Illustration 1

A and B formed a partnership. A contributed cash of P500,000, while B contribu

carrying amount of P400,000 and fair value of P800,000. The land has an unpaid
P200,000 which is assumed by the partnership.
Requirements:
1. Determine the correct valuations of the partners' contributions in the partnership books of accounts
2. Provide the Journal Entry

1 A B Partnership
Cash 500,000.00 500,000.00
Land 800,000.00 800,000.00
Total 500,000.00 800,000.00 1,300,000.00
Mortgage Payable 200,000.00 200,000.00
A Capital 500,000.00 500,000.00
B Capital 600,000.00 600,000.00
Total 500,000.00 800,000.00 1,300,000.00

2 Cash 500,000.00
Land 800,000.00
Mortgage Payable 200,000.00
A. Capital 500,000.00
B. Capital 600,000.00

a 250,000.00 25/85
b 450,000.00 45/85
c 150,000.00 15/85
850,000.00
000, while B contributed land with
he land has an unpaid mortgage of

books of accounts

110,000.00
5/11 50,000.00 50000
6/11 60,000.00 60000

85,000.00
25,000.00
45,000.00
15,000.00
 A and B formed a partnership. The following are their contributions:

A B
Cash 500,000.00
Accounts Receivable 100,000.00
Building 700,000.00
Total 600,000.00 700,000.00
A. Capital 600,000.00
B. Capital 700,000.00
Total 600,000.00 700,000.00

Additional Information
The accounts receivable included a P20,000 account that is deemed uncollectible
The building is under -depreciated by P50,000
The building has an unpaid mortgage P100,000, but this is not assumed by the partnership
Partner B promised to pay for the mortgage himself.

Requirements:
1. Determine the correct valuations of the partners' contributions in the partnership bookds of accounts
2. Provide the Journal Entry

A B Partnership
Cash 500,000.00 500,000.00
Accounts Receivable 80,000.00 80,000.00
Building 650,000.00 650,000.00
Total 580,000.00 650,000.00 1,230,000.00
A. Capital 580,000.00 580,000.00
B. Capital 650,000.00 650,000.00
Total 580,000.00 650,000.00 1,230,000.00
-

2 Cash 500,000.00
Accounts Receivable 80,000.00
Building 650,000.00
A. Capital 580,000.00
B. Capital 650,000.00
hip bookds of accounts
Bonus on initial investments

A and B agreed to form a partnership. A contributed P40,000 cash, while B

contributed equipment with fair value of P100,000. However due to the
expertise that A will be bringing to the partnership, the partners agreed that
they should initially have an equal interest in the partnership capital.

Solution
Actual Contribution
A 40,000.00 (140000 x 50%) 70000
B 100,000.00 (140000 x 50%) 70000
Total 140,000.00
Additional /Deduction
A 40,000.00 30,000.00 70,000.00
B 100,000.00 (30,000.00) 70,000.00
Total 140,000.00 70,000.00 140,000.00

Cash 40,000.00
Equipment 100,000.00
A. Capital 70,000.00
B. Capital 70,000.00
 Illustration 1: Cash settlement between partners

A, B, and C formed a partnership. Their Contributions are as follows:

A B
Cash 40,000.00 10,000.00
Equipments 80,000.00
Totals 40,000.00 90,000.00

Additional Information
1. The equipment has an unpaid mortgage of P20,000, which the parthership assumes to r
2. The partners agreed to equalize their interests. Cash settlements among the partners ar

Requirements:
a. Which partners(s) shall receive cash payment from the other partners (s)?
b. Provide the entry to record the contributions of the partners

Solution 1
A B
Cash 40,000.00 10,000.00
Equipments 80,000.00
Totals 40,000.00 90,000.00
Mortgage Payable (20,000.00)
Contributions 40,000.00 70,000.00
210,000/3 70,000.00 70,000.00
Received (payment) (30,000.00) -

2 Cash 150,000.00
Equipment 80,000.00
Mortgage payable 20,000.00
A. Capital 70,000.00
B. Capital 70,000.00
C. Capital 70,000.00
 C
100,000.00

100,000.00

e parthership assumes to repay.

nts among the partners are to be made outside the partnership.

partners (s)?

C Partnership
100,000.00 150,000.00
80,000.00
100,000.00 230,000.00
(20,000.00)
100,000.00 210,000.00
70,000.00 210,000.00
30,000.00 -
 ratio
A 100,000.00 60% 84,000.00 (16,000.00) 60%
B 40,000.00 40% 56,000.00 16,000.00 40%
140,000.00 140,000.00
PROBLEM 2: FOR CLASSROOM DISCUSSION

1. Solution:

Mr. A Ms. B Partnership

Cash 20,000 30,000 50,000
Inventory 20,000 20,000
Building 60,000 60,000
Furniture & fixture 40,000 40,000
Mortgage payable (10,000) (10,000)
Adjusted capital balances 60,000 100,000 160,000

Cash 50,000
Inventory 20,000
Building 60,000
Date Furniture & fixture 40,000
Mortgage payable 10,000
A, Capital 60,000
B, Capital 100,000

2. Solution:

Actual contributions Bonus method

A 600,000 (1,100,000 x 40%) 440,000
B 500,000 (1,100,000 x 60%) 660,000
Total 1,100,000 1,100,000

Date Cash 600,000

Inventory 500,000
A, Capital 440,000
B, Capital 660,000

3. Solutions:

A B C
Cash 500,000 200,000 100,000
Accounts receivable 700,000
Inventories 900,000
Equipment 2,000,000
Mortgage payable (800,000)
Net contribution 1,200,000 1,400,000 1,000,000
Equal interest (3.6 ÷ 3) 1,200,000 1,200,000 1,200,000
Cash receipt (payment) - 200,000 (200,000)

Requirement (a): C pays B ₱200,000.

Requirement (b):

Cash 800,000
Accounts receivable 700,000
Inventory 900,000
Equipment 2,000,000
Date
Mortgage payable 800,000
A, Capital 1,200,000
B, Capital 1,200,000
C, Capital 1,200,000

4. Solution:

A B C
Cash 500,000 200,000 100,000
Accounts receivable 700,000
Inventories 900,000
Equipment 2,000,000
Mortgage payable (800,000)
Net contribution 1,200,000 1,400,000 1,000,000
Equal interest (3.6 ÷ 3) 1,200,000 1,200,000 1,200,000
Add’tl. (W/drawal) - (200,000) 200,000

Answer: B withdraws ₱200,000, while C provides additional ₱200,000.

 A, Capital (600,000 - 160,000 bonus)
B, Capital (500,000 + 160,000 bonus)

Partnership
800,000
700,000
 900,000
2,000,000
(800,000)
3,600,000
3,600,000
-

Partnership
800,000
700,000
900,000
2,000,000
(800,000)
3,600,000
3,600,000
-