Agreed Values

Accounts
Investment by F Investment by G
Cash P100,000 P100,000
Inventory 100,000
Land 200,000
Building 400,000
Equipment 200,000
Mortgage on Building assumed by
the Partnership 200,000

Assumption 1. F and G a
Assumption 2. F and G a

A. Bonus Method
B. Goodwill Method
Assumption 1. F and G agree that each partner is to receive a capital credit equal to the agreed values of the net assets each partner in
A. To record the investments of F

Cash 100,000.00
Inventory 100,000.00
Equipment 200,000.00
F, Capital 400,000.00

B. To record the investments of G

Cash 100,000.00
Land 200,000.00
Building 400,000.00
Mortgage Payable 200,000.00
G, Capital 500,000.00

F & G Partnership
Statement of Financial Position
July 12, 2022

Assets
Cash 200,000.00
Inventory 100,000.00
Equipment 200,000.00
Land 200,000.00
Building 400,000.00
Total Assets 1,100,000.00

Liabilities and Capital

 Mortgage Payable 200,000.00
F, Capital 400,000.00
G, Capital 500,000.00
Total Liabilities and Capital 1,100,000.00

Assumption 2. F and G agree that each partner is to receive an equal capital interest

A. Bonus Method
A. To record the investments of F

Cash 100,000.00
Inventory 100,000.00
Equipment 200,000.00
F, Capital 400,000.00

B. To record the investments of G

Cash 100,000.00
Land 200,000.00
Building 400,000.00
Mortgage Payable 200,000.00
G, Capital 500,000.00

C. To record the bonus to F F

400,000.00
G, Capital 50,000.00 50,000.00
F, Capital 50,000.00 450,000.00

F & G Partnership
Statement of Financial Position
July 12, 2022

Assets
Cash 200,000.00
Inventory 100,000.00
Equipment 200,000.00
Land 200,000.00
Building 400,000.00
Total Assets 1,100,000.00

Liabilities and Capital

Mortgage Payable 200,000.00
F, Capital 450,000.00
G, Capital 450,000.00
Total Liabilities and Capital 1,100,000.00
B. Goodwill Method
A. To record the investments of F

Cash 100,000.00
Inventory 100,000.00
Equipment 200,000.00
F, Capital 400,000.00

B. To record the investments of G

Cash 100,000.00
Land 200,000.00
Building 400,000.00
Mortgage Payable 200,000.00
G, Capital 500,000.00
50%
C. To record the goodwill F
400,000.00
Goodwill 100,000.00 100,000.00
F, Capital 100,000.00 500,000.00

F & G Partnership
Statement of Financial Position
July 12, 2022

Assets
Cash 200,000.00
Inventory 100,000.00
Equipment 200,000.00
Land 200,000.00
Building 400,000.00
Goodwill 100,000.00
Total Assets 1,200,000.00

Liabilities and Capital

Mortgage Payable 200,000.00
F, Capital 500,000.00
G, Capital 500,000.00
Total Liabilities and Capital 1,200,000.00
es of the net assets each partner invested
 G Total
500,000.00 900,000.00
- 50,000.00 -
450,000.00 900,000.00
50%
G Total
500,000.00 900,000.00
- 100,000.00
500,000.00 1,000,000.00
Below is the balance sheet of H on November 30, 2014 before accepting I as his partner to form HI Partnership:

H Partnership
Balance Sheet
November 30, 2014

Assets
Cash 100,000.00
Accounts Receivable 40,000.00
Less: Allowance for Doubtful Accounts 2,500.00 37,500.00
Notes Receivable 50,000.00
Merchandise Inventory 22,500.00
Equipment 60,000.00
Less: Accumulated Depreciation 5,000.00 55,000.00
Total Assets 265,000.00

Liabilities and Capital

Accounts Payable 10,000.00
Notes Payable 50,000.00
H, Capital 205,000.00
Total Liabilities and Capital 265,000.00

It is agreed that for purposes of establishing H's interest the following adjustments shall be made:
a. The accounts receivable is estimated to be 90% realizable.
b. Interest at 8% on notes receivable dated March 1, 2014 is to be accrued.
c. The merchadise inventory is to be valued at P17,500.
d. The equipment is under-depreciated by P4,000.
e. Prepaid expenses of P2,000 and accrued expenses of P6,000 are to be recognized.

I is to invest cash to obtain a one-third interest in the partnership.

Assumption 1. Old set of books

Steps:
1. Adjust the books of H
2. No closing entries
3. Recording of investments
4. Preparation of Balance Sheet

Assumption 2. New set of books

Steps:

1. Adjust the books of H

2. Close the books of H
3. Recording of investments
4. Preparation of Balance Sheet
m HI Partnership:

Assumption 1. Old set of books

To record the adjustments in the books of H (Books of HI Partnership).

a. H, Capital 1,500.00
Allowance for Doubtful Accounts

4,000.00
- 2,500.00
1,500.00

b. Interest Receivable/Accrued Interest Income 3,000.00

H, Capital

3,000.00

c. H, Capital 5,000.00
Merchandise Inventory

5,000.00

d. H, Capital 4,000.00
Accumulated Depreciation

e. Prepaid Expenses 2,000.00

H, Capital 4,000.00
Accrued Expenses

To record the investment of I

Cash 96,750.00
I, Capital
 Unadjusted H, Capital 205,000.00
a. - 1,500.00
b. 3,000.00
c. - 5,000.00
d. - 4,000.00
e. - 4,000.00
Adjusted H, Capital 193,500.00
divided by 0.67
Total Partnership 290,250.00
multiply by 0.33
Cash Investment of I 96,750.00

HI Partnership
Balance Sheet
November 30, 2014

Assets
Cash 196,750.00
Accounts Receivable 40,000.00
Less: Allowance for Doubtful Accounts 4,000.00 36,000.00
Notes Receivable 50,000.00
Interest Receivable 3,000.00
Merchandise Inventory 17,500.00
Prepaid Expenses 2,000.00
Equipment 60,000.00
Less: Accumulated Depreciation 9,000.00 51,000.00
Total Assets 356,250.00

Liabilities and Capital

Accrued Expenses 6,000.00
Accounts Payable 10,000.00
Notes Payable 50,000.00
H, Capital 193,500.00
I, Capital 96,750.00
Total Liabilities and Capital 356,250.00
 Assumption 2. New set of books

To record the adjustments in the books of H

a. H, Capital
1,500.00 Allowance for Doubtful Accounts

4,000.00
- 2,500.00
1,500.00

b. Interest Receivable/Accrued Interest Income

3,000.00 H, Capital

3,000.00

c. H, Capital
5,000.00 Merchandise Inventory

5,000.00

d. H, Capital
4,000.00 Accumulated Depreciation

e. Prepaid Expenses
H, Capital
6,000.00 Accrued Expenses

To close the books of H

Allowance for Doubtful Accounts 4,000.00

96,750.00 Accumulated Depreciation 9,000.00
Accrued Expenses 6,000.00
Accounts Payable 10,000.00
Notes Payable 50,000.00
H, Capital 193,500.00
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise Inventory
Prepaid Expenses
Equipment

To record the investments of H

Cash 100,000.00
Accounts Receivable 40,000.00
Notes Receivable 50,000.00
Interest Receivable 3,000.00
Merchandise Inventory 17,500.00
Prepaid Expenses 2,000.00
Equipment 51,000.00
Allowance for Doubtful Accounts
Accrued Expenses
Accounts Payable
Notes Payable
H, Capital

To record the investment of I

Cash 96,750.00
I, Capital

HI Partnership
Balance Sheet
November 30, 2014

Assets
Cash 196,750.00
Accounts Receivable 40,000.00
Less: Allowance for Doubtful Acco 4,000.00 36,000.00
Notes Receivable 50,000.00
Interest Receivable 3,000.00
Merchandise Inventory 17,500.00
Prepaid Expenses 2,000.00
Equipment, net 51,000.00
Total Assets 356,250.00

Liabilities and Capital

Accrued Expenses 6,000.00
Accounts Payable 10,000.00
Notes Payable 50,000.00
H, Capital 193,500.00
I, Capital 96,750.00
Total Liabilities and Capital 356,250.00
1,500.00
1,500.00

3,000.00
3,000.00

5,000.00
5,000.00

4,000.00
4,000.00

2,000.00
4,000.00
6,000.00
100,000.00
40,000.00
50,000.00
3,000.00
17,500.00
2,000.00
60,000.00

4,000.00
6,000.00
10,000.00
50,000.00
193,500.00

96,750.00
On October 01, 2014, J and K decided to pool their assets and form a partnership. They
allocate profit and loss in the ratio of 44:56 for them, respectively. The firm is to take
over business assets and assume business liabilities, and capitals are to be based on
net assets transferred after the following adjustments:

a. J's inventory amounting to P10,000 is worthless, while K's agreed value of inventory amounted to P125,000.
b. Uncollectible accounts of P6,000 for J is to be provided; a 5% allowance is to be recognized in the books of K.
c. Accruent rent income of P10,000 on J, and accrued salaries of P8,000 on K should be recognized on their respective books.
d. Interest at 16% on notes receivable dated August 17, 2014 should be accrued.
e. The office supplies unused amounted to P20,000.
f. The equipment's agreed value amounted to P50,000.
g. The furniture and fixtures has a fair market value of P90,000.
h. Interest at 12% on notes payable dated July 01, 2014 should be accrued. Use 360 days a year.
i. K has an unrecorded patent amounting to P40,000.

Balance sheets for J and K on October 01, 2014 before adjustments are given below:

J K
Cash 75,000.00 45,000.00
Accounts Receivable 180,000.00 150,000.00
Allowance for Doubtful Accounts - 4,000.00 - 5,000.00
Notes Receivable 50,000.00
Merchandise Inventory 160,000.00 120,000.00
Office Supplies 27,000.00
Equipment 100,000.00
Accumulated Depreciation - Equipment - 45,000.00
Furniture and Fixtures 120,000.00
Accumulated Depreciation - Furniture and Fixtures - 20,000.00
Total Assets 493,000.00 460,000.00

Accounts Payable 133,000.00 100,000.00

Notes Payable 50,000.00
Capitals 310,000.00 360,000.00
Total Liabilities and Capital 493,000.00 460,000.00

Assumption 1. Old set of books ( Books of K is to be retained by the new partnership)

Steps:
1. Adjust the books of J and K
2. Close the books of J
3. Recording of investments

4. Preparation of Balance Sheet

Assumption 2. New set of books
Steps:

1. Adjust the books of J and K

2. Close the books of J and K
3. Recording of investments
4. Preparation of Balance Sheet
ounted to P125,000. Assumption 1. Old set of books
zed in the books of K.
ognized on their respective books. To record the adjustments in the books of J and K.

Books of J

a. J, Capital 10,000.00
Merchandise Inventory

b. J, Capital 6,000.00
Allowance for Doubtful Accounts

c. Rent Receivable 10,000.00

J, Capital

d. NA

e. J, Capital 7,000.00
Office Supplies

7,000.00

f. J, Capital 5,000.00
Accumulated Depreciation - Equipment

5,000.00

g. NA
h. J, Capital 1,500.00
Interest Payable

1,500.00

i. NA

To close the books of J.

Allowance for Doubtful Accounts 10,000.00

Accumulated Depreciation - Equipment 50,000.00
Accounts Payable 133,000.00
Notes Payable 50,000.00
Interest Payable 1,500.00
J, Capital 290,500.00
Cash
Accounts Receivable
Rent Receivable
Merchandise Inventory
Office Supplies
Equipment

To record the investments of J.

Cash 75,000.00
Accounts Receivable 180,000.00
Rent Receivable 10,000.00
Merchandise Inventory 150,000.00
Office Supplies 20,000.00
Equipment, net 50,000.00
Allowance for Doubtful Accounts
Accounts Payable
Notes Payable
Interest Payable
J, Capital

J and K Partnership
Balance Sheet
October 01, 2014
Assets
Cash
Accounts Receivable 330,000.00
Less: Allowance for Doubtful Accounts 17,500.00
Notes Receivable
Interest Receivable
Rent Receivable
Merchandise Inventory
Office Supplies
Equipment, net
Furniture and Fixtures, net
Patent
Total Assets

Liabilities and Capital

Salaries Payable
Accounts Payable
Notes Payable
Interest Payable
J, Capital
K, Capital
Total Liabilities and Capital

Assumption 2. New set of books

To record the adjustments in the books of J and K.

Books of J

a. J, Capital 10,000.00
Merchandise Inventory

b. J, Capital 6,000.00
Allowance for Doubtful Accounts

c. Rent Receivable 10,000.00

J, Capital

d. NA
e. J, Capital 7,000.00
Office Supplies

7,000.00

f. J, Capital 5,000.00
Accumulated Depreciation - Equipment

5,000.00

g. NA

h. J, Capital 1,500.00
Interest Payable

1,500.00

i. NA

To close the books of J.

Allowance for Doubtful Accounts 10,000.00

Accumulated Depreciation - Equipment 50,000.00
Accounts Payable 133,000.00
Notes Payable 50,000.00
Interest Payable 1,500.00
J, Capital - 19,500.00
Cash
Accounts Receivable
Rent Receivable
Merchandise Inventory
Office Supplies
Equipment

To record the investments of J.

Cash 75,000.00
Accounts Receivable 180,000.00
Rent Receivable 10,000.00
Merchandise Inventory 150,000.00
Office Supplies 20,000.00
Equipment, net 50,000.00
Allowance for Doubtful Accounts
Accounts Payable
Notes Payable
Interest Payable
J, Capital
 Books of K

a. Merchandise Inventory 5,000.00

10,000.00 K, Capital

b. K, Capital 2,500.00
6,000.00 Allowance for Doubtful Accounts

7,500.00
5,000.00
2,500.00

c. K, Capital 8,000.00
10,000.00 Salaries Payable

d. Interest Receivable 1,000.00

K, Capital

1,000.00

e. NA
7,000.00

f. NA
5,000.00

g. K, Capital 10,000.00

Accumulated Depreciation
- Furniture and Fixtures
 10,000.00
h. NA
1,500.00

i. Patent 40,000.00
K, Capital

75,000.00
180,000.00
10,000.00
150,000.00
20,000.00
100,000.00

10,000.00
133,000.00
50,000.00
1,500.00
290,500.00

p
120,000.00

312,500.00
50,000.00
1,000.00
10,000.00
275,000.00
20,000.00
50,000.00
90,000.00
40,000.00
968,500.00

8,000.00
233,000.00
50,000.00
1,500.00
290,500.00
385,500.00
968,500.00

Books of K

a. Merchandise Inventory 5,000.00

10,000.00 K, Capital

b. K, Capital 2,500.00
6,000.00 Allowance for Doubtful Accounts

7,500.00
5,000.00
2,500.00

c. K, Capital 8,000.00
10,000.00 Salaries Payable

d. Interest Receivable 1,000.00

 K, Capital

1,000.00

e. NA
7,000.00

f. NA
5,000.00

g. K, Capital 10,000.00

Accumulated Depreciation
- Furniture and Fixtures

10,000.00
h. NA
1,500.00

i. Patent 40,000.00
K, Capital

To close the books of K.

Allowance for Doubtful Accounts

Accumulated Depreciation - Furniture and Fixtures
Accounts Payable
Salaries Payable
K, Capital
Cash
75,000.00 Accounts Receivable
180,000.00 Notes Receivable
10,000.00 Interest Receivable
150,000.00 Merchandise Inventory
20,000.00 Furniture and Fixtures
100,000.00 Patent

To record the investments of K.

 Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise Inventory
Furniture and Fixtures, net
10,000.00 Patent
133,000.00 Allowance for Doubtful Accounts
50,000.00 Accounts Payable
1,500.00 Salaries Payable
290,500.00 K, Capital

J and K Partnership
Balance Sheet
October 01, 2014

Assets
Cash
Accounts Receivable 330,000.00
Less: Allowance for Doubtful Accounts 17,500.00
Notes Receivable
Interest Receivable
Rent Receivable
Merchandise Inventory
Office Supplies
Equipment, net
Furniture and Fixtures, net
Patent
Total Assets

Liabilities and Capital

Salaries Payable
Accounts Payable
Notes Payable
Interest Payable
J, Capital
K, Capital
Total Liabilities and Capital
 5,000.00

2,500.00

8,000.00

1,000.00

10,000.00
40,000.00
5,000.00

2,500.00

8,000.00
 1,000.00

10,000.00

40,000.00

7,500.00
30,000.00
100,000.00
8,000.00
385,500.00
45,000.00
150,000.00
50,000.00
1,000.00
125,000.00
120,000.00
40,000.00
 45,000.00
150,000.00
50,000.00
1,000.00
125,000.00
90,000.00
40,000.00
7,500.00
100,000.00
8,000.00
385,500.00

120,000.00

312,500.00
50,000.00
1,000.00
10,000.00
275,000.00
20,000.00
50,000.00
90,000.00
40,000.00
968,500.00

8,000.00
233,000.00
50,000.00
1,500.00
290,500.00
385,500.00
968,500.00