PARTNERSHIP AND CORPORATION

PARTNERSHIP FORMATION

BY: PROF. VERLITA V. MERCULLO , C.P.A.

 Partnership Formation

• Journal Entries to form Partnership:

• A) individuals with no existing business form a
partnership
Mr A and Ms B and Ms C agreed to form a partnership with
capital contribution as follows: A, Cash 500,000, B cash of
300,000 and C pc. of land worth 200,000.
Journal Entry: Debit Credit

Cash 800,000

Land 200,000

A Capital 500,000

B Capital 300,000

C Capital 200,000

Individuals with no existing business form a partnership

 A sole proprietorship and an individual without an existing business
form a partnership

Popoy has a business as single proprietor, His books of accounts as of December 31,
2020 is:

Assets ( Cash included) 5,000,000

Liabilities 200,000
Capital 4,800,000

He admitted Basha to form a partnership BasPoy Milk tea with Basha contributiong
4,800,000 capital for a ½ interest in the partnership

Journalize the transaction.

Books of Popoy Books of Bas Poy

Payment of Liabilities

Liabilities 200,000 Cash 9,600,000

Cash 200,000 Basha Capital 4,800,000

Poy Capital 4,800,000 Popoy,Capital 4,800,000

Assets 4,800,000
 2 single proprietor joined to form a partnership:

Mr. E MR F
Cash 100,000 160,000
Accounts Receivable 40,000 20,000
Fixed Asset (net) 120,000 70,000
Accounts Payable ( 20,000) ( 10,000)
Capital (240,000) (240,000)

1. Close entries on books of E Close entries on Books of F

E Capital 240,000 F Capital 240,000
Accounts Payable 20,000 Accounts Payable 10,000
Cash 100,000 Cash 160,000
Accounts Receivable 40,000 Accounts Receivable 20,000
. Fixed Asset 120,000 Fixed Asset 70,000
2. Open Entries for the Partnership

Cash 260,000
Accounts Receivable 60,000
Fixed Asset 190,000
Accounts Payable 30,000
E Capital 240,000
F. Capital 240,000
THANK YOU