1. VR formed a partnership on January 10, 2020.

V contributed cash of P150,000, while R

contributed inventory with a fair value of P120,000. Due to V's expertise in selling, R agreed that
V should have 60 percent of the total capital of the partnership. V and R agreed to recognize
goodwill. What is the total capital of the VR partnership and the capital balance of V after the
goodwill is recognized, respectively?
V R Total
Agreed Capital 150,000 100,000 250,000
Actual Contributions 150,000 120,000 270,000
Goodwill 0 20,000 20,000
150,000 / 60% = 250,000
250,000 / 40% = 100,000 (R’s Agreed Contribution)
120,000 – 100,000 = 20,000 (R’s Goodwill)

2. On July 5, 2019, the business accounts of Mark and Dave appear below:
Mark Dave
Cash P20,000 P130,000
Accounts Receivable 70,000 14,000
Merchandise Inventory 120,000 80,000
Land 1,200,000 -
Buildings - 750,000
Furniture and Fixtures 180,000 90,000
Accounts Payable 160,000 155,000
Leonard, Capital 1,430,000 -
George, Capital - 909,000

Both agreed to form a partnership contributing their respective assets and liabilities subject to the
following adjustments:
• Accounts Receivable of P15,000 in Mark’s books and P4,000 in Dave’s books are
uncollectible.
• Inventories of P30,000 and P10,000 are worthless in Mark’s and Dave’s respective
books.
• Buildings in Dave’s books has a fair market value of P900,000.
• Accounts payable worth P55,000 on Mark’s books will not be passed upon the
partnership.

What are the contributed capitals of Mark and Dave, respectively?

Mark Dave
Cash 20,000 130,000
AR 70,000 14,000
Allowance for Doubtful Accounts - 15,000 - 4,000
Inventory 120,000 80,000
Worthless - 30,000 - 10,000
Land 1,200,000 -
Building - 900,000
Furnitures And Fixtures 180,000 90,000
Total Assets 1,545,000 1,200,000
Accounts Payable 160,000 155,000
AP not accounted in partnership - 55,000 -
Total Liabilities 105,000 155,000
Total Assets 1,545,000 1,200,000
Total Liabilities 105,000 155,000
Total Equity 1,440,000 1,045,000 2,485,000

3. Lebron and Dwayne formed a partnership on January 1, 2020. Lebron contributed cash of
P120,000 and Dwayne contributed land with a fair value of P160,000. The partnership assumed
the mortgage on the land which amounted to P40,000 on January 1. Dwayne originally paid
P90,000 for the land. On July 31, 2020, the partnership sold the land for P190,000. Assuming
Lebron and Dwayne share profits and losses equally, how much of the gain from sale of land
should be credited to Lebron and Dwayne, respectively, for financial accounting purposes?

FV of Land 160,000
Price of Land 190,000
Gain on Sale 30,000

Distribution of Gain:
Lebron 30,000 x 50% 15,000
Dwayne 30,000 x 50% 15,000

4. The ZYX partnership reported net income of P130,000 for the year ended December 31, 2019.
According to the partnership agreement, partnership profits and losses are to be distributed as
follows:

Z Y X
Salaries P25,000 P20,000 P15,000
Bonus on net income 10% - -
Remainder 60% 30% 10%

How should partnership net income for 2019 be allocated to Z, Y, and X, respectively?
 .

Z Y X
SALARIES 25,000 20,000 15,000 60,000
BONUS ON NET INCOME 13,000 13,000
REMAINDER 34,200 17,100 5,700 57,000
Allocation of Net Income 72,200 37,100 20,700 130,000

5. Neko and Inu formed a partnership on January 2, 2020, and agreed to share profits 90% and
10%, respectively. Neko contributed capital of P25,000. Inu contributed no capital but has a
specialized expertise and manages the form full time. There were no withdrawals during the year.
The partnership agreement provides for the following:
• Capital accounts are to be credited annually with interest at 5% of beginning capital.
• Inu is to be paid salary of P1,000 a month
• Inu is to receive a bonus of 20% of income calculated before deducting his salary and
interest on both capital accounts.
The partnership 2020 income statement follows:
Revenues P96,450
Expenses (including salary, interest and bonus) 49,700
Net Income P46,750

What is Inu’s 2020 bonus?

Neko Inu Total

5% Interest 1,250 1,250
Bonus 9,350 9,350
Salary 1,000 1,000
Remaining 31,635 3,515 35,150
Income 32,885 13,865 46,750

Bonus of Inu 9,350