c. P75,000
d. P331,250
NOTE: LU ANG (A); HEE RAP (B); NAH MAN ( C )
TCC Revaluation Bonus TAC
425,000 30,000 6,000 461,000
400,000 45,000 9,000 454,000
200,000 75,000 15,000 290,000 1,205,000 OLD PARTNER'S CAPITAL
331,250 - - 30,000 301,250 x 5/4
1,356,250 150,000 1,506,250 TOTAL PARTNERSHIP CAP
*100k + 50k
Land & Inv.

Q1: 75k share in reva and 15k bonus to old partners

= 90k increase

Q2: 331,250: see table above.

Problem #9: TCC
MacDo will invest in the partnership of Jabili and Pitsa Hat for a 40% interest. MACDO 200,000
Jabili and Pitsa Hat have capital of ₱400,000 and ₱300,000 and shares profit JABILI 400,000
60:40, respectively. MacDo is to invest ₱200,000 into the partnership and to PITSA HAT 300,000
purchase 1/2 of Jabili’s interest for ₱300,000. 900,000

Compute the capital interest of MacDo, Jabili and Pitsa Hat, respectively,
under the bonus method.
a. ₱500,000, ₱200,000; ₱200,000
b. ₱360,000, ₱224,000; ₱316,000
c. ₱400,000, ₱200,000; ₱200,000
d. ₱200,000, ₱200,000; ₱200,000
 T OF C.I BONUS TAC
200,000 - 40,000 360,000
- 200,000 24,000 224,000
- 16,000 316,000
900,000
Problem #10:
T
As of December 31, the books Ton Partnership showed capital balances of: T, ₱400,000; O, 400,000
₱250,000; N, ₱50,000. The partners’ profit and loss ratio was 3:2:1, respectively. The partners
decided to liquidate and they sold all non-cash assets for ₱370,000. After settlement of all - 210,000
liabilities amounting ₱120,000, they still have cash of ₱280,000 left for distribution. Assuming 190,000
that any capital debit balance is uncollectible, the share of T in the distribution of the
₱280,000 cash would be: - 12,000
178,000

a. ₱178,000
b. ₱180,000
c. ₱ 190,000
d. ₱170,000
 O N TOTAL
250,000 50,000 700,000
- 140,000 - 70,000 - 420,000
110,000 - 20,000 280,000
- 8,000 20,000
102,000 -