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Acct. On Special Transaction
Acct. On Special Transaction
PARTNERSHIP FORMATION
Introduction
A partnership is an unincorporated association of two or more individuals to carry on, as co-owners, a business, with
the intention of dividing the profits among themselves.
The following distinguishes a partnership from other types of entities:
1) It is owned by two or more individuals;
2) It is created by agreement between the parties;
3) A partnership is formed for a business undertaking that is normally of continuing nature
• Temporary withdrawals during the period • Recurring reimbursable costs paid by the
partner
• Temporary funds held to be remitted to the
partnership
▪ Loan extended - receivable
▪ loan obtained- payable
RECEIVABLE FROM/ PAYABLE TO PARTNER
Cash 100,000 -
Inventory 80,000 -
Land 50,000
Building 120,000
Additional Information
▪ Included in the accounts receivable is an account amounting to P20,000 which is deemed uncollectible
▪ The inventory has an estimated selling price of P100,000 and estimated costs to sell of P10,000
▪ The partnership assumed a P10,000 unpaid mortgage on the land
▪ The building is under depreciated by P25,000
▪ There is unpaid mortgage of P15,000 on the bldg which Ciri agreed to settle using his personal funds
▪ The note payable is stated at face amount. A proper valuation requires the recognition of a P15,000 discount on
note payable
▪ Yennefer and Ciri shall share in profits and losses on a 60:40 ratio, respectively.
Requirement: (a) Compute for the adjusted Balances of the partners' capital account