1.

Assume that AA and BB partners of AB Partnership (who share net income and loss in 80%:20%)
organize A & B Corporation to take over the net assets of the partnership. The balance sheet of the
partnership on June 20, 20x4, the date of incorporation, is as follows: **

Assets:

Cash 14,400

Trade AR 33,720

Allowance for doubtful accounts (720)

Inventories 30,600

Equipment 72,000

A/D (31,200)

Total Assets 118,800

Liabilities and Partners Capital

Trade AP 42,000

AA, Capital 57,588

BB, Capital 19,212

Total Liabilities and Partners Capital 118,800

After an appraisal of the equipment and an audit of the partnership’s financial statements, the partners
agree that the following adjustments are required to restate the net assets of the partnership to current
fair value:
A. Increase the allowance for doubtful accounts to P1,200
B. Increase the inventories to current replacement cost of P36,000
C. Increase the equipment to its reproduction cost new, P84,000, less accumulated depreciation
on this basis, P36,600; that is to current fair value , P47,400
D. Recognize accrued liabilities of P1,320
E. Recognize goodwill of P12,000

A & B Corporation is authorized to issue 12,000 shares of P10 par common stock. It issues 9,000
shares of common stock valued at P11 a share to the partnership in exchange for the net assets of the
partnership

● In the books of the corporation, the amount credited to Paid in Capital in Excess of Par is
9000

● The adjusted capital of AA is

75348

● The adjusted capital of BB is

 23652

● The total net adjustment is

22200
 1. XYZ Partnership provided for the following in the distribution of profits and losses:
First: X is to receive 10% of net income up to P100,000 and 20% of the amount in excess thereof.
Then: Y and Z are each to receive a 5% of the remaining income in excess of P150,000 after X’s share.
Lastly: The balance is to be distributed equally to the three partners.

● If the partnership income is P250,000, what is the total share of X?

P108,000

2. Tamayo, Banson and Vidal, a partnership formed on january 1, 2018, had the following initial
investments.

Tamayo 100,000

Banson 150,000

Vidal 225,000

The partnership agreement profits and losses are to be shared equally by the partners after
consideration is made for the following:
a. Salaries allowed to partners: P60,000 for Tamayo; P48,000 for Banson and P36,000 for Vidal.
b. Average partner’s capital balances during the year shall be allowed 10% interest.

Additional information:
A. On June 30,2018, Tamayo invested an additional P60,000.
B. Vidal withrew P70,000 from the partnership on September 30, 2018.
C. Share on the remaining profit was P3,000 for each partner.

● The average capital of Vidal is ________.

207500

● The partnership net profit for 2018 before salaries, interest and partner’s share on the
remainder is _______.
201750

● The average capital of Tamayo is ________.

130000

● Interest on average capital balances of the partners totals

48750

● Total Partnership Capital

666750
Robert, Mico and Aaron formed a partnership on March 1, 2019 with original capital contributions of P300,000,
P100,000, and P400,000, respectively. On April 30, 2019, agreed to invest additional capital of P100,000 each.
On August 1, all partners agreed to have the same level of contributed capital of P500,000.

● How much is the average capital balance of Mico for the 10-month period ending December 31,
2019?
 330,000

● How much is the average capital balance of Robert for the 10-month period ending December
31, 2019?
430,000

● How much is the average capital balance of Mico for the 10-month period ending December 31,
2019?
Robert of P100,000. Mico of P300,000 and nothing from Aaron

Dino, Doods, and Dong have the following accounts and their normal balances on January 31, 2021, the date
the partners agreed to liquidate their 3D Partnership:

Cash P20,000 Accounts Payable P10,000

Accounts Receivable 25,000 Notes Payable 27,000

Allowance for Bad Debts 5,000 Loans due to Dino 5,000

Merchandise Inventory 60,000 Loans due to Doods 7,000

Furniture & Equipment 50,000 Dino, Capital 20,000

Accumulated Depreciation 5,000 Doods, Capital 40,000

Dong, Capital 36,000

The partners divide profit and losses 4:1:5, respectively. Sales proceed follows:
Accounts Receivable P10,000
Merchandise Inventory 30,000
Furniture & Equipment 20,000

● Assuming that Dino is a limited partner, the cash paid to Dong is?
0

● If Dino is a limited partner, the cash paid to Doods is

32500

● Assuming that Dino is a limited partner, how much additional investment should Dong give?
1500

● How much is the non-cash assets?

125000

● Assuming that any deficiency will be immediately paid, the cash paid to Doods
40500

● Assuming that any deficiency is uncollectible, the cash paid to Dong?

2667
● The sale of non-cash assets resulted in a total loss of
65000

● How much is the cash available for distribution to the partners?

43000

● The sale resulted in a capital deficiency for

Dino