Solution Manual - Partnership & Corporation, 2014-2015 PDF

Partnership and Corporation
Solution Manual
2014-2015
Chapter 1
Review of the Accounting Process
** Quizzers Problems **
I.
B 25,000
B 100,000
II.
Maria Julieta Lopez Allera-Alegrado

Liabilities
=
+
Accrued
Accounts
Accrued
Alegado
Income = Payable
Expense + Capital
48,000
=
+ 100,000
Assets
Beg. Bal.
AJE
#1
Cash
150,000
5,000
A/R
80,000
(5,000)
(6,000)
(3,000)
8,000
8,000
72,000
A-
VII.
15,000
57,000
100,000
+
8,000
130,000
(58,000)
172,000
P. Amandoron Company
350,000
1,200,000
125,000
575,000
1,550,000
700,000
850,000
-D
Ruben Realty Co.

36,000
12
P3,000 x 5
P15,000 - A
36,000
12
P3,000 x 7
P21,000 - B
Evelyn T. Alegre
Cash in Bank
Office Equipment
Office Furniture
VI.
42,000
=
229,000
Current Assets
Property and Equipment
Less: Current Liabilities
Long Term Liabilities
Owners Equity
V.
Expenses
(40,000)
(3,000)
(15,000)
15,000
149,000
IV.
Revenue
122,000
(6,000)
#2
#3
III.
Capital
Assets
=
850,000 + 30,000
300,000
60,000
=
1,240,000
=
Liability
Owners Equity
1,150,000 + 30,000
60,000
60,000
1,180,000 - D
Raul Langbid Co.

truck
P18,000
12
= P1,500 x 3 = P4,500
building
P15,000
12
= P1,250 x 3 = 3,750
P 8,250 -A
Blas Sardido Co.

Sales (250,000 x P 15)
Cost of Sales:
Beg. Inventory
Purchases (400,000 x P11)
Available for Sale
Less: Ending Inventory (150,000 x P11)
Gross Profit
3,750,000
4,400,000
4,400,000
1,650,000
2,750,000
1,000,000
- none of the choices
VIII. Alfredo Yao Co.

ERRATUM: Available for Sale P26,000 instead of P6,000
Beg. Inventory
Purchases
Freight In
Available for Sale
Ending Inventory
Cost of Sales
15,000
10,000
1,000
26,000
5,000
21,000
-D
-D
Solution Manual in Partnership and Corporation 2014-2015
IX.
Rolando Ibaez Enterprises

Accounts Payable
P35,000 BB
25,000
20,000 On acct.
30,000 - A
Payment
X.
BB
Billing
Accounts Receivable
350,000
5,000 Write-off
100,000 145,000 - A
300,000
Vicente Chotangco, Jr.

BB
XI.
E. Detoya & Sons

BB
XII.
Accounts Receivable
50,000
36,000
60,000
4,000 - A
110,000
40,000
70,000
Accounts Receivable
100,000
2,000
67,000
100,000
69,000
31,000
80,000 Sales
49,000 Account Sales
90,000 Cash Sales
139,000 - B
L. Caminade Enterprises
Accounts Payable
20,000
70,000
50,000
80,000
130,000
BB
Account Purchases
Cash Purchases
Total Purchases - B
XIII. Laureano Cacho Trading

1,240,000 100,000 = 1,140,000 = 228,000
5 years
5
Cost of Machine
Less: Acc. Depn.
Net Book Value
Sold at
Loss on disposal
P1,240,000
228,000
P1,012,000
960,000
(P 52,000) - A
XIV. Santos Advertising Agency
Gomezano
SM Marketing
Yu and Sons
XV.
1 30 days
10,000
15,000
35,000
60,000
x 5%
3,000
31 60 days
20,000
30,000
45,000
95,000
x 8%
7,600
61 days and over

20,000
5,000
25,000
x 10%
2,500
= 13,100 8,000 = 5,100 - A
Leopoldo Medina Trading
250 units x P31 = P7,750

65
x 33 = 2,145
FIFO
P9,895 - C
P27,605 835 x 315 = P10,413.86 Average

9,895.00
P 518.86 bigger - B
XVI. Lucky Strike Co.

Beg. Inventory
Purchases
Freight In
Purchase Ret. & Allow.
Available for Sale
Cost of Goods Sold:
Sales
P4,500,000
Less: Gross Profit (40%)
1,800,000
Estimated Inventory, end
Less: Actual Inventory after fire
Damaged by fire
P 3,450,000
2,740,000
20,000
(
25,000)
P 6,185,000
2,700,000
P3,485,000 - A
2,948,000
P 537,000 - C
XVII. Universal Financing Co.

Principal
P50,000 x 15% 90 days = P 1,875

360
50,000
P 51,875 MV -C
P 1,875 3 x 2 = P1,250 - A
Interest Expense
Accrued Interest Expense
1,250
1,250
** Quizzers **
Test III
Manufacturing
Dr.
Cr.
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
Finished Goods, Beg.

Finished Goods, End
Goods in Process, Beg.
Goods in Process, End
Raw Materials, Beg.
Raw Materials, End
Factory Supplies Inventory
Factory Supplies Used
Salaries - Office
Salaries - Factory
Repair - Office Equipment
Repairs - Factory Equipment
Light and Water - Office
Light and Water - Factory
Tools Used
Patents
Amortization of Patents
Purchases, Raw Materials
Freight In
Sales
Income Statement
Dr.
Cr.
Balance Sheet
Dr.
Cr.
Test IV Multiple Choice (Problem)

1.
2.
3.
4.
5.
Raw Materials, Beg.

Purchases, Raw Materials
Freight In
Available for Sale
Less: Raw Materials, End
Direct Materials
P 120,000
110,000
5,000
P 235,000
105,000
P 130,000
(B)
Direct Materials
Direct Labor
Prime Cost
P 130,000
308,000
P 438,000
(A)
Manufacturing Overhead:
Indirect Labor
Indirect Materials
Amortization of Trademark
Real Expense - Factory
Depreciation - Factory
Factory Overhead
P 45,000
65,000
50,000
25,000
40,000
P 225,000
(A)
Conversion Cost:
Direct Labor
Manufacturing Overhead
P 308,000
225,000
Factory Cost:
Direct Materials
Direct Labor
P 533,000
(A)
P 130,000
308,000
225,000
P 663,000
(C)
6.
7.
Cost of Goods Manufactured:

Direct Materials
Direct Labor
Factory Cost
Add: Work in Process, Beg.
Total cost placed in process
Less: Work in Process, End
Cost of Goods Manufactured
P 130,000
308,000
225,000
P 663,000
250,000
P 913,000
275,000
P 638,000
(A)
Cost of Goods Manufactured

Finished Goods, Inventory
Goods Available for Sale
Less: Finished Goods, End
Cost of Goods Manufactured and sold
P 638,000
170,000
P 808,000
290,000
P 518,000
(A)
Chapter 2
Partnership Nature and Information
** Exercises/Problems **
2-1.
Sanada and Estrebilla
Requirement 1:
Cash
Merchandise Inventory
Saada, Capital
250,000
160,000
Cash
Delivery Car
Estrebilla, Capital
380,000
950,000
410,000
1,330,000
Requirement 2:
Current Assets:
Cash
Merchandise
Partners Equity
P 630,000
160,000
Non-Current Assets:
Delivery Equipment
Total Assets
2-2.
P 790,000
Saada, Capital
Estrebilla, Capital
P 410,000
1,330,000
950,000
P1,740,000
P1,740,000
Maula, Montecina and Maceda
Requirement 1a:
Cash
Furniture and Fixtures
Transportation Equipment
Accounts Payable
Maula, Capital
Montecina, Capital
P200,000
120,000
850,000
P 100,000
270,000
800,000
Jeremy Maceda was admitted in the partnership as an

industrial partner with a 15% share in profit.
Requirement 1b:
Cash
Maula, Capital
Montecina, Capital
P200,000
120,000
850,000
270,000
900,000
** (Same notation for Maceda)

Requirement 2:
Assets
Current Assets
Cash
Non-Current Assets
Furniture & Fixtures
120,000
850,000
Total Assets
Current Liabilities
Accounts Payable
100,000
200,000
970,00
1,170,000
Partners Equity
Maula, Capital
Montecina, Capital
Maceda, Capital
Total Partners Equity
Total Liability &
Partners Equity
270,000
800,000
1,070,000
1,170,000
2-3.
Malquisto and Rocabo
Requirement 1:
Debits:
Cash
Accounts Receivable
Merchandise
Equipment
P 375,000
90,000
420,000
250,000
Credits:
Estimated Uncollectible
Accumulated Depreciation
Accounts Payable
Account balance of Malquisto
Requirement 2:
P 1,000
50,000
75,000
a) Malquisto, Capital
Estimated Uncollectible Account
126,00
P1,009,000
4,000
4,000
b) Malquisto, Capital
Merchandise
30,000
c) Malquisto, Capital
20,000
30,000
d) Malquisto, Capital
Accrued Utilities
Requirement 3:
P1,135,000
20,000
1,500
1,500
Est. Uncollectible Accounts

Accounts Payable
Accrued Utilities Expense
Malquisto, Capital
Cash
Accounts Receivable
Merchandise
Equipment
5,000
70,000
75,000
1,500
953500
375,000
90,000
390,000
250,000
Requirement 4:
Malquisto and Rocabo
Statement of Financial Position
As of _________
Assets
Current Assets:
Cash
Accounts Receivable
Est. Uncollectible Account
Merchandise
Non-Current Assets:
Equipment (Net)
Total Assets
851,750
90,000
5,000
85,000
390,000
180,000
1,506,750
Liabilities
Accounts Payable
75,000
Accrued Utilities Expense
1,500
76,500
Partners Equity
953,500
476,750
1,430,750
Malquisto, capital
Rocabo, Capital
Total Liabilities & Owners Equity
1,506,750
(the account Accumulated Depreciation is no longer carried in the book of the partnership)
2-4.
Malquisto, Beringuel and Alemanza
Requirement 1:
Adjusting entries in their respective Sole Proprietorship Book
Malquisto
1) Malquisto, Capital
4,000
Est. Uncoll. Acct.
Merchandise
42,000
Acc. Depn.
5,000
4,000
Beringuel
Est. Uncoll. Acct.
500
Beringuel, Capital
Beringuel, Capital
Merchandise
60,000
42,000
Beringuel, Capital
Acc. Depn.
100,000
5,000
4) Cash
50,000
Malquisto, Capital
50,000
500
Alemanza, Capital
Merchandise
45,000
60,000
Alemanza, Capital
Acc. Depn.
5,000
100,000
Cash
150,000
Beringuel, Capital
150,000
Alemanza
Alemanza, Capital
1,500
Est. Uncoll. Acct.
1,500
45,000
5,000
Cash
250,000
Alemanza, Capital
250,000
Requirement 2:
Closing Entries in their respective sole proprietorship book.
Malquisto
Est. Uncoll. Acct.
7,000
Acc. Depn.
185,000
Malquisto, Capital 1,556,000
Cash
A/R
Merchandise
Equipment
Requirement 3:
950,000
70,00
378,000
350,000
Beringuel
Est. Uncoll. Acct.
4,500
Acc. Depn.
330,000
Beringuel, Capital 1,625,500
Cash
A/R
Merchandise
Equipment
850,000
90,000
540,000
480,000
Alemanza
Est. Uncoll. Acct.
3,500
Acc. Depn.
180,000
Alemanza, Capital 1,246,500
Cash
A/R
Merchandise
Equipment
750,000
25,000
405,000
250,000
Compound Opening Journal Entry
Cash
Accounts Receivable
Merchandise
Equipment
Malquisto, Capital
Beringuel, Capital
Alemanza, Capital
3,000,000
185,000
1,323,000
358,000
15,000
1,606,000
1,775,500
1,496,500
(Accumulated Depreciation-Equipment is no longer shown in the opening-entry)
2-5.
Laureto and Auditor Partnership
Assumption 1
Requirement 1: Journal Entries to close their Respective Sole Proprietorships Book

Laureto
Accounts Payable
Notes Payable
Interest Payable
Allow. for Doubtful Accounts
Laureto, Capital
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment
Requirement 2:
50,000
20,000
500
10,000
15,000
275,500
125,000
80,000
50,000
1,000
75,000
40,000
Auditor
Accounts Payable
Acc. Depn. Equipment
Auditor, Capital
Cash
Accounts Receivable
Merchandise
Equipment
75,000
12,000
40,000
389,000
186,000
120,000
150,000
60,000
Journal Entries to record investment in the Partnership Book
Laureto
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment
Allowance for Doubtful Accounts
Accounts Payable
Notes Payable
Interest Payable
Laureto, Capital
Auditor
Cash
186,000
Accounts Receivable
120,000
Merchandise
150,000
Equipment
20,000
Accounts Payable
Auditor, Capital
75,000
12,000
389,000
6,000
Book of Auditor
Auditor, Capital
12,000
Allowance for Doubtful Acct.
12,000
Auditor, Capital
Merchandise
7,500
3,750
Auditor, Capital
8,000
125,000
80,000
50,000
1,000
75,000
25,000
10,000
50,000
20,000
500
275,000
Assumption 2
Requirement 1:
Book of Laureto
Laureto, Capital
Laureto, Capital
Merchandise
Laureto, Capital
Adjusting Entries
6,000
3,750
17,000
17,000
7,500
8,000
Closing Entries in their Respective Sole Proprietorship Book

Book of Laureto
Accounts Payable
Notes Payable
Interest Payable
Laureto, Capital
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment
Requirement 2:
186,000
120,000
142,500
60,000
125,000
80,000
50,000
1,000
71,250
8,000
16,000
50,000
20,000
500
248,750
Auditor
Cash
Accounts Receivable
Merchandise
Equipment
Allowance for Doubtful Accts.
Accounts Payable
Auditor, Capital
186,000
120,000
142,000
12,000
24,000
75,000
361,500
Mendez and Salazar

ERRATUM: P300,000 cost of building was Salazars investment
Requirement 1a:
Requirement 1b:
2-7.
125,000
80,000
50,000
1,000
71,250
40,000
Book of Auditor
24,000
48,000
Accounts Payable
75,000
Auditor, Capital
361,500
Cash
Accounts Receivable
Merchandise
Equipment
Journal Entries to record investment in the Partnership Book
Laureto
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment
Allowance for Doubtful Accts.
Accounts Payable
Notes Payable
Interest Payable
Laureto, Capital
2-6.
16,000
32,000
50,000
20,000
500
248,750
Cash
Building
Furniture
Mendez, Capital
Salazar, Capital
300,000
300,000
70,000
Cash
Accounts Receivable
Building
Furniture
Accounts Payable
Mendez, Capital
Salazar, Capital
300,000
30,000
300,000
70,000
140,000
530,000
20,000
170,000
510,000
Dabucol and Miranda

Compound Journal Entry
Cash
220,000
Computer
550,000
200,000
Prepaid Rental
6,000
Dabucol, Capital
Miranda, Capital
566,000
410,000
Computations:
Cash
Computer
Prepaid Rental
Dabucol
100,000
300,000
160,000
6,000
566,000
Miranda
120,000
250,000
40,000
410,000
Total
220,000
550,000
200,000
6,000
976,000
2-8.
Torralba and Rosada

Requirement 1:
Debits:
Cash
Accounts Receivable
Merchandise
Equipment
85,000
60,000
120,000
150,000
Credits:
Allow. For Doubtful Accounts
Acc. Depreciation
Accounts Payable
Torralba, Capital
4,000
30,000
80,000
415,000
114,000
301,000
Requirement 2:
Torralba, Capital
3,000
3,000
Torralba, Capital
Merchandise
15,000
Torralba, Capital
15,000
15,000
15,000
Accounts Payable
Torralba, Capital
4,000
4,000
Requirement 3:
Accounts Payable
Torralba, Capital
Cash
Accounts Receivable
Merchandise
Equipment
1,000
45,000
76,000
278,000
85,000
60,000
105,000
150,000
Requirement 4:
Cash (85,000+1/2 of P278,000)
Accounts Receivable
Merchandise
Equipment
Accounts Payable
Torralba, Capital
Rosada, Capital (1/2 of P278,000)
224,000
60,000
105,000
105,000
1,000
76,000
278,000
139,000
Requirement 5:
Torralba and Rosada Partnership
As of _________
Assets
Cash
Accounts Receivable
Less: Allow. For Doubtful Accounts
Merchandise
Current Assets
Non-Current Assets:
Equipment
Total Assets
2-9.
Liabilities
60,000
1,000
224,000
Accounts Payable
59,000
105,000
338,000
Torralba, Capital
Rosada, Capital
105,000
493,00
76,000
Partners Equity
278,000
139,000
417,000
Total Liability & Partners Equity
493,000
Galbog and Torrequemada

Requirement 1:
Glabog, Capital
15,000
Glabog, Capital
Merchandise
30,000
Glabog, Capital
20,000
15,000
30,000
20,000
Requirement 2:
Journal Entries to close the books of Glabog

Accounts Payable
Glabog, Capital
Cash
Accounts Receivable
Merchandise
Equipment
15,000
20,000
60,000
670,000
320,000
75,000
220,000
150,000
Requirement 3:
Assets
Current Assets:
Cash (P320,000 + P500,000)
Accounts Receivable
Merchandise
Non-Current Asset:
Equipment
Total Assets
Liability
75,000
15,000
820,000
Accounts Payable
60,000
220,000
Partners Equity
Glabog, Capital
670,000
Torrequemada, Capital
500,000
Total Liability &
Partners Equity
130,000
1,230,000
60,000
1,170,000
1,230,000
2-10. Angie Aguilon Company

Requirement 1:
Capital Contribution of Zulueta

Unadjusted capital of Aguilon
Accounts Receivable to be derecognized
Recognized prepaid expenses
Revaluation of Equipment
Adjusted Aguilon Capital
267,000
( 25,000 )
13,000
25,000
280,000
Capital contribution of Zulueta is equal to P280,000,Matching the adjusted capital of Aguilon.

Requirement 2:
Angie Aguilon Company
As of June 30 __________
Assets
Cash
Merchandise
Prepaid Expense
Non-Current Asset:
Equipment
Acc. Depreciation
Total Assets
Liability
35,000
185,000
13,000
120,000
10,000
Accounts Payable
Accrued Expenses
Total Liabilities
45,000
18,000
63,000
233,000
110,000
343,000
Partners Equity
A. Aguilon, Capital
280,000
Total Liability & Partners Equity 343,000
2-11. Misamis Construction Supply

Requirement A:
Hingcos Capital Balance

Debits:
Cash in Bank
Accounts Receivable
Equipment
Total Debit
420,000
82,000
100,000
130,000
732,000
Credits:
Acc. Depreciation
Total Credit
Hingco's Capital Balance
8,500
15,000
23,500
708,500
Barillo's Capital Balance

Debits:
Cash in Bank
Accounts Receivable
Total Debit
450,000
60,000
250,000
760,000
Credits:
Barillo's Capital Balance
7,500
752,500
Requirement B:
Requirement C:
a) Allow. for Doubtful Accounts

Hingco, Capital
Accounts Receivable
8,500
73,500

Barillo, Capital
Accounts Receivable
7,500
52,500
82,000
60,000
b) Hingco, Capital
Merchandidse
10,000
Barillo, Capital
Merchandidse
20,000
c) Acc. Depreciation
Hingco, Capital
5,000
10,000
20,000
5,000
Cash in Bank
Equipment
Hingco, Capital
420,000
90,000
120,000
Cash in Bank
Barillo, Capital
450,000
230,000
Requirement D:
630,000
680,000
Hingco and Barillo
As of July 31 20__
Assets
Cash in Bank
Equipment
Total
Partners Equity
Hingco, Capital
630,000
Barillo, Capital
680,000
870,000
320,000
120,000
1,310,000
Total
1,310,000
2-12. Janulgue and Rota

Requirement 1:
Janulque's Book:
Janulgue, Capital
30,000
Janulgue, Capital
Acc. Depreciation
10,000
30,000
10,000
Rota's Book:
Rota, Capital
Merchandise
30,000
Accounts Payable
Rota, Capital
25,000
Requirement 2:
To record the contribution of Janulgue
Cash
Accounts Receivable
Merchandise
Prepaid Insurance
Equipment
Janulgue, Capital
To record the contribution of Rota
Cash
Accounts Receivable
Merchandise
Rota, Capital
30,000
25,000
180,000
200,000
500,000
6,000
70,000
50,000
906,000
150,000
100,000
620,000
2,000
868,000
10
2-13. Medina and Loqueloque

Adjusting Entries in the books of Medina
Requirement 1:
Requirement 2:
a) Medina, Capital
4,750
4,750
b) Medina, Capital
Merchandise
25,000
c) Acc. Depreciation
Medina, Capital
90,000
d) Medina, Capital
Accrued Rental Expense
60,000
e) Prepaid Expenses
Medina, Capital
25,000
25,000
90,000
60,000
25,000
Loqueloque should contribute cash of P3,795,250 equal to the capital balance of Medina
computed as follows:
Capital balance of Medina before adjustment

Add: Adjustment
3,770,000
25,250
3,795,250
Journal Entries to open the book of the Partnership:

Requirement 3:
Cash
Accounts Receivable
Merchandise
Prepaid Expenses
Store Equipment
Accounts Payable
Accrued Rental Expense
Medina, Capital
Loqueloque, Capital
4,845,250
65,000
2,325,000
25,000
850,000
9,750
450,000
60,000
3,795,250
3,795,250
2-14. Pamulagan and Salec-Amer

Requirement 1:
a) Amer, Capital
b) Amer, Capital
Accrued Expense Payable
c) Amer, Capital
Merchandise
Requirement 2:
10,000
10,000
2,000
2,000
10,000
P10,000
Cash in Bank
Pamulagan, Capital
543,000
Cash in Bank
Accounts Receivable
Accrued Expense
Accounts Payable
Amer, Capital
250,000
100,000
95,000
130,000
543,000
10,000
2,000
20,000
543,000
Requirement 3:
Assets
Cash in Bank
Accounts Receivable
Allow. for Doubtful Account
Total Assets
Liabilities
793,000
100,000
10,000
90,000
95,000
130,000
1,108,000
Accounts Payable
Accrued Expense
Total Liabilities
Partners Equity
Amer, Capital
Pamulagan, Capital
Total Liabilities and
Partners Equity
2,000
20,000
22,000
543,000
543,000
1,086,000
1,108,000
11
2-15. Degracia and Mascarias

Mascarias offered Investment:
Cash
Equipment
Total
200,000
80,000
280,000
Degracia's Adjusted Capital Balance:

Cash
Merchandise
Total
80,000
175,000
255,000
1/2 of P280,000
Degracia's adjusted investment
Reduction from Degracia's Investment
140,000
255,000
115,000
Composed of:
Cash
Merchandise
Requirement 1:
80,000
35,000
115,000
1/2 of Mascarias offered Investment of P280,000
Degracia's Investment
Reduction from Degracia's Investment
Cash
Merchandise
Requirement 2:
80,000
35,000
115,000
Estimated Uncollectible Accounts

Degracia, Capital
Accounts Receivable
15,000
85,000
Accounts Payable
Degracia, Capital
60,000
100,000
60,000
Degracia, Capital
Cash
Merchandise
Requirement 3:
140,000
255,000
115,000
115,000
80,000
35,000
Just to comply
with the
requirements,
these adjusting
entries were
prepared. The
receivable and
payable accounts
remain in the sole
proprietors
records.
To record contribution of Degracia:

Merchandise (175,000-35,000)
Degracia, Capital
140,000
140,000
To record contribution of Mascarias:

Cash
Equipment
Mascarias, Capital
200,000
80,000
280,000
2-16. Estalilla, Fortuna and Sonsona

Requirement A:
Capital balance prior to formation of the partnership:
Cash
Accounts Receivable
Allow. of Accounts Receivable
Merchandise
Acc. Depreciation
Building
Acc. Depreciation
Land
Accounts Payable
Capital balances prior to formation
Estalilla
30,000
105,000
(6,000)
150,000
Fortuna
70,000
90,000
(4,000)
280,000
Sonsona
40,000
70,000
(15,000)
120,000
350,000
(80,000)
650,000
(100,000)
(40,000)
789,000
800,000
(50,000)
1,186,000
(45,000)
440,000
12
Requirement B:
The new Capital balance after the revaluation of non-cash assets:
Estalilla
30,000
105,000
(10,000)
130,000
Cash
Accounts Receivable
Allow. of Accounts Receivable
Merchandise
Acc. Depreciation
Building
Acc. Depreciation
Land
Accounts Payable
Capital balances prior to formation
Requirement C:
a)
b)
c)
d)
e)
Requirement D:
Fortuna
70,000
90,000
(9,000)
220,000
650,000
(50,000)
(40,000)
815,000
850,000
(50,000)
1,171,000
Estalilla, Capital
4,000
Fortuna, Capital
5,000

Sonsona, Capital
4,500
(45,000)
404,500
4,000
5,000
4,500
Estalilla, Capital
Merchandise
20,000
Fortuna, Capital
Merchandise
60,000
Sonsona, Capital
Merchandise
20,000
Sonsona, Capital
Acc. Depn.-Transportation Equipment
20,000
Acc. Depreciation.- Building

Estalilla, Capital
50,000
Land
Fortuna, Capital
50,000
20,000
60,000
20,000
Cash
Accounts Receivable
Merchandise
Building
Land
Acc. Depn. Transportation Equipment
Acc. Depreciation. Building
Accounts Payable
Estalilla, Capital
Fortuna, Capital
Sonsona, Capital
Requirement E:
Sonsona
40,000
70,000
(10,500)
100,000
350,000
(100,000)
20,000
50,000
50,000
140,000
265,000
450,000
350,000
650,000
850,000
29,500
100,000
50,000
135,000
815,000
1,171,000
404,500
Estalilla, Fortuna, Sonsona

As of 31 March 20A
Assets
Cash
Accounts Receivable
Merchandise
Acc. Depreciation - Transportation Equip.
Building
Acc. Depreciation - Building
Land
Total
140,000
265,000
29,500
350,000
100,000
650,000
50,000
235,500
450,000
250,000
600,000
850,000
2,252,000
13
Liabilities and Partners Equity

Liabilities
Accounts Payable
135,000
Partners Equity
Estalilla, Capital
Fortuna, Capital
Sonsona, Capital
Total Liabilities & Partners Equity
815,000
1,171,000
404,500
2,390,500
2,252,000
** Multiple Choice (Problem) **

2-I.
JJ Pawnshop
Q1
Q2
A
Solution:
Assets
Liabilities
Owner's Equity
2-II.
100%
40%
60%
800,000
320,000
480,000
P480,000 60%
P800,000 - P480,000
=
=
P800,000
P320,000
(B)
(A)
Edulan, Tabarranza and Labasan
Q3
Q4
C
Solution:
75,000 1/5
2-III.
375,000
- 75,000
300,000
2
150,000
(C) - equal to total capitalization of the partnership

- contribution of Tabaranza
(C) - each contribution of Labasan and Edulan
Santos and Bombeo
Q5 C
350,000
- the cost of land when sold in that date is considered the fair market value
of the land
Q6
2-IV.
200,000
120,000
320,000
cash
fair market value of equipment
(C)
Kudemus and Rendon
Q7
Cash
Accounts Receivable
Merchandise
Building
Accounts Payable
Total
Q8
Rendon, Capital
Add: Liability
2-V.
Rendon
1,410,000
120000
1,710,000
Kudemus
400,000
120,000
(1,200)
50,000
558,000
Rendon
600,000
60,000
1,050,000
( 300,000)
1,410,000 =
1,968,000
(A)
(B)
Dolor and Aleman
Q9
The land should be valued in the partnership book at P200,000 (C)
Q 10
Alemans capital account should be credited in the amount of P187,500 (B)
Q 11
The capital account balances of Dolors capital account during the partnership formation would be P250,000 (D)
2-VI.
Awayan and Nadua
Q 12
Accounts Receivable
Allowance
Awayan
80,000
8,000
72,000
Nadua
95,000
14,250
80,750
(A)
14
Q 13
Awayan
150,000
72,000
125,000
15,000
362,000
Cash
Accounts Receivable
Merchandise
Prepaid Expense
Q 14
(A)
Nadua
120,000
80,750
170,000
(10,000)
360,750
Cash
Accounts Receivable
Accrued Expense
Prepaid Expense
(A)
2-VII. Beceira and Obeso

Q 15
Capital contribution of Obeso:

2 units Altis taxi
Less: Liability assumed by partnership
Obeso, capital
required additional contribution of Beceira
1,950,000
200,000
1,750,000
x 20%
additional cash that Beceira should contribute

Q 16
Q 17
Cost of 2 units Altis

Less: Liability assumed by the partnership
Capital contribution of Obeso
350,000
(C)
1,950,000
200,000
1,750,000
(B)
Partners Capital Balances:

Cash (P350,000 + P350,000
2 units Corolla
2 units Altis
Accounts Payable (P250,000 + P200,000)
Beceira, Capital
Obeso, Capital
Beceira, Capital
Obeso, Capital
1,790,000
1,750,000
3,540,000
700,000
1,340,000
1,950,000
450,000
1,790,000
1,750,000
(D)
2-VIII. Rada and Besinan

Q 18
Accounts Receivable
x Probability of Collection
Estimated Realizable Value
40,000
70%
28,000
Original balance of Allowance

Increased by
New balance of Allowance
3,000
9,000 (A)
12,000
Q 19
At fair market value of P100,000 (B)
Q 20
Cash
Accounts Receivable
Laundry Equipment
Accounts Payable
Net Assets
2-IX.
65,000
28,000
100,000
(15,000)
178,000
(A) The amount of cash to be contributed by Besinan
Basa and Alfeche
Q 21
429,000 (C)
Q 22
390,000 (B)
Cash
Accounts Receivable
Merchandise
Prepaid Expense
Accrued Expense
(C)
Basa
Alfeche
145,000
64,000
200,000
20,000
160,000
45,000
190,000
429,000
390,000
(39,000)
(5,000)
390,000
(B)
Amount of cash to be deducted from Basa
15
Q 23
Cash Balance of Basa
Excess Capital Contribution of Alfeche
Cash Balance of Basa
145,000
-39,000
106,000
Cash Balance of Alfeche
160,000
(D)
Chapter 3
Partnership Operations
** Exercises and Problems **
3-1
Cebu Grocers
Requirement 1
Agreed Ratio
Matero
30%
x
120,000 =
Bernacer
20%
x
120,000 =
Selisana
50%
x
120,000 =
Profit distributed
Requirement 2
Proportional Ratio
Matero
60/160 x
120,000
Bernacer
80/160 x
120,000
Selisana
20/160 x
120,000
Requirement 3
Income and Expense Summary
Matero, Drawing
Bernacer, Drawing
Selisana, Drawing
3-2
=
=
=
45,000
60,000
15,000
120,000
120,000
36,000
24,000
60,000
Cotabato Micro-Appliance Center

P/L Ratio ( in proportion to capital)
Profit P80,000
Share of Pedrosa (80,000 x 8%)
Share of Cogollo (80,000 6,400 x 62.5%)
Share of Eruela (80,000 6,400 x 37.5%)
Profit distributed
3-3
36,000
24,000
60,000
120,000
Cogollo
62.5%
Eruela
37.5%
(2)
6,400
(1)
6,400
46,000
46,000
27,600
27,600
80,000 (3)
Steve and Raymund

Income & Expense Summary
Steve, Drawing
Raymund, Drawing
P450,000
P229,500
220,500
Steve
Bonus to Raymund
Balance:
Steve
(P450,000 - 67,500 x 3/5)
Raymund (P450,000 67,500 x 2/5)
Total
3-4
Pedrosa
Raymund
P67,500
= P229,500
=
P229,500
153,000
P220,000
Musuan Supermarket
Requirement 1a
800,000
1,500
279,500
149,066.67
700,000
1,500
279,500
130,433.33
279,500.00
Journal Entry

Japad, Drawing
Ayuban, Drawing
279,500
149,066.67
130,433.33
16
Requirement 1b:
810,000
1,515
705,000
1,515
279,500
149,435.64
279,500
130,064.36
279,500.00
Journal Entry

Japad, Drawing
Ayuban, Drawing
P279,000
149,435.64
130,064.36
Requirement 1c:
Debit
Jan. 1
Apr.1
Oct.1
Credit
No. of Months
Unchanged
x
3
x
6
x
3
12
Balances
800,000
820,000
810,000
10,000
Peso Unit
2,400,000
4,920,000
2,430,000
9,750,000
12
812,500
Average Capital of Japad
Debit
Jan. 1
Apr.1
Nov.1
Credit
Balances
700,000
680,000
705,000
20,000
25,000
No. of Months
Unchanged
x
3
x
7
x
2
12
Peso Unit
2,100,000
4,760,000
1,410,000
8,270,000
12
689,166.67
Average Capital of Ayuban

P 812,500
1,501.6667
P279,500
151,227.80
P689,166.67
1,501.6667
P279,500
128,272.20
279,500.00
Journal Entry
Japad, Drawing
Ayuban, Drawing
Requirement 1d:
Japad
Ayuban
P279,500
P279,500
x
x
3/5
2/5
=
=
279,500
151,227.80
128,272.20
167,700
111,800
279,500
Journal Entry

Japad, Drawing
Ayuban, Drawing
Requirement 1e:
Japad
Ayuban
P279,500
P279,500
x
x
279,500
167,700
111,800
= 139,750
= 139,750
279,500
Journal Entry

Japad, Drawing
Ayuban, Drawing
3-5
279,500
139,750
139,750
Mallari and Asuncion
Requirement 1a
Beg. Capital Ratio:
Mallari
Asuncion
P 85,000
120,000
P205,000
85,000/205,000
120,000/205,000
x
x
P20,000
P20,000
=
=
P 8,292.68
11,707.32
P20,000.00
17
Journal Entry
Mallari, Drawing
Asuncion, Drawing
20,000
8,292.68
11,707.32
Requirement 1b
Ending Capital Ratio:
Mallari
Asuncion
P100,000
95,000
P195,000
100,000/195,000 x P20,000
95,000/195,000 x P20,000
=
=
P10,256.41
9,743.59
P20,000.00
Journal Entry
Mallari, Drawing
Asuncion, Drawing
P20,000
P10,256.41
9,743.59
Requirement 2a:
Mallari
Debit
Credit
Jan.1
Mar.1
No. of Months
Unchanged
x
2
x
10
12
Balances
85,000
100,000
P15,000
Peso Unit
170,000
1,000,000
1,170,000
12
97,500
Asuncion
Debit
Jan.1
Oct.1
Credit
P25,000
Mallari
Asuncion
No. of Months
Unchanged
x
9
x
3
12
Balances
120,000
95,000
P 97,500
113,750
P211,250
97,500/211,250 x P30,000
113,750/211,250 x P30,000
Loss
=
=
Peso Unit
1,080,000
285,000
1,365,000
12
113,750
P(13,846.15)
(16,153.85)
P(30,000.00)
Journal Entry
Mallari, Drawing
Asuncion, Drawing
To distribute loss.
Requirement 2b:
Mallari
Asuncion
- P30,000 x 4/5
- P30,000 x 1/5
=
=
P13,846.15
16,153.85
P30,000
P(24,000)
(6,000)
P(30,000)
Journal Entry
Mallari, Drawing
Asuncion, Drawing
To distribute loss.
3-6
P24,000
6,000
P30,000
Esmeralda and Besino
Requirement 1
Salaries
Interest on Beg. Capital
Remainder (60%-40%)
Total
Esmeralda
Besino
60,000
82,500
142,500
65,500
208,000
36,000
30,000
24,000
52,500
39,300
105,300
26,200
102,700
18
Requirement 2
Journal Entry
Esmeralda, Drawing
Besino, Drawing
3-7
P208,000
P 105,300
102,700
Gabayan and Domingo
Requirement 1:
Gabayan Palatino -
P150,000/P330,000 x P110,000 =
P180,000/P330,000 x P110,000 =
50,000
60,000
110,000
Requirement 2:
Total
Salaries
Remainder: 3/5 2/5
Gabayan
P 39,000
71,000
P110,000
Palatino
P 24,000
42,600
P 66,600
P 15,000
28,400
P 43,400
Requirement 3:
Total
10% interest
Remainder, Equally
3-8
Gabayan
P33,000
77,000
P110,000
Palatino
P 15,000
38,500
P 53,500
P 18,000
38,500
P 56,500
Cebu Vintage Car
Requirement A:
Total
Deriquito
P 45,000
60,160
130,220
P235,380
Searez
Annual Salaries
Interest on Beg. Capital
Remainder, Equally
P 75,000
114,560
260,440
P450,000
P 30,000
54,400
130,220
P214,620
Total
Deriquito
Searez
Interest based on Ending Capital

Annual Salaries
Remainder, Equally
P288,400
70,000
91,600
P450,000
P146,400
50,000
45,800
P242,200
P142,000
20,000
45,800
P207,800
Total
Deriquito
Annual Salaries
Bonus to Deriquito
Remainder, Average Capital
P220,000
112,500
117,500
P450,000
P120,000.00
112,500.00
58,368.08
P242,200.00
Requirement B:
Requirement C:
Debit
Jan.1
Oct.1
Dec.1
P70,000
Searez
P100,000.00
59,131.92
P159,131.92
Average Capital - DERIQUITO

No. of Months
Credit
Balances
Unchanged
P752,000 x
9
682,000 x
2
P50,000
732,000 x
1
12
Peso Unit
P 6,768,000
1,364,000
732,000
P8,864,000
12
P738,666.67
Average Capital - SEAREZ

Debit
Jan.1
Mar.1
Nov.1
Dec.1
Credit
P80,000
P10,000
40,000
Balances
P680,000
760,000
750,000
790,000
x
x
x
x
No. of Months
Unchanged
2
8
1
1
12
.
Average Capital
Deriquito
Searez
- P738,666.67
- P748,333.33
P738,666.67/1,487,000 x P117,500 =
P748,333.33/1,487,000 x P117,500 =
Peso Unit
P 1,360,000
6,080,000
750,000
790,000
P 8,980,000
12
P 748,333.33
P 58,368.08
59,131.92
P117,500.00
19
3-9
Universal Dry Cleaning Services

Requirements:
Case A:
Total
Salaries Allowed
15% Interest
Remainder, Equally
P110,000
45,000
5,000
P160,000
Case B:
Total
Salaries Allowed
15% Interest
Remainder, Equally
P110,000
45,000
(25,000)
P130,000
Salaries Allowed
15% Interest
Remainder, Equally
P110,000
45,000
(185,000)
P(30,000)
Case C:
Total
Espaol
Rosada
P60,000
30,000
2,500
P92,500
P50,000
15,000
2,500
P67,500
Espaol
Rosada
P60,000
30,000
(12,500)
P77,500
P50,000
15,000
(12,500)
P52,500
Espaol
Rosada
P60,000
30,000
(92,500)
P(2,500)
P50,000
15,000
(92,500)
P(27,500)
Case A:
Journal Entry
Espaol, Drawing
Rosada, Drawing
P160,000
P92,500
67,500
Journal Entry

Espaol, Drawing
Rosada, Drawing
P130,000
P77,500
52,500
Journal Entry
Espaol, Drawing
Rosada, Drawing
3-10
P30,000
Aana, Beltran and Ventic

Total
P 75,000
20,000
45,000
P140,000
Annual Salaries
20% Interest
Remainder
3-11
P 2,500
27,500
Aana
P 30,000
Beltran
P 25,000
18,000
P 48,000
18,000
P 43,000
Ventic
P 20,000
20,000
9,000
P 49,000
Matuguinas and Rovelero

Annual Salaries
10% Bonus after Salaries
18% Interest based on Average
Remainder, Equally
Total
P 80,000
10,000
101,250
(11,250)
P180,000
Matuguinas
P 30,000
17,250
(5,625)
P 41,625
Rovelero
P 50,000
10,000
84,000
(5,625)
P138,375
Matuguinas
Debit
Jan.1
June 1
Oct.1
Credit
P20,000
P30,000
Balances
P100,000
80,000
110,000
No. of Months
Unchanged
x
5
x
4
x
3
12
.
Peso Unit
500,000
320,000
330,000
1,150,000
12
95,833.33
Rovelero
Debit
Jan.1
May 1
Nov.1
Credit
P50,000
P10,000
Balances
P150,000
200,000
190,000
No. of Months
Unchanged
x
4
x
6
x
2 .
12
Peso Unit
600,000
1,020,000
3,800,000
5,600,000
12
466,666.67
20
Matuguinas
Rovelero
3-12
17,250
84,000
101,250
Robles, Saromines and Tiempo

Bonus (20% of P250,000)
Interest:
10% x P100,000
10% x P300,000
10% x P200,000
Salary Allowed
Remainder: (2:3:5)
As distributed
3-13
- P 95,833.33 x 18% =
- P466,666.67 x 18% =
Total
50,000
Robles
50,000
10,000
30,000
20,000
38,000
148,000
102,000
250,000
10,000
Saromines
Tiempo
30,000
20,000
38,000
98,000
20,400
118,400
30,000
30,600
60,600
20,000
51,000
71,000
Gadiano and Alisuag
Requirement A:
Salary to Gadiano
10% bonus to Alisuag (10% x P60,000)
Interest:
10% x P 85,000
10% x P150,000
Remainder:
Equally (Less than P30,000)
As distributed
Total
P20,000
6,000
Gadiano
P20,000
8,500
15,000
P49,500
10,500
P60,000
8,500
Alisuag
6,000
15,000
P21,000
5,250
P26,250
P28,500
5,250
P33,750
Requirement B:
Total
Salary, Bonus and Interest
(same as in Req. A)
Remainders:
P30,000 (equally)
in excess of P30,000 (30%-70%)
As distributed
3-14
Gadiano
Alisuag
P49,500
P28,500
P21,000
30,000
500
P80,000
15,000
150
P43,650
15,000
350
P36,350
Comval Supermarket
Case 1:
Separis
P 50,000.00
21,428.00
45,000.00
97,428.80
P213,856.80
Salary Allowance
Bonus (5% of profit after bonus)
Interest Allowed on Beg. Capital
Remainder: (2:3)
As distributed
Barroga
P 30,000.00
60,000.00
146,143.20
P236,143.20
Total
P 80,000
21,428
105,000
243,572
P450,000
Bonus Computation:
Profit before Bonus
Profit after Bonus
Bonus
P450,000 105%
P428,572 = 100%
P 21,428
OR
B=
=
B + .05B =
1.05B =
B=
5% (P - B)
P22,500 - .05B
P22,500
P22,500
P22,500
1.2
P21,428
Interest on Beginning Capital Balances

Separis =
Barroga =
Case 2:
Bonus (20% Profit P140,000-Bonus)
Salaries
Interest Allowed (10% of Ending
Capital Balance
Remainder: (4:3)
As distributed
15% x P300,000 =
15% x P400,000 =
P 45,000
60,000
P105,000
Separis
Barroga
Total
P 81,666.00
60,000.00
P 30,000.00
P 80,000
21,428
28,000.00
194,476.57
P364,142.57
60,000.00
145,857.43
P265,587.43
105,000
340,334
P630,000
21
Profit before Bonus

Less: Salaries (60,000 + 80,000)
Profit after Bonus
Bonus Computation:
P 630,000
140,000
P 490,000 120%
OR
Bonus
408,334
P 81,666
B=
=
=
.20 (630,000 - 140,000B)

.20 (490,000 - B)
P98,000 - .20B
P98,000
1.2
P81,666
B=
Interest on Beginning Capital Balances
Separis =
10% x P280,000 =
P 28,000
Barroga =
10% x P400,000 =
40,000
P 68,000
Case 3:
Interest Allowed on Average Capital @ 10%
Salaries Allowed
Bonus
Remainder: 50%-50%
As distributed
Separis
Barroga
Total
P 30,667
80,000
33,636
132,432
P276,735
P 40,833
70,000
P 71,500
150,000
33,636
264,864
P520,000
132,432
P243,265
Separis
Jan.1
May 1
Sept. 1
Barroga
P300,000 x 12 = P3,600,000
40,000 x 8 =
320,000
60,000 x 4 = (240,000)
P3,680,000
12
P 306,667
x 10%
P 30,667
Jan.1
Sept. 1
Nov. 1
P400,000 x 12 = P4,800,000
50,000 x 8 =
200,000
50,000 x 2 = (100,000)
P4,900,000
12
P 408,333
x 10%
P 40,833
Bonus Computation:
Profit before Salaries & Bonus
Less: Salaries (80,000 + 70,000)
Profit after Salaries & Bonus
P 520,000
150,000
P 370,000 110%
Bonus
336,364 = 100%
P 33,636
OR
B=
=
=
=
B=
10% (P S B)
.10 (P520,000 P150,000 - B)
.10 (P370,000 B)
P370,000 - B
P370,000 1.1
P33,636
Case 4:
Separis
Bonus (20% of Profit)
Salaries Allowed
Interest Allowed on Beg. Capital at 10%
Remainder: (2:8)
As distributed
3-15
P 80,000
50,000
30,000
48,000
P208,000
Barroga
Total
P192,000
P192,000
P 80,000
50,000
30,000
240,000
P400,000
Ceniza, Barredo and Labata

Requirement 1:
As 30% share is given to Labata, what is left is 70% which will be shared between Ceniza
and Barredo based on their old P/L Ratios. Therefore:
Old P/L Ratio
New P/L
Ratio
Ceniza (3/5) = 60% x 70%

Barredo (2/5)= 40% x 70%
Labata
Total
42%
28%
30%
100%
Requirement 2:
Reported Profit
Overstatement of Inventory End, overstates Profit
Understatement of Prepaid Expense (asset) results to
overstatement of Expenses (P10,000 - 1,000)
Understatement of Accrued Expense (liability) results to
understatement of Expenses (P8,000 - 5,000)
Corrected Profit
P300,000
(30,000)
9,000
(3,000)
P276,000
22
Ceniza =
Barredo =
3-16
Schedule of Profit Distribution:

3/5 or 60% of P276,000 =
P165,600
2/5 or 40% of P276,000 =
110,400
P276,000
Sorima and Magalso

Requirement 1:
Reported Profit
P150,000
1) Understatement of Inventory at the end results to Profit understatement

2) Non-recognition of Accrued Expense understates Expense and overstates Profit
3) Non-recognition of Supplies Expense overstates Profit
Corrected Profit
20,000
(5,000)
(8,000)
P157,000
Requirement 2:
Partners Equity Jan. 1, 2009
Add: Net Interest in Equity
Share in Profit
Less: Permanent Withdrawal
Partners Equity Dec. 31, 2009
3-17
Total
Sorima
Magalso
P450,000
P250,000
P200,000
157,000
P607,000
(50,000)
P557,000
(40%)
62,800
P312,800
(20,000)
P292,800
(60%)
94,200
P294,200
(30,000)
P264,200
Dipolog Grocers
Requirement 1:
Closing Entries
Merchandise Inventory, End
Sales
Purchase Return & Allowances
Merchandise Inventory, Beg.
Sales Discount
Purchases
Freight In
480,000
960,000
6,000

Salaries Expense
Freight Out
Taxes & Licenses
Supplies Expense
Depreciation
108,000

Pugoy, Drawing
Gargar, Drawing
Anguit, Drawing
121,000
510,000
4,000
700,000
3,000
229,000
50,000
1,000
7,000
10,000
40,000
49,880
41,950
29,170
Requirement 2:
Salaries to Partners
10% Bonus (P121,000 - P50,000)
Remainder:
Pugoy - 20% x P63,900
Gargar - 50% x P63,900
Anguit - 30% x P63,900
As distributed
Total
P 50,000
7,100
Pugoy
P 30,000
7,100
12,780
31,950
19,170
P121,000
12,780
Gargar
P 10,000
Anguit
P 10,000
31,950
P 49,880
P 41,950
19,170
P 29,170
Requirement 3:
Statement of Changes in Partners Equity
Partners Equity July 1, 2009
Add: Net Increase in Equity
Remainder:
Share in Profit
Less: Drawing
Partners Equity June 30, 2010
Operating Expenses
Total
P215,000
Pugoy
P 75,000
Gargar
P 80,000
Anguit
P 60,000
121,000
(30,000)
P 91,000
P306,000
49,880
(15,000)
P 38,880
P109,880
42,950
(5,000)
P 36,950
P116,950
29,170
(10,000)
P 19,170
P 79,170
211,000
284,000
23
** Multiple Choice Problems **

3-I
Q-1. B
32,000/80,000 = 40%
3-II
Q-2. A
3/P = 75000
P = 75,000 x 5/3= 125,000
125,000 75,000 = P50,000
Q-3. A
125,000
Q-4. A
Kenneth Peras 120,000 x 33/3 = 40,000
Q-5. A
Mark Peras 60,000 + 40,000 = 100,000
Q-6. B
Jean Pila 120,000 x 20% (40/200) = 24,000
3-IV
Q-7. A
Zamora - 150,000/450,000 = 33 1/3
3-V
Q-8 & 9
3-III
Torres
Profit 100,000 x 10%
100,000 10,000 x 35%
100,000 10,000 x 65%
3-VI
Q-10. C
8-B
58,500
5,000 x 12 months = 60,000
Bonus (200,000 128,430 x 10%)

Remainder
3-IV
Ardina
10,000
31,500
Q-11 to Q-13
Salaries
Interest
3-VII
Un
9-B
Q-14. C
98,000 + 3,000 5,000 = P96,000
Q-15. B
15/35 x 96,000 = P41,143
Total
120,000
8,400
128,400
7,160
135,560
64,440
200,000
Diane
60,000
5,250
65,250
7,160
72,410
38,664
111,074
Ysabelle
60,000
3,150 (11 - A)
63,150
(12 A)
63,150
25,776
88,926 (13 - A)
Q-16. A
Partners
Gregorio
Jumawan
Totals
Salaries
P15,000
20,000
P35,000
Interest
P20,000
45,000
P65,000
Balance
P 6,000
14,000
P20,000
Total
P 41,000
79,000
P120,000
Salaries
P15,000
20,000
P35,000
Interest
P20,000
45,000
P65,000
Balance
( 3,000)
( 7,000)
(10,000)
Total
P 32,000
58,000
P 90,000
Salaries
P15,000
20,000
P35,000
Interest
P20,000
45,000
P65,000
Balance
( 31,500)
( 73,500)
(105,000)
Total
P 3,500
( 8,500)
( 5,000)
Q-17. D
Partners
Gregorio
Jumawan
Totals
Q-18. A
Partners
Gregorio
Jumawan
Totals
3-V
Q-19. B
P20,000 + 30% (86,000 60,000)
3-VI
Q-20. A
Sales
Inventory
Cost of Sales
Operating Expenses
Profit
P1,250,000
100,000
P1,350,000
( 685,000)
( 450,000)
P 215,000
Q-21. A
Partners
Bidad
2/10 x 215,000
Mondejar 5/10 x 215,000
Sarceno
3/10 x 215,000
=
=
=
43,000
107,500
64,500
215,000
24
Q-22. D
Partners
Bidad
Mondejar
Sarceno
Totals
3-VII
Salaries
P 60,000
60,000
60,000
P180,000
Balance
( 4,000)
( 2,000)
( 4,000)
( 10,000)
Total
P101,000
( 58,000
56,000
P 215,000
Q-23. C
B
B
B
B
B
B
=
=
=
=
=
=
Q-24. C
Partners
Carpeso
Cabreros
Totals
3-VIII
Interest
P45,000
P65,000
20%
20% (240,000 b)
48,000 - .28
.2B = P48,000
P48,000/1.2
P40,000
Bonus
P 40,000
P 40,000
Balance
P100,000
100,000
P200,000
Total
P140,000
100,000
P240,000
Q-25. B
Partners
Zabalo
Perez
Delmonte
P/L Before
.60
.18
.40
.12
New P/L
.42
.28
.30
Q-26. B
Understated inventories
Accrued Expense
Prepaid Expense
Increase in Net Income
15,000
( 5,000)
4,000
P14,000
Q-27. C
Reported Net Income
Increase in Net Income
Corrected Net Income
P 450,000
14,000
P464,000
Q-28. C
Partners
Zabalo
Perez
Delmonte
3-IX
=
=
=
=
=
Q-30. A
Salaries
P 60,000
40,000
P100,000
Balance
( 70,000)
( 70,000)
( 70,000)
(210,000)
Total
P14,000
( 58,000)
( 22,000)
( 66,000)
Q-31. C
B
B
B
B
B
3-XII
Share in Net Income

P194,880
129,920
139,200
P464,000
25% (NI B)
25% (240,000 B)
60,000 - .25B
60,000 / 1.25
P48,000
Partners Average Capital

Linobo
P24,000
Manansala
12,000
Aguillon
8,000
Totals
P44,000
3-XI
Net Income
P464,000
464,000
464,000
Q-29. B
B
B
B
B
B
3-IX
P/L Ratio
.42
.28
.30
=
=
=
=
=
20% (NI B)
20% (240,000 B)
48,000 - .2B
48,000 / 1.2
P40,000
Q-32. C
Reported Net Income
Understatement of Inventory End
Unrecorded Expense
Corrected Net Income
P105,000
50,000
( 5,000)
P150,000
25
3-XIII
Q-33. A
Partners
Old P/L
New P/L
Go
.50
.10
.40
Adia
.50
.10
.40
Pactana
.20
Q-34. C
40% x P150,000 = P60,000
Chapter 4
Partnership Dissolution Change in Ownership structure
4-1
4-2
Tan and Esparaguera

Esparaguera, Capital
Carreon, Capital
200,000
200,000
CSCV
Caete, Capital
Saletrero, Capital
Cajegas, Capital
Villaplaza, Capital
4-3
4-4
62,500
87,500
112,500
262,500
Abuzo and Edulan

1. P187,500
2. Abuzo-Selling Partners
3. P12,500 personal gain
4. P187,500
5. P17,500 personal loss
Book Value of Interest Sold
Selling Price of Interest Sold
Loss on Sale of Interest
P187,500
170,000
P 17,500
Total Partnership Interest

Portion of Interest Sold
Book Value of Interest Sold
Selling Price of Interest Sold
Gain on Sale of Interest Sold
P 300,000
25%
P 75,000
85,000
P 10,000
Badoy and Yee
1.
2.
Badoy, Capital
Yee, Capital
Gatmaitan, Capital
4-5
3.
4-6
75,000
Hernandez and Gementiza
1. Hernandez, Capital
Santos, Capital
2.
25,000
50,000
75,000
75,000
Gementiza, Capital
Santos, Capital
112,500
112,500
Hernandez, Capital
150,000
Gementiza, Capital
150,000
Santos, Capital
300,000
(converted into a sole-proprietorship)
JAR Partnership
Contributed Capital:
J
A
R
Orbita
P 250,000
250,000
500,000
20,000
P1,200,000 x 20% = P240,000 capital credit of Orbita
Contribution of Orbita 200,000
Bonus to New partner P 40,000
Cash
J
A
R
Orbita, Capital
P200,000
10,000
10,000
20,000
P246,000
26
4-7
Ursua and Halangdon

Requirement 1:
Ursua
Halangdon
Gondales
Contributed Capital
P 80,000
100,000
70,000
P 250,000
Requirement 2:
P250,000 x 40% = P100,000 P70,000 = P30,000 bonus to new partner
(Her capital credit is bigger than her capital contribution, so bonus is given to the new partner)
Requirement 3:
Journal Entry
Cash
Ursua, Capital
Halangdon, Capital
Gondales, Capital
Requirement 4:
70,000
9,000
21,000
100,000
Ursua
Halangdon
Gondales
Contributed Capital
P 80,000
100,000
150,000
P 330,000
P330,000 x 35% = P115,500 P150,000 = P34,500 bonus to old partners

(His capital credit is smaller than his capital contribution, so bonus is given to the old partners)
Requirement 5:
Journal Entry
Cash
150,000
Ursua, Capital
Halangdon, Capital
Gondales, Capital
4-8
10,350
24,150
115,500
Beceira and Ytac

Requirement 1:
Casulla, Capital
Ytac, Capital
Sarno, Capital
120,000
130,000
250,000
Requirement 2:
Casulla, Capital
Ytac , Capital
Sarno, Capital
180,000
195,000
375,000
Requirement 3:
Casulla, Capital
Ytac, Capital
Sarno, Capital
48,000
52,000
100,000
Requirement 4:
Casulla, Capital
Sarno, Capital
60,000
60,000
Requirement 5:
Casulla, Capital
Sarno, Capital
80,000
80,000
Requirement 6:
Casulla, Capital
Sarno, Capital
Requirement 7:
120,000
120,000
Casulla, Capital
Ytac, Capital
Sarno, Capital
Contributed Capital
240,000
260,000
300,000
800,000
800,000 x 1/3 = 266,667 300,000 = 33,333 bonus to old partners

(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)
27
Cash
Casulla, Capital
Ytac, Capital
Sarno, Capital
Requirement 8:
300,000
12,500
20,833
266,667
Contributed Capital - 800,000

Cash
Casulla, Capital (3/8 x 100,000)
Ytac, Capital (5/8 x 100,000)
Sarno, Capital
Requirement 9:
300,000
37,500
62,500
200,000
Contributed Capital - 800,000
800,000 x 40% = 320,000 300,000 = 20,000 bonus to new partners

(Her capital credit is bigger than her capital contribution, so bonus is given to the new partner)
Cash
Casulla, Capital
Ytac, Capital
Sarno, Capital
Requirement 10:
300,000
7,500
12,500
320,000
Casulla, Capital
Ytac, Capital
Sarno, Capital
Contributed Capital
240,000
260,000
350,000
850,000
850,000 x 30% = 255,000 350,000 = 95,000 bonus to old partners

Cash
Casulla, Capital
Ytac, Capital
Sarno, Capital
4-9
350,000
35,625
59,375
255,000
San Carlos Industries
Case 1:
Nemenzo
Kwan
Gimena
Total Contributed Capital
200,000
100,000
100,000
400,000
400,000 x 1/4 = 100,000 100,000 = No bonus

(His capital credit is equal to his capital contribution, so theres no bonus to both)
Cash
Gimena, Capital
Case 2:
100,000
100,000
Nemenzo
Kwan
Gimena
200,000
100,000
120,000
420,000

(His capital credit is less than his capital contribution, so bonus is given to the old partners)
Cash
Nemenzo, Capital
Kwan, Capital
Gimena, Capital
Case 3:
120,000
Nemenzo
Kwan
Gimena
9,000
6,000
105,000
200,000
100,000
100,000
400,000
400,000 x 30% = 120,000 100,000 = 20,000 bonus to new partner

28
(His capital credit of P120,000 is greater than his capital contribution of P100,000, so, bonus is
given to the new partner)
Cash
Nemenzo, Capital
Kwan, Capital
Gimena, Capital
Case 4:
Nemenzo
Kwan
100,000
12,000
8,000
120,000
200,000 x 25% = 50,000
100,000 x 25% = 25,000
Nemenzo, Capital
Kwan, Capital
Gimena, Capital
50,000
25,000
Nemenzo, Capital
Kwan, Capital
Gimena, Capital
100,000
50,000
75,000
Case 5:
4-10
150,000
Carcar Ampao Factory
Assumption 1:
Lapu-lapu
180,000 x 1/3 = 60,000
Lapu-lapu, Capital
Besario, Capital
Assumption 2:
Lim
60,000
60,000
140,000 x 1/8 = 17,500
Lim, Capital
Besario, Capital
Assumption 3:
17,500
17,500
Lapu-lapu
Lim
Besario
180,000
140,000
160,000
480,000

(Her capital credit is lesser than her capital contribution of P100,000, so, bonus is given to the
old partners)
Cash
Lapu-lapu, Capital
Lim, Capital
Besario, Capital
Assumption 4:
160,000
24,000
16,000
120,000
Lapu-lapu, Capital
Lim, Capital
Besario, Capital
180,000
140,000
72,000
392,000

(Her capital credit is greater than her capital contribution of P100,000, so, bonus is given to
the new partner)
Cash
Lapu-lapu, Capital
Lim, Capital
Besario, Capital
4-11
72,000
15,600
10,400
98,000
Cacdac, Lopez and Cruz
Requirement A:
1.
2.
3.
Capital Adjustments
6,000
Capital Adjustments
7,000
Capital Adjustments
4,000
6,000
7,000
4,000
29
4.
Cacdac, Capital
Lopez, Capital
Capital Adjustments
6,800
10,200
17,000
(1)
(2)
(3)
Capital Adjustments
6,000
17,000
7,000
4,000
17,000
17,000
(4)
Requirement B:
Post-Closing Trial Balances
Cash in Bank
Accounts Receivable
Merchandise
Store Equipment
Acc. Depreciation
Accounts Payable
Cacdac, Capital
Lopez, Capital
Total
Debit
40,000
50,000
Credit
10,000
63,000
80,000
233,000
20,000
40,000
93,200
69,800
233,000
Requirement C:
a) Cruz is going to pay 40,750
Computed as follows:
Refugio, Capital (P93,200 x 25%)
Berhay, Capital (P69,800 x 25%)
b)
4-12
Cacdac, Capital
Lopez, Capital
Cruz, Capital
23,300
17,450
40,750
23,300
17,450
40,750
Jadulco, Mabad and Anghag
Instruction No. 1:
a.
b.
c.
d.
e.
Capital Adjustments
20,000
20,000
Capital Adjustments
Merchandise
20,000
20,000
Capital Adjustments
50,000
Capital Adjustments
Accrued Expenses
10,000
Jadulco, Capital (30%)

Mabad, Capital (20%)
Anghag, Capital (50%)
Capital Adjustments
30,000
20,000
50,000
50,000
10,000
100,000
Instruction No.2:
New Capital of the Partnership
Jadulco, Capital
Mabad, Capital
Anghag, Capital
(P400,000 30,000) = 370,000

(P280,000 20,000) = 260,000
(P150,000 50,000) = 100,000
730,000
a) P730,000 x 1/3 = P243,333

Jadulco, Capital
Mabad, Capital
Anghag, Capital
Caete, Capital
123,333
86,667
33,333
243,333
30
b)
Cash
Jadulco, Capital
Mabad, Capital
Anghag, capital
Caete, Capital
200,000
9,250
6,500
16,250
232,500
Jadulco, Capital
Mabad, Capital
Anghag, Capital
Caete, Capital
Total Contribution
370,000
260,000
100,000
200,000
930,000
x 25%
232,500
200,000
32,500
Capital Credit of New Partner

Capital Contribution of New Partner
Bonus to New Partner
c)
Cash
Jadulco, Capital
Mabad, capital
Anghag, Capital
Caete, Capital
200,000
4,200
2,800
7,000
186,000
Jadulco, Capital
Mabad, Capital
Anghag, Capital
Caete, Capital
Total Contribution
370,000
260,000
100,000
200,000
930,000
20%
186,000
200,000
14,000
Capital of New Partner

Capital Contribution of New Partner
Bonus to Old Partners
4-13
Bartolome, tan and de los Santos
Instruction No.1:
1.
Capital Adjustments
Inventory
2.
3.
4.
10,000
10,000
Prepaid Insurance
Capital Adjustments
7,000
Capital Adjustments
2,000
Bartolome, Capital (50%)

Tan, Capital (40%)
Delos Santos, Capital (10%)
Capital Adjustments
500
400
100
(1)
7,000
Capital Adjustment
10,000
7,000
2,000
1,000
10,000
10,000
2,000
1,000
(2)
(3)
(4)
Instruction No.2:
2a)
Adjusted Capital Account of the old partners

Bartolome
(200,000 500) =
199,500
Tan
(180,000 400) =
179,600
de los Santos
( 60,000 100) =
59,900
439,000
Bartolome, Capital
Chua, Capital
49,875
49,875
(P199,500 x = P49,875 - Interest Purchased)

2b)
Bartolome
Tan
de los Santos
Chua
199,500
179,600
59,900
80,000
519,000

31
(Her capital credit is bigger than her capital contribution so, bonus is given to the new partner)
Journal Entry;
Cash
Bartolome, Capital
Tan, Capital
Delos Santos, Capital
Chua, Capital
4-14
80,000
37,850
30,280
7,570
155,700
Davao Commodity Sales
Requirement 1:
a)
b)
c)
d)
e)
f)
g)

Capital Adjustments
2,000
Capital Adjustments
Merchandise
8,000
Capital Adjustments
2,000
Accounts Payable
Cash
7,000
Unused Supplies
Capital Adjustments
5,000
2,000
8,000
2,000
7,000
5,000
Capital Adjustments
Unearned Interest Income
100
100
Saburnido, Capital
Cervantes, Capital
Capital Adjustments
(b)
(c)
(f)
1,550
1,550
3,100
Capital Adjustments
8,000
2,000
2,000
5,000
100
3,100
10,100
10,100
(a)
(e)
(g)
Requirement 2:
Assets
Current Assets:
Cash in Bank
Accounts Receivable
Notes Receivable
Unused Supplies
Liabilities and Partners' Equity

233,000
30,000
3,000
Property And Equipment

Furniture and Fixture
Accu. Depreciation
Total Assets
27,000
10,000
72,000
5,000
50,000
20,000
Liabilities
Current Liabilities:
Accounts Payable
33,000
Unearned Int. Income
100
33,100
347,000
30,000
377,000
Partners' Equity
Calimpusan, Capital
178,450
Sala, Capital
165,450
Total Liabilities and
Partners' Equity
343,900
377,000
Requirement 3:
Cash in Bank
Banta, Capital
Computed as follows:
Saburnido, Capital (178,450 x 50%)
Cervantes, Capital
(165,450 x 50%)
4-15
171,950
171,950
89,225
82,725
171,950
Ruben, Lacierda and Ordoez

Requirement 1:
V. Ruben, Capital
O. Lacierda, Capital
B. Ordoez, Capital
80,000
40,000
30,000
150,000
150,000 x 30% = 50,000 30,000 = 20,000 bonus to new partner, Ordoez
32
Requirement 2:
The capital accounts of Ruben and Lacierda were decreased by P12,000 and 8,000 respectively
because of the bonus they gave to Ordoez.
Requirement 3:
Ruben
80,000
( 12,000)
68,000
Capital
Bonus to Ordoez
Balance
Lacierda
40,000
( 8,000)
32,000
Ordoez
30,000
20,000
50,000
Requirement 4:
Cash
Ruben, Capital
Lacierda, Capital
Ordoez, Capital
4-16
30,000
12,000
8,000
50,000
Mendez, Tirol and Lupot

Requirement 1:
Mendez
Tirol
Lupot
200,000
100,000
125,000
425,000

Mendez
P 40,000 x .75 = 30,000
Tirol
40,000 x .25 = 10,000
Bonus as distributed
40,000
Requirement 2:
Capital
Mendez
200,000
Tirol
100,000
Capital Account balance after the bonus
Requirement 3:
Mendez
Tirol
Lupot
200,000
100,000
125,000
+
+
-
30,000 =
10,000 =
(40,000) =
Requirement 4:
Cash
Mendez, Capital
Tirol, Capital
Lupot, Capital
4-17
+
+
Bonus
30,000
10,000
=
=
Total
230,000
110,000
340,000
230,000
110,000
85,000
425,000
125,000
30,000
10,000
85,000
Jay, Mamaril and Chung

Requirement 1:

Jay
Mamaril
Chung
120,000
100,000
80,000
300,000
300,000 x 1/3 = 100,000 80,000 = 20,000 bonus to Chung

Requirement 2:
Capital
Bonus to Chung
Balance
Jay
120,000
(12,000)
108,000
Mamaril
100,000
(8,000)
92,000
Chung
80,000
20,000
100,000
= 300,000
Requirement 3:
Cash
Jay, Capital
Mamaril, Capital
Chung, Capital
80,000
12,000
8,000
100,000
33
4-18
Butuan Internet Cafe

Case 1:
Basarte, Capital
Silverio, Capital
Jostol, Capital
Total (3/4 capital after admission)
New capitalization after admission
(610,000/.75)
Required contribution of Balibay
265,000
185,000
160,000
610,000
Basarte, Capital
Silverio, Capital
Jostol, Capital
Bonus
Total
265,000
185,000
160,000
24,000
634,000
75%
845,333
610,000
235,333
Case 3:
Basarte, Capital
Silverio, Capital
Jostol, Capital
Bonus to new partner
Total
New capital after admission
Share of new partner after bonus
Less: Bonus to new partner
265,000
185,000
160,000
10,000
600,000
800,000
200,000
10,000
190,000
Case 4:
Basarte, Capital
Silverio, Capital
Jostol, Capital
Asset Revaluation
Total
Share of new partner after bonus
265,000
185,000
160,000
80,000
690,000
920,000
230,000
Case 5:
Basarte, Capital
Silverio, Capital
Jostol, Capital
Assets write down
Bonus to new partner
Total
Share of the new partner after bonus
Less: Bonus to new partner
Contribution of new partner
265,000
185,000
160,000
(50,000)
(40,000)
520,000
693,333
173,333
(40,000)
133,333
Case 2:
Share of New Partner after admission
4-19
813,333
203,333
Independents Cases
Case 1
Lopez
Baya
Maguid
800,000
1,200,000
500,000
2,500,000
2,500,000 x 20% = 500,000 = 0 (No Bonus)
Cash
Maguid, Capital
Journal Entry
500,000
500,000
Case 2
Solis
Orbita
Tangaro
40,000
50,000
25,000
115,000
34
Journal Entry
Cash
Solis, Capital
Orbita, Capital
Tangaro, Capital
25,000
23,000
1,000
1,000
Case 3
Sison
Laranjo
Morales
45,000
40000
35,000
120,000
120,000 x 30% = 36,000 35,000 = 1,000 bonus to new partners

Journal Entry
Cash P
Laranjo, Capital
Sison, Capital
Morales, Capital
35,000
600
400
36,000
*** Multiple Choice Problems ***

Admission of a Partner in an Existing Partnership
4-I
City Travel and Tours

Q-1
P800,000 x 1/4 = P200,000 (A)
Q-2
to be distributed to the selling partners (D)
Q-3
Gevera
Tropico
Canque
Aguilar
Q-4
210,000 x 25% = 52,500 - 210,000 = 157,500 (A)
4 - II
1/5 x 75%
2/5 x 75%
2/5 x 75%
1/4
= 15%
= 30% (B)
= 30%
= 25%
= 100%
Panganiban, Salisana and Berhay

Q-5
414,375 (C)
Q-6
Panganiban and Salisana (C)
Q-7
1,835,000 (B)
Solutions
a)
b)
c)
d)
Capital Adjustments
5,000
5,000
Capital Adjustments
Merchandise
15,000
Capital Adjustments
15,000
15,000
15,000
Panganiban, Capital
Salisana, Capital
Capital Adjustments
2,500
2,500
5,000
Panganiban, Capital 950,000 2,500 = 947,500 x .25 = 236,875

Salisana, Capital 890,000 2,500 = 887,500 x .20 = 177,500
1,835,000
414,375 (C)
Capital after adjustments

Acquired by Berhay
Panganiban
947,500
(236,875)
710,625
Salisana
887,500
(177,500)
P710,000
Berhay
414,375
414,375
= 1,835,000 (B)
4 - III Southwxpressway Merchandising

Q-8
450,000 x 1/2 = 225,000 (B)
35
Q-9
Book Value of Igaos interest sold to Estroso

Cash proceeds from the sale
Personal loss to Igao
225,000
220,000
5,000 (C)
Q-10
Estroso should be credited by P225,000 equal to the book value of interest she acquired. (B)
4 - IV Southwxpressway Merchandising
Q-11
Espero
Aduana
Gelacio
Q-12
95,000 x 1/5 = 19,000 20,000 = 1,000 bonus to old partners (B)
Q-13
Espero
Aduana
4-V
30,000
45,000
20,000
95,000 (B)
1,000 x 40% = 400

1,000 x 60% = 600 (A)
1,000
Ligsay, Emperado and Balagot
Q-14
Ligsay
150,000
4,000
(2,400)
151,600
Capital Balances
Understatement of Inventory
Understatement of depreciation
Adjusted Balance
Q-15
Q-16
Selling Price of share sold

Book Value of interest purchased
Gain on sale of share sold
35,000
30,200
4,800
Emperado
100,000
4,000
(2,400)
101,600
Balagot
120,000
2,000
(1,200)
120,800
(A)
Balagot will share a capital credit of P30,200 (B)
4 - VI Galos and Villarido

Q-17
Galos
Villarido
Villanueva
200,000
160,000
110,000
470,000
470,000 x 1/4 = 117,500 110,000 = 7,500 bonus to new partner (C)

Q-18
Galos
Villarido
7,500 x 60%
7,500 x 40%
= 4,500
= 3,000 (A)
7,500
** Exercise and Problems **

Retirement or Withdrawal/Death, Bankruptcy or Incapacity of a Partner
4-1
Lacson, Joe and Ajoc
Requirement 1:
a)
b)
c)
Joel Jo, Capital

Alex Ajoc, Capital
85,000
Joel Jo, Capital

Heginio Lacson, Capital
Alex Ajoc, Capital
85,000
Joel Jo, Capital

Marco Ocenar, Capital
85,000
85,000
63,750
21,250
85,000
Requirement 2:
Heginio Lacson
Alex Ajoc
60,000
140,000
200,000
Heginio Lacson
Alex Ajoc
123,750
76,250
200,000
Heginio Lacson
Alex Ajoc
Marco Ocenar
60,000
55,000
85,000
200,000
36
4-2
Esparaguera, Supapo and Ceniza

1.
2.
4-3
Ceniza, Capital
Cash
Esparaguera, Capital (2/6 x P 50,000)
Supapo, Capital (4/6 x P 50,000)
650,000
Ceniza, Capital
Esparaguera, Capital
Supapo, Capital
Cash
650,000
16,667
33,333
600,000
16,667
33,333
700,000
Tea for Snack House
Requirement 1:
Orcullos Withdrawal
Orcullo, Capital
Reyes, Capital
Lopez, Capital
Cash
80,000
7,500
7,500
95,000
Capital Balances
Reyes, Capital
Lopez, Capital
92,500
82,500
175,000
Requirement 2:
Orcullo, Capital
Cash
Reyes, Capital
Lopez, Capital
4-4
80,000
75,000
2,500
2,500
Long Live Enterprises
Requirement 1:
Mr. Dimamatays interest, Dec. 31, 2009
Add: Share in Net Income from Jan. 1-Feb.29 (20,000 x )
50,000
10,000
60,000
Requirement 2:
Dimamatay, Capital
Cash
60,000
60,000
Requirement 3:
Dimamatay, Capital
Buhay, Capital
4-5
60,000
60,000
Walangbuhay and Maylangit
Requirement 1:
Capital Adjustment
Allow. for Doubtful Account
5,000
5,000
Inventories
Capital Adjustment
15,000
Capital Adjustment
50,000
Capital Adjustment
Accrued Expense
10,000
Capital Adjustment
Walangbuhay, Capital (60%)
Maylangit, Capital (40%)
50,000
15,000
50,000
10,000
30,000
20,000
37
Requirement 2:
Effects of Adjustments:
Decrease in Account Receivable
Increase in Inventory
Increase in Equipment
Increase in Expense
Total
P/L Ratio of Walangbuhay
Share of Walangbuhay on the adjustments
Add: Feb. 14 balance of Walangbuhay
Walangbuhays adjusted capital balance
(5,000)
15,000
50,000
(10,000)
50,000
x 60%
30,000
950,000
980,000
Requirement 3:
Walangbuhay, Capital
Cash
980,000
980,000
Requirement 4:
Walangbuhay, Capital
Maylangit, Capital
Cash
4-6
980,000
20,000
1,000,000
Sianosa, Rosete and Facturan
Requirement 1:
Non-Cash Assets
Gatmaitan, Capital (25%)
Barroga, Capital (25%)
Dorado, Capital
(50%)
56,000
14,000
14,000
28,000
Requirement 2:
Gatmaitan, Capital
Gatmaitan, Loan
Cash
Barroga, Capital
Dorado, Capital
4-7
56,000
9,000
16,200
16,267
32,533
Lopez, Albios and Aguhob

ERRATUM: Accounts Payable should be 90,000
Requirement 1:
a)
b)
c)
Inventory
Lopez, Capital
Albios, capital
Aguhob, Capital
30,000
Equipment
Lopez, Capital
Albios, capital
Aguhob, Capital
20,000
Lopez, Capital
Albios, capital
Aguhob, Capital
Accrued Salaries
9,000
5,000
6,000
13,500
7,500
9,000
9,000
5,000
6,000
20,000
Requirement 2:
Lopez, Capital
Cash in Bank
Albios, Capital (25/55)
Aguhob, Capital (30/55)
114,500
50,000
29,318
35,182
(Note: Since this only a retirement of a partner, a partners deficiency will be considered as
his own loss and become the advantage of the remaining partners.)
38
Requirement 3:
Assets
Inventory
Equipment
Total Assets
Liabilities & Partners Equity

Accounts Payable
90,000
Accrued Salaries
20,000
Albios, Capital
116,818
Aguhob, Capital
154,182
Total Liabilities & Partners
Equity
380,000
180,000
200,000
380,000
Chapter 5
Dissolution with Liquidation
Test I True or False
1.
2.
3.
4.
5.
6.
7.
8.
True
False
True
True
True
True
True
True
9.
10.
11.
12.
13.
14.
15.
16.
True
False
False
True
True
True
True
True
17.
18.
19.
20.
21.
22.
23.
24.
25.
False
True
True
True
False
True
True
True
True
Test II Multiple Choice

1.
2.
3.
4.
5.
C
B
B
A
A
6.
7.
8.
9.
10.
B
C
C
A
A

5-1
Centerpoint Commercial
Requirement A:
Statement of Partnership Liquidation
Balance before realization

Realization and Gain
Balances
Payment of Liabilities
Balance
Payment to Partners Loan
Balances
Payment to Partners Capital
Cash
30,000
350,000
380,000
(49,000)
331,000
(20,000)
311,000
(311,000)
NonCash
340,000
(340,000)
Liabilities
49,000
49,000
(49,000)
Dizon,
Loan
20,000
20,000
20,000
(20,000)
40%
Dizon,
Capital
95,000
4,000
99,000
99,000
99,000
(99,000)
20%
Tamala,
Capital
100,000
2,000
102,000
102,000
102,000
(102,000)
40%
Dimalanta,
Capital
106,000
4,000
110,000
110,000
110,000
(110,000)
Journal Entries
a)
b)
c)
d)
Cash
Non-Cash Assets
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
350,000
340,000
4,000
2,000
4,000
Liabilities
Cash
49,000
Dizon, Loan
Cash
20,000
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Cash
49,000
20,000
99,000
102,000
110,000
311,000
39
Requirement B:

Realization and Loss
Balances
Balance
Balances
Cash
30,000
200,000
230,000
(49,000)
181,000
(20,000)
161,000
(161,000)
NonCash
340,000
(340,000)
Liabilities
49,000
49,000
(49,000)
Dizon,
Loan
20,000
20,000
20,000
(20,000)
40%
Dizon,
Capital
95,000
(56,000)
39,000
39,000
39,000
(39,000)
20%
Tamala,
Capital
100,000
(28,000)
72,000
72,000
72,000
(72,000)
40%
Dimalanta,
Capital
106,000
(56,000)
50,000
50,000
50,000
(50,000)
20%
Tamala,
Capital
100,000
(50,000)
50,000
50,000
50,000
50,000
(50,000)
40%
Dimalanta,
Capital
106,000
(100,000)
6,000
6,000
6,000
6,000
(6,000)
Journal Entries
a)
b)
c)
d)
Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets
200,000
56,000
28,000
56,000
340,000
Liabilities
Cash
49,000
Dizon, Loan
Cash
20,000
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Cash
39,000
72,000
50,000
49,000
20,000
161,000
Requirement C:

Balances
Balance
Right of Offset
Balance
Balances
Cash
30,000
90,000
120,000
(49,000)
71,000
71,000
(15,000)
56,000
(56,000)
NonCash
340,000
(340,000)
Liabilities
49,000
49,000
(49,000)
Dizon,
Loan
20,000
20,000
20,000
(5,000)
15,000
(15,000)
40%
Dizon,
Capital
95,000
(100,000)
(5,000)
(5,000)
5,000
Journal Entries
a)
b)
c)
d)
e)
Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets
Liabilities
Cash
Dizon, Loan
Dizon, Capital
90,000
100,000
50,000
100,000
340,000
49,000
49,000
5,000
5,000
Dizon, Loan
Cash
15,000
Tamala, Capital
Dimalanta, Capital
Cash
50,000
6,000
15,000
56,000
40
Requirement D:

Balances
Balance
Right of Offset
Balance
Balances
Deficiency of Dimalanta
absorbed by Tamala
Balances
Cash
30,000
60,000
90,000
(49,000)
41,000
41,000
(3,000)
38,000
NonCash
340,000
(340,000)
Liabilities
49,000
49,000
(49,000)
Dizon,
Loan
20,000
20,000
20,000
(17,000)
3,000
(3,000)
40%
Dizon,
Capital
95,000
(112,000)
(17,000)
(17,000)
17,000
38,000
(38,000)
20%
Tamala,
Capital
100,000
(56,000)
44,000
44,000
44,000
44,000
(6,000)
38,000
(38,000)
40%
Dimalanta,
Capital
106,000
(112,000)
(6,000)
(6,000)
(6,000)
(6,000)
6,000
Journal Entries
a)
b)
c)
d)
e)
f)
Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets
60,000
112,000
56,000
112,000
340,000
Liabilities
Cash
49,000
Dizon, Loan
Dizon, Capital
17,000
49,000
17,000
Dizon, Loan
Cash
3,000
Tamala, Capital
Dimalanta, Capital
6,000
3,000
Tamala, Capital
Cash
6,000
38,000
38,000
Requirement E:

Balances
Balance
Right of Offset
Balance
Deficiency of Dizon & Tamala
absorbed by Dimalanta
Balances
Cash
30,000
40,000
70,000
(49,000)
21,000
21,000
NonCash
340,000
(340,000)
Liabilities
49,000
49,000
(49,000)
Dizon,
Loan
20,000
20,000
20,000
(20,000)
21,000
(21,000)
40%
Dizon,
Capital
95,000
(120,000)
(25,000)
(25,000)
20,000
(5,000)
20%
Tamala,
Capital
100,000
(60,000)
40,000
40,000
40,000
5,000
(19,000)
21,000
(21,000)
40%
Dimalanta,
Capital
106,000
(120,000)
(14,000)
(14,000)
(14,000)
14,000
Journal Entries
a)
b)
c)
d)
e)
Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets
40,000
120,000
60,000
120,000
340,000
Liabilities
Cash
49,000
Dizon, Loan
Dizon, Capital
20,000
Tamala, Capital
Dimalanta, Capital
Dizon, Capital
19,000
Tamala, Capital
Cash
21,000
49,000
20,000
14,000
5,000
21,000
41
5-2
Watin Veloso Partnership

Requirement A1:
(SOVENT)
Watin Veloso Partnership

Balances
Balance
Right of Offset
Balances
Additional Cash - Watin
Balances
Payment to Veloso
NonCash
180,000
(180,000)
Cash
20,000
85,000
105,000
(60,000)
45,000
45,000
7,000
52,000
(52,000)
Liabilities
60,000
60,000
(60,000)
Watin,
Loan
10,000
10,000
10,000
(10,000)
60%
Watin,
Capital
40,000
(57,000)
(17,000)
(17,000)
10,000
(7,000)
7,000
40%
Veloso,
Capital
90,000
(38,000)
52,000
52,000
52,000
52,000
(52,000)
60%
Watin,
Capital
40,000
(57,000)
(17,000)
(17,000)
10,000
(7,000)
40%
Veloso,
Capital
90,000
(38,000)
52,000
52,000
52,000
7,000
(7,000)
45,000
(45,000)
Requirement A2:
(INSOVENT)

Balances
Balance
Right of Offset
Balances
Deficiency of Watin
Absorbed by Veloso
Balances
Payment to Veloso
NonCash
180,000
(180,000)
Cash
20,000
85,000
105,000
(60,000)
45,000
45,000
Liabilities
60,000
60,000
(60,000)
Watin,
Loan
10,000
10,000
10,000
(10,000)
45,000
(45,000)
Requirement B1: SOLVENT
Journal Entries
a)
b)
c)
d)
e)
Cash
Watin, Capital
Veloso, Capital
Non-Cash Assets
85,000
57,000
38,000
Accounts payable
Cash
60,000
Watin, Loan
Watin, Capital
10,000
Cash
Watin, Capital
7,000
Veloso, Capital
Cash
180,000
60,000
10,000
7,000
52,000
52,000
Requirement B2: INSOLVENT
Journal Entries
a)
b)
c)
d)
e)
Cash
Watin, Capital
Veloso, Capital
Non-Cash Assets
85,000
57,000
38,000
Accounts payable
Cash
60,000
Watin, Loan
Watin, Capital
10,000
Veloso, Capital
Watin, Capital
7,000
Veloso, Capital
Cash
180,000
60,000
10,000
7,000
45,000
45,000
42
5-3
Sanciangko Commercial
Requirement 1:
Sanciangko Commercial

Customers Collection
Balances
Sale of Mdse. at a Loss
Balances
Balances
Payment to Loan
Balance
Payment to Partners
Cash
45,000
50,000
95,000
59,500
154,500
(62,000)
92,500
(5,000)
87,500
(87,500)
NonCash
127,000
(57,000)
70,000
(70,000)
Accounts
Payable
62,000
62,000
62,000
(62,000)
Pozon,
Loan
5,000
5,000
5,000
5,000
(5,000)
30%
Pozon,
Capital
35,000
(2,100)
32,900
(3,150)
29,750
29,750
29,750
(29,750)
30%
Selisana,
Capital
35,000
(2,100)
32,900
(3,150)
29,750
29,750
29,750
(29,750)
40%
Teque,
Capital
35,000
(2,800)
32,200
(4,200)
28,000
28,000
28,000
(28,000)
Requirement 2:
1)
2)
3)
4)
5)
5-4
Cash
Allowance for doubtful Accounts
Pozon, Capital
Selisana, Capital
Teque, Capital
Accounts Receivable
To record collection from customers
account and charged off the balance.
50,000
3,000
2,100
2,100
2,800
Cash
Pozon, Capital
Selisana, Capital
Teque, Capital
Merchandise
59,000
3,150
3,150
4,200
Accounts Payable
Cash
62,000
60,000
70,000
62,000
Pozon, Loan
Cash
5,000
5,000
Pozon, Capital
Selisana, Capital
Teque, Capital
Cash
29,750
29,750
28,000
87,500
RNJ Trading
Requirement 1:
RNJ Trading

Realization on Loss
Balances
Balances
Right of Offset
Balances
Deficiency of Suico is
absorbed by Cabral and Lledo
on the ratio of 2/5 3/5
Balance
Payment to Partners
Cash
5,000
60,000
65,000
(50,000)
15,000
15,000
15,000
(15,000)
NonCash
80,000
(80,000)
Accounts
Payable
50,000
50,000
(50,000)
Suico,
Loan
4,000
4,000
4,000
(4,000)
50%
Suico,
Capital
5,000
(10,000)
(5,000)
(5,000)
4,000
(1,000)
20%
Cabral,
Capital
17,000
(4,000)
13,000
13,000
13,000
1,000
(400)
12,600
(12,600)
30%
Lledo,
Capital
9,000
(6,000)
3,000
3,000
3,000
(600)
2,400
(2,400)
43
Requirement 2:
1)
2)
3)
4)
5)
5-5
Cash
Suico, Capital
Cabral, Capital
Lledo, Capital
Non-Cash Assets
60,000
10,000
4,000
6,000
Accounts Payable
Cash
50,000
Suico, Loan
Suico, Capital
4,000
Cabral, Capital
Lledo, Capital
Suico, Capital
400,
600
80,000
50,000
4,000
1,000
Cabral, Capital
Lledo, Capital
Cash
12,600
2,400
15,000
Capreso Tao Partnership

Case 1:
Carpeso Tao Partnership
Statement of Liquidation
Cash
130,000
130,000
(40,000)
90,000
(90,000)

Realization and Gain
Balances
Balances
Payment to Capital
NonCash
120,000
(120,000)
Liabilities
40,000
40,000
(40,000)
40%
Carpeso,
Capital
60,000
4,000
64,000
64,000
(64,000)
60%
Tao,
Capital
20,000
6,000
26,000
26,000
(26,000)
Journal Entries
1)
2)
3)
Cash
Non-Cash
Carpeso, Capital
Tao, Capital
130,000
120,000
4,000
6,000
Accounts Payable
Cash
40,000
Carpeso, Capital
Tao, Capital
Cash
64,000
26,000
40,000
90,000
Case 2:
Carpeso Tao Partnership
Cash
70,000
70,000
(40,000)
30,000
10,000
40,000
(40,000)

Realization on Loss
Balances
Balances
Contribution of Tao
Balances
Payment to Capital
NonCash
120,000
(120,000)
Liabilities
40,000
40,000
(40,000)
40%
Carpeso,
Capital
60,000
(20,000)
40,000
40,000
40,000
(40,000)
60%
Tao,
Capital
20,000
(30,000)
(10,000)
(10,000)
10,000
Journal Entries
1)
2)
Cash
Carpeso, Capital
Tao, Capital
Non-Cash
70,000
20,000
30,000
Accounts Payable
Cash
40,000
120,000
40,000
44
3)
4)
5-6
Cash
Tao, Capital
10,000
Carpeso, Capital
Cash
40,000
10,000
40,000
Sambag Refrigeration Services

Requirement 1:
Sambag Refrigeration Services


Sale of non-cash assets and
Distribution of loss
Balances
Balance
Right of Offset
Balance
Deficiency of Delantar
Absorbed by Gabriel and
Padul (5/8 3/8)
Balances
Payment to Gabriel
Payment to Padul
Cash
20,000
200,000
220,000
(156,000)
64,000
64,000
NonCash
250,000
Accounts
Payable
156,000
Delantar,
Loan
4,000
(250,000)
156,000
(156,000)
4,000
4,000
(4,000)
64,000
(33,125)
(30,875)
20%
Delantar,
Capital
(5,000)
50%
Gabriel,
Capital
65,000
30%
Padul,
Capital
50,000
(10,000)
(15,000)
(15,000)
4,000
(11,000)
(25,000)
40,000
40,000
40,000
(15,000)
35,000
35,000
35,000
11,000
(6,875)
33,125
(33,125)
(4,125)
30,875
(30,875)
Requirement 2:
Journal Entries
1)
2)
3)
4)
5)
5-7
Cash
Delantar, Capital
Gabriel, Capital
Padul, Capital
Non-Cash Assets
200,000
10,000
25,000
15,000
Accounts Payable
Cash
156,000
250,000
156,000
Delantar, Loan
Delantar, Capital
4,000
4,000
Gabriel, Capital
6,875
Padul, Capital
4,125
Delantar, Capital
To record capital deficiency of
Delantar absorbed by Gabriel
and Padul.
Gabriel, Capital
Padul, Capital
Cash
To finally distribute cash to
partners.
11,000
33,125
30,875
64,000
Saberon and Lopez

Requirement 1:

a) Realization and Loss
Balances
b) Payment of Liabilities
Balances
c) Right of Offset
Balances
d) Payment to Loan
Balances
e) Payment to Capital
Cash
3,000
40,000
43,000
(20,000)
23,000
23,000
(1,000)
22,000
(22,000)
NonCash
55,000
(55,000)
Accounts
Payable
20,000
20,000
(20,000)
Saberon,
Loan
5,000
5,000
5,000
(4,000)
1,000
(1,000)
80%
Saberon,
Capital
8,000
(12,00)
(4,000)
(4,000)
4,000
20%
Lopez,
Capital
25,000
(3,000)
22,000
22,000
22,000
22,000
(22,000)
(Note: The balancing amount of P55,000 is non-cash assets)

45
Requirement 2:
Journal Entries
a)
b)
c)
d)
e)
5-8
Cash
Saberon, Capital
Lopez, Capital
Non-Cash Assets
40,000
12,000
3,000
Accounts Payable
Cash
20,000
55,000
20,000
Saberon, Loan
Saberon, Capital
4,000
Saberon, Loan
Cash
1,000
Lopez, Capital
Cash
22,000
4,000
1,000
22,000
Badoy, Licayan and Bargayo

Requirement 1:
Badoy, Licayan and Bargayo


Balance
Payment of Liability
Balance
Right of Off-set
Balance after the rights of offset
Deficiency of Gulane
Absorbed by Badoy & Licayan
Balance
Payment to Badoy and Licayan
Cash
20,000
10,000
30,000
(5,000)
25,000
25,000
NonCash
122,000
(122,000)
Accounts
Payable
5,000
5,000
(5,000)
25,000
(25,000)
Badoy,
Loan
20,000
20,000
20,000
(4,800)
15,200
40%
Badoy,
Capital
24,000
24,000
24,000
(6,400)
17,600
(5,200)
10,000
(10,000)
(2,600)
15,000
(15,000)
20%
Licayan,
Capital
16,000
(22,400)
(6,400)
(6,400)
6,400
40%
Bargayo,
Capital
37,000
(44,800)
(7,800)
(7,800)
(7,800)
7,800
Requirement 2a:
Journal Entries
a)
b)
c)
d)
e)
f)
Cash
Gain or Loss on Realization
Accounts Receivable
Equipment
Sale on non-cash assets.
Badoy, capital
Licayan, Capital
Bargayo, Capital
To distribute loss on realization.
10,000
40,000
5,000
112,000
42,000
30,000
95,000
44,800
22,400
44,800
112,000
Accounts Payable
Cash
Payment of liability.
5,000
Badoy, Loan
Badoy, Capital
Right of Off-set.
4,800
Licayan, Loan
Licayan, Capital
Right of Off-set.
6,400
Badoy, Loan
Licayan, Loan
Bargayo, Capital
5,200
2,600
5,000
4,800
6,400
7,800
46
Requirement 2b: (Bargayo is solvent and pays deficiency, same entry from a to f)
g)
h)
Cash
Bargayo, Capital
Cash payment of deficiency.
Badoy, Loan
Licayan, Loan
Cash
To distribute cash to partners.
7,800
7,800
10,000
15,000
25,000
To distribute cash to partners

Badoy,
Loan
15,200
(15,200)
Balance after right of Offset

Cash payment to Bargayo
Cash payment to partners
5-9
Licayan,
Loan
17,600
(17,600)
Bargayo,
Capital
(7,800)
7,800
-0-
LJ Enterprises
Assumption 1:
LJ Enterprises
Balance before Liquidation

Sale of Non-cash assets and distribution of Loss
Balance
Balance
Absorption of Tormis deficiency
Balance
Payment to Laguna, loan
Cash
110,000
110,000
(91,000)
19,000
19,000
(19,000)
Non-Cash
200,000
(200,000)
Caminade,
Loan
19,000
19,000
19,000
19,000
(19,000)
Liabilities
91,000
91,000
(91,000)
65%
Caminade,
Capital
59,000
(58,500)
500
500
(500)
35%
Tormis,
Capital
31,000
(31,500)
(500)
(500)
500
80%
Caminade,
Capital
59,000
(72,000)
(13,000)
(13,000)
13,000
20%
Tormis,
Capital
31,000
(18,000)
13,000
13,000
13,000
(13,000)
Journal Entries
a)
b)
c)
d)
Cash
Caminade, Capital
Tormis, Capital
Non-Cash Assets
110,000
58,500
31,500
200,000
Liabilities
Cash
91,000
91,000
Caminade, Capital
Tormis, Capital
500
500
Caminade, Loan
Cash
19,000
19,000
Assumption 2:
LJ Enterprises

Sale of Non-cash assets and distribution of Loss
Balance
Balance
Right of Off-set - Caminade
Balances
Payment to Loan Caminade
Payment to Capital - Tormis
Cash
110,000
110,000
(91,000)
19,000
19,000
(6,000)
(13,000)
Non-Cash
200,000
(200,000)
Liabilities
91,000
91,000
(91,000)
Caminade,
Loan
19,000
19,000
19,000
(13,000)
6,000
(6,000)
Journal Entries
a)
b)
Cash
Caminade, Capital
Tormis, Capital
Non-Cash Assets
Liabilities
Cash
110,000
72,000
18,000
200,000
91,000
91,000
47
c)
d)
Caminade, Loan
Caminade, Capital
13,000
Caminade, Loan
Tormis, Capital
Cash
6,000
13,000
13,000
19,000
Payment of Loan to Caminade and capital to Tormis.

5 - 10 Digos Trading
Requirement 1:
Digos Trading
June 30, 20A
Balances before liquidation

1st Installment:
a) Realization and Loss
Balances
b) Payment of Liabilities
Balances
c) Right of Off-set
Balances
d) Cash Payment (Sch.1)
Balances
2nd Installment:
e) Realization and Loss
Balances
f) Right of Off-set
Balances
g) Cash Payment (Sch.2)
Balances
3rd Installment:
h) Realization and Loss
Balances
i) Right of Off-set
Balances
j) Payment to Loan
Balances
k) Payment to Capital
NonCash
70,000
Cash
13,000
Liabilities
20,000
10,000
23,000
(20,000)
3,000
3,000
(3,000)
(30,000)
40,000
40,000
40,000
40,000
4,000
4,000
4,000
(4,000)
(6,000)
34,000
34,000
34,000
30,000
30,000
30,000
(7,200)
22,800
(22,800)
(34,000)
Requirement 2:
20,000
(20,000)
Apolinar,
Loan
10,000
10,000
10,000
(1,000)
9,000
9,000
(600)
8,400
8,400
8,400
(1,200)
7,200
(7,200)
30%
Apolinar,
Capital
5,000
30%
Guiamad,
Capital
25,000
40%
Paclijan,
Capital
23,000
(6,000)
(1,000)
(1,000)
1,000
(6,000)
19,000
19,000
19,000
(3,000)
16,000
(8,000)
15,000
15,000
15,000
15,000
(600)
(600)
600
(6,00)
15,400
15,400
(4,000)
11,400
(800)
14,200
14,200
14,200
(1,200)
(1,200)
1,200
(1,200)
10,200
10,200
10,200
(10,200)
(1,600)
12,600
12,600
12,600
(12,600)
(1)
Schedule of Cash Payment
Total
30%
Apolinar
30%
Guiamad
40%
Paclijan
43,000
(40,000)
3,000
9,000
(12,000)
(3,000)
19,000
(12,000)
7,000
15,000
(16,500)
(1,000)
3,000
(4,000)
3,000
1,000
st
Balance after 1 Installment

Capital and Loan
Less: Theoretical Loss
Cash for Distribution
Deficiency of Apolinar and Paclijan
absorbed by Guiamad
Cash payment to Guiamad
(2)
Schedule of Cash Payment
Total
30%
Apolinar
30%
Guiamad
40%
Paclijan
38,000
(34,000)
4,000
8,400
(10,200)
(1,800)
15,400
(10,200)
5,200
14,200
(13,600)
600
1,800
(771.43)
4,428.57
4,000.00
(1,028.57)
428.57
428.57
nd
Balance after 2 Installment

Capital and Loan
Cash for Distribution
Deficiency of Apolinar absorbed by
Guiamad and Paclijan (3/7 4/7)
Balance
Deficiency of Paclijan absorbed by Guiamad
48
Requirement 3:
Journal Entries
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
Cash
Apolinar, Capital
Guiamad, Capital
Paclijan, Capital
Non-Cash Assets
10,000
6,000
6,000
8,000
Accounts Payable
Cash
20,000
30,000
20,000
Apolinar, Loan
Apolinar, Capital
3,000
Guiamad, Loan
Cash
3,000
Cash
Apolinar, Capital
Guiamad, Capital
Paclijan, Capital
Non-Cash Assets
4,000
600
600
800
Apolinar, Loan
Apolinar, Capital
1,200
Guiamad, Capital
Cash
4,000
3,000
3,000
6,000
1,200
4,000
Cash
Apolinar, Capital
Guiamad, Capital
Paclijan, Capital
Non-Cash Assets
30,000
1,200
1,200
1,600
Apolinar, Loan
Apolinar, Capital
1,200
Apolinar, Loan
Cash
7,200
34,000
1,200
7,200
Guiamad, Capital
Paclijan, Capital
Cash
10,200
12,600
22,800
Requirement 4:
Digos Trading
Cash Priority Program
Loss Absorption Balance
Apolinar
Guiamad
Paclijan
Capital and Loan Balances
before realization
Profit and Loss ratio
Loss absorption ability
Excess of Guiamad over Paclijan
Balances
Excess of Guiamad and
Paclijan over Apolinar
Balances
15,000
30%
50,000
23,000
40%
57,500
50,000
25,000
30%
83,333
(25,833)
57,500
50,000
(7,500)
50,000
(7,500)
50,000
Cash Payment
Apolinar
Guiamad
Total
Paclijan
7,750
7,750
5,250
13,000
2,250
10,000
3,000
3,000
30%
40%
57,500
Cash available in excess of 13,000(P/L Ratio)
30%
5 - 11 Paramount Company
Paramount Company
Case 1:

Balances
Balances
Right of Off-set - Clarin
Balances
Payment to Loan-Clarin & Namoc
Balances
Payment to Capital-Namoc &
Martinez
Cash
8,000
74,000
82,000
(44,800)
37,200
37,200
(4,400)
32,800
NonCash
136,000
(136,000)
(32,800)
Accounts
Payable
44,800
44,800
(44,800)
Clarin,
Loan
2,000
2,000
2,000
(800)
1,200
(1,200)
Namoc,
Loan
3,200
3,200
3,200
3,200
(3,200)
40%
Clarin,
Capital
24,000
(24,800)
(800)
(800)
800
40%
Namoc,
Capital
32,000
(24,800)
7,200
7,200
7,200
7,200
20%
Martinez,
Capital
38,000
(12,400)
25,600
25,600
25,600
25,600
(7,200)
(25,600)
49
40%
Clarin,
Capital
24,000
(27,200)
(3,200)
(3,200)
2,000
(1,200)
Case 2:
Cash
8,000
68,000
Balances
76,000
(44,800)
Balances
31,200
Right of Off-set
Balances
31,200
Cash contribution by Clarin to pay off
deficiency
1,200
Balances
32,400
Payment to Loan - Namoc
(3,200)
Martinez
(29,200)
NonCash
136,000
(136,000)
Accounts
Payable
44,800
44,800
(44,800)
Clarin,
Loan
2,000
2,000
2,000
(2,000)
Namoc,
Loan
3,200
3,200
3,200
3,200
3,200
(3,200)

Balances
Balances
Right of Off-set
Balances
Deficiency of Clarin absorbed by
Namoc & Martinez on a 4/6 and
2/6 basis
Balances
Payment to Loan - Namoc
Martinez
Cash
8,000
68,000
76,000
(44,800)
31,200
31,200
Accounts
Payable
44,800
44,800
(44,800)
Clarin,
Loan
2,000
2,000
2,000
(2,000)
40%
Clarin,
Capital
24,000
(27,200)
(3,200)
(3,200)
2,000
(1,200)
Namoc,
Loan
3,200
3,200
3,200
3,200
31,200
(3,200)
20%
Martinez,
Capital
38,000
(13,600)
24,400
24,400
24,400
4,800
24,400
(4,800)
(24,400)
40%
Namoc,
Capital
32,000
(27,200)
4,800
4,800
4,800
20%
Martinez,
Capital
38,000
(13,600)
24,400
24,400
24,400
(800)
4,000
(400)
24,000
(4,000)
(24,000)
1,200
Case 3:
NonCash
136,000
(136,000)
40%
Namoc,
Capital
32,000
(27,200)
4,800
4,800
4,800
3,200
(3,200)
1,200
(28,000)
5 - 12 Star Hardware
Requirement 1:
Star Hardware
Cash Priority Program
Loss Absorption Balance
Corpuz
Cuidadano
Luntao
Capital and Loan Balances
before realization
Profit and Loss ratio
Loss absorption ability
Extinguishment: Excess of
Luntao over Corpuz
Balances
Excess of Luntao and Corpuz
over Cuidadano
Balances
Total
Cash Payment
Corpuz
Cuidadano
Luntao
65,000
30%
216,667
80,000
40%
200,000
70,000
30%
233,333
216,667
200,000
(16,666)
216,667
5,000
5,000
(16,667)
200,000
200,000
(16,667)
200,000
10,000
15,000
5,000
5,000
5,000
10,000
Cash available in excess of 15,000 (P/L Ratio)
30%
40%
30%
Requirement 2:
Computations:
30%
Corpuz
Cash available for distribution P8,000:

st
1 cash available of P5,000 is given to Lunato
Remainder of P3,000 (P/L Ratio) 3/6 or to Corpuz
3/6 or to Luntao
Computations:
A per program
Excess (P/L ratio)
Cash available for distribution
Total
15,000
5,000
20,000
40%
Cuidadano
30%
Luntao
5,000
1,500
1,500
-0-
1,500
6,500
30%
Corpuz
5,000
1,500
6,500
40%
Cuidadano
2,000
2,000
30%
Luntao
10,000
1,500
11,500
50
*** Multiple Choice Problems ***

5I
Ibaez, Langbid and Pedroo

Q1
Ibaez
Agreed share
Capital balance before realization
Share of realization gain of P50,000
Balance after effecting the gain
Q2
40%
80,000
20,000
100,000
Ibaez
Agreed share
x Loss on realization
Share of the realization loss
5 II
40%
30,000
12,000
Langbid
Pedronio
35%
70,000
17,500
87,500
25%
50,000
12,500
62,500
Langbid
(A)
Pedronio
35%
30,000
10,500
25%
30,000
7,500
(A)
S&R trading
Q3
Q4
Partners Equity
Gabuya
Cadelea
Total
Less: Write-off
New Partners Equity
P 105,000
120,000
P 225,000
4,000
P221,000
(B)
Cash
Add: 90% collection
Total
Less: Payment of Liabilities
Cash Balance
P 60,000
36,000
P 96,000
80,000
P 16,000
(A)

Add: Liabilities
Total Assets
P105,000
145,000
P250,000
(B)
Book Value of Non-Cash Assets

Proceeds from Sale
Loss on Realization
P/L Ratio
Share of Torralba on the Realization Loss
P 250,000
180,000
P 70,000
x 70%
P 49,000
(C)
Rosada, Capital
Share of the Realization Loss
of P70,000 (P70,000 x 30%)
Share of cash distribution
P 50,000
5 III Manila and Torralba

Q5
Q6
Q7
21,000
P 29,000
(A)
P 490,000
( 340,000)
P150,000
(A)
5 IV Ambrosio, Rada and Pateo

Q 8
Q9
Non-Cash Assets
Less: Realization Loss
Realization of non-cash assets
All accounts with credit balances:
Liabilities
Ambrosio, Capital
Rada, Capital
Pateo, Capital
Less: Non-Cash Assets
Cash balance before realization
P 105,000
180,000
150,000
120,000
P555,000
490,000
P 65,000
(B)
Q 10
Ans. C - P3,000 capital contribution is equal to her capital deficiency.
Q 11
Ans. A - Ambrosio, P2,000 and Rada P1,000.
5 V Southexpressway Hardware
Q 12
Total partnership interest

Less: Allow. for Doubtful Accounts
Merchandise
Store Furniture and Equipment
Less: Accumulated Depreciation
Book Value of non-cash assets
P 60,000
5,000
90,000
60,000
P 55,000
80,000
30,000
P165,000
(C)
51
Q 13
Ans. A
Cash
Accounts Receivable
Merchandise
P 186,000
5,000
60,000
P 60,000
80,000
90,000
21,000
Q 14
Realization
Value
P 56,000
85,000
45,000
P 186,000
Accounts Receivable
Merchandise
Q 15
Ans. A - P7,000 for Tao and P14,000 for Alegado
Q 16
Ans. B
Arib, Capital
Zaragoza, Capital
Q 17
Book
Value
P 55,000
80,000
30,000
P 165,000
Gain
(loss)
P 1,000
5,000
15,000
P21,000
(B)
P 21,000
P
Ans. B
Accounts Payable
Cash
7,000
14,000
P 15,000
P 15,000
5 VI Miranda and Leon

Q 18
Q 19
Q 20
Q 21
Q 22
5 VII
Proceeds from sale of non-cash assets

Non-cash assets
Loss on Realization
P 140,000
( 200,000)
(P 60,000)
Loss on Realization
x P/L ratio of Leon
Share of Leon on the realization loss
Miranda, Capital
Leon, Capital
Gain on Realization
36,000
24,000
60,000
(B)
Miranda, Capital
Share of Miranda on realization loss
Capital debit of Miranda
P 30,000
( 36,000)
(P 6,000)
(B)
(B)
Ans. C - The amount of Miranda, loan that is off-set against capital deficiency is P6,000.
Sabado, Gregori and Gadia
Capital balances
Loan balances
Combined Capital & loan balances
Less: Theoretical Loss Q 23 (A)
Q 24 (A)
Total
Deficiency of Sabado and Deriquito
Absorbed by Gregori
Q 25 (B)
5 VIII
60,000
x 40%
P 24,000
(C)
Total
65,000
5,000
70,000
(20,000)
50,000
40%
Sabado
(4,000)
5,000
1,000
20%
Gregori
63,000
40%
Dequito
6,000
63,000
6,000
(8,000)
(7,000)
(4,000)
59,000
(8,000)
(2,000)
7,000
(9,000)
50,000
2,000
Espocia and Malquisto
Q 26
Balances before realization
Balances
Balance
Payment of Capital
Cash
450,000
450,000
(120,000)
330,000
(330,000)
Non-cash
510,000
(510,000)
Liabilities
120,000
120,000
(120,000)
Espocia
240,000
(240,000)
216,000
216,000
(216,000)
Malquito
150,000
136,000
114,000
114,000
(114,000)
(A)
52
5 IX
Java and Constantino
Q 27
Q 28
5X
Total Assets
Less: Cash
Non-cash assets
P 55,000
10,000
(P 45,000)
(C)
Realization Loss
Add: Non-Cash
Cash Proceeds from Sale
(P 15,000)
45,000
(P 30,000)
(A)
Patosa, Juinio and dela Cruz

Q 29
Balances
Balances
Absorption Loss of dela Cruz
5 XI
Cash
60,000
400,000
460,000
(140,000)
320,000
Other
Assets
540,000
(540,000)
50%
Patosa
280,000
(70,000)
210,000
210,000
(5,000)
205,000
30%
Juinio
160,000
(42,000)
118,000
118,000
(3,000)
115,000
50%
Villacampa
95,000
(40,000)
55,000
55,000
25%
Kudemus
80,000
(20,000)
60,000
60,000
Liabilities
140,000
140,000
(140,000)
20%
dela Cruz
20,000
(28,000)
(8,000)
(8,000)
8,000
(D)
Villacampa, Kudemus and Puno
Q 30
1st Installment
Balances
Balances
Cash
28,000
70,000
98,000
(48,000)
50,000
Other
Assets
265,000
(150,000)
115,000
115,000
SCHEDULE 1:
Cash Distribution
Deficiency of Villacampa absorbed
by Trinidad and Puno
Cash Payment to Trinidad and Puno
Liabilities
48,000
48,000
(48,000)
50%
Villacampa
55,000
(57,500)
(2,500)
Total
165,000
(115,000)
50,000
25%
Kudemus
60,000
(28,750)
31,250
25%
Puno
50,000
(28,750)
21,250
(1,250)
30,000
(1,250)
20,000
2,500
25%
Puno
70,000
(20,000)
50,000
50,000
Chapter 6
Corporation
(Definition, Nature and Formation)
1.
2.
3.
4.
5.
6.
7.
true
true
true
false
false
true
true
8.
9.
10.
11.
12.
13.
14.
false
true
false
true
false
true
true
15.
16.
17.
18.
19.
20.
21.
true
false
true
true
true
true
true
22.
23.
24.
25.
26.
27.
28.
False
true
true
false
true
true
true
4.
5.
6.
A
D
A
7.
8.
9.
A
C
B
10. A
11. B
12. A
29. true
Test I Multiple Choice

1. D
2. C
3. B
Chapter 7
Accounting for Share Capital Transactions
1.
2.
3.
4.
5.
6.
false
false
false
true
false
true
7.
8.
9.
10.
11.
12.
true
true
true
true
true
true
13.
14.
15.
16.
17.
18.
true
false
false
true
true
true
19.
20.
21.
22.
23.
24.
true
true
true
false
false
true
25. true
26. false
53
Test I Multiple Choice

1. A
2. A
3. D
4. A
5. A
6. C
7.
8.
9.
A
A
D
10. A
11. C
*** EXERCISES and PROBLEMS ***

71
Sarangani Marketing Corporation

Journal Entry
Memorandum Entry
July 2
Unissued Ordinary Share
Authorized Ordinary Share
P1,000,000
Subscription Receivable
Subscribed Ordinary Share
P 250,000
Cash
P1,000,000
Ordinary Share Capital

Authorized
shares at
to issue 10,000
P100 par value
P 250,000
Cash
P 62,500
Organization Cost
P 15,000
62,500
62,500
P250,000
P250,000
P 62,500
July 15
Organization Cost
15,000
Cash
P 15,000
Cash
P 15,000
July 16
Share Premium
Cash
10,500
Share Premium
P 10,500
Cash
Share Premium
P 11,000
10,000
1,000
15,000
Cash
Ordinary Share
P 15,000
15,000
Cash
P 15,000
20,000

Ordinary Share
P 20,000
Land
Ordinary Share
Share Premium
P 40,000
30,000
10,000
Share Premium (Organization Cost)

Ordinary Share
Share Premium
P 35,000
30,000
5,000
10,000
500
4,500
4,500
P 10,000
500
4,500
P
4,500
July 18
Share Premium
11,000
P 10,000
1,000
July 20
Cash
15,000
P 15,000
July 25
Cash

15,000
20,000
P 15,000
P 20,000
July 27
Land
P 40,000
P
Share Premium
(fair market value of land is given)
July 29
Organization Expense
35,000

Share Premium
(par value is used)
P 30,000
10,000
P 30,000
5,000
July 30
Cash
P 35,000
P 35,000
Cash
P 35,000
P 35,000
54
July 31
Cash
Cash
P 6,000
6,000

Ordinary Share
P10,000
P 10,000

72
6,0000
10,000
P 6,000
P 10,000
Dadiangas canning Corporation
Requirement 1:
Memorandum Entry
Journal Entry
Sept. 1
Ordinary Share
.
Authorized to issue 30,000 Ordinary shares
at P100 par value share

P3,000,000
P 750,000
P 750,000
Cash
P 187,500
P 187,500
P 750,000
P3,000,000
P 750,000
Sept. 2
Cash
P 187,500
P 187,500
Sept. 5
Cash
20,000
Share Premium
22,000
Cash
20,000
Share Premium
22,000
Cash
4,400
Cash
P 148,500
P 148,500

P 198,000
P 198,000
20,000
20,000
2,000
Cash
20,000
20,000
2,000
4,400
Sept. 10
4,400
4,400
Sept. 14
Cash
1,980 x 100 per share
Partial Payment
Balance Collected
Share Capital
P 148,500
P 148,500
P198,000
49,500
P148,500
P 198,000
P 198,000
Sept. 19
Cash in Bank
Ordinary Share
50,000
Cash in Bank
50,000
50,000
94,000
1,000
Land
Share Premium
17,600
Cash
20,000

P 20, 000
50,000
94,000
1,000
17,600
20,000
Sept. 24
Land
Ordinary Share
Share Premium
95,000
95,000
Sept. 30
Cash
17,600

Ordinary Share
P 20, 000
17,600
55
Requirement 2-1:
Shareholders Equity (Memorandum Entry)
Share Capital
Ordinary Share, P100 par value, 3,620 shares issued
Less: Subscription Receivable
Share Premium
Issued and Subscribed Ordinary Shares
362,000
552,000
414,000
138,000
3,000
503,000
Shareholders Equity (Journal Entry)

Share Capital
Ordinary Shares authorized, 30,000 shares at P100
Less: Unissued ordinary shares
Issued Ordinary Shares
Subscribed Ordinary Shares
Share Premium
Issued and Subscribed Ordinary Shares
3,000,000
2,638,000
362,000
552,000
414,000
138,000
3,000
503,000
Requirement 2-2:
Aug. 5
Unissued Preference Share

Authorized Preference Share
P 1,500,000
10,000,000
Subscription Receivable Preference (14,000 x 30)

Subscription Receivable Ordinary (27,000 x 100)
Subscribed Preference Share
Cash
P 3,120,000
P 1,500,000
10,000,000
420,000
2,700,000
Subscription Receivable Preference

Subscription Receivable Ordinary
Aug. 10
Aug. 15
Share Premium Ordinary


Share Premium Preference
Cash
Land

Cash
420,000
2,700,000
20,000
5,000
420,000
2,700,000
6,000
100,000
1,000
5,000
1,400
21,000
300,000
15,000
60,000
4,000
64,000
60,000
7,000
105,000
22,400
315,000
64,000
64,000
420,000
2,700,000

Aug. 28
420,000
2,700,000
25,000

Aug. 20
60,000
56
Aug. 29
Cash (105,000 21,000)


Share Premium-Preference
15)
1,000
28)
4,000
5,000
84,000
P
84,000
100,000
100,000
Share Premium-Ordinary
15)
5,000
20) 15,000
20,000
Share Premium:
Total Shareholders Equity
P
5,000
P 3,705,400
Details
Unissued Preference
1,500,000
420,000
60,000
1,020,000
Unissued - Ordinary
10,000,000
20,000
2,700,000
300,000
6,980,000
Authorized - Preference
1,500,000
Authorized - Ordinary
10,000,000
Subscribed Share - Preference

420,000
420,000
60,000
6,000
60,000
6,000
Subscribed Share - Ordinary

2,700,000
2,700,000
100,000
100,000

420,000
420,000
7,000
6,000
64,000
60,000
5,600
Subscription Receivable - Ordinary

2,700,000
2,700,000
105,000
21,000
84,000
Share Premium - Preference

1,000
4,000
5,000
73
Share Premium - Ordinary

5,000
15,000
20,000
Cebu Centennial Hotel
Requirement 1 and 2:
Aug. 5
Aug. 10
Unissued preference Share

Authorized preference Share
P 1,500,000
10,000,000
Subscription Receivable Preference (14,000 x P300)

Subscription Receivable Ordinary (27,000 x P100)
Subscribed Share Capital Preference
Subscribed Share Capital Ordinary
Cash
P 3,120,000

P 1,500,000
10,000,000
420,000
2,700,000
P
420,000
2,700,000
420,000
2,700,000
20,000
5,000
420,000
2,700,000
25,000
420,000
2,700,000
57
Aug. 15
Aug. 20
Aug. 28
Aug. 29

Cash
Land

Cash

Cash (105,000 21,000)


7,000
105,000
P
6,000
100,000
1,000
5,000
1,400
21,000
300,000
15,000
60,000
4,000
64,000
60,000
84,000
100,000
22,400
315,000
64,000
64,000
60,000
84,000
100,000
Requirement 3:
Shareholders Equity (Memo Entry)
Share Capital
10% Preference Share, P30 par, 50,000 shares authorized,
16,000 shares were issued
Less: Subscription Receivable Preference
Issued and Subscribed Preference
Ordinary Share, P100 par, 100,000 shares authorized
Issued and Subscribed Ordinary
Total Issued and Subscribed Preference and Ordinary
480,000
400
480,400
P 6,000
5,600
P 3,020,000
100,000
P 3,120,000
P 3,600,400
P 5,000
20,000
25,000
P 3,625,400
Shareholders Equity (Journal Entry)

Share Capital
10% Preference Share, 50,000 shares at 30 par value
Less: Unissued Preference share, 34,000 shares
Issued Share Capital Preference
Ordinary Share Authorized 100,000 shares at P100 par value
Less: Unissued Ordinary Shares, 69,800 shares
Issued Share Capital, 30,200 shares
Subscribed Share capital Ordinary
Total Issued and Subscribed Ordinary
P 1,500,000
1,020,000
P 6,000
5,600
P
400
480,400
P10,000,000
6,980,000
P 3,020,000
100,000
P 3,120,000
P 3,600,400
P 5,000
20,000
25,000
P 3,625,400
58
75
Color Quick Corporation

Error: 500 shares issued instead of 50 shares
Requirement 1:
Requirement 2:
Land
Discount on Ordinary Share
Ordinary Share
P 45,000
5,000
Cash
P 50,000
5,000
P
5,000
76
Shareholders Equity (Memorandum Entry)
Share Capital
10% Preference Share at P100 par value, 10,000 shares
authorized and 3,600 shares issued
Ordinary Shares at P100 par value, 30,000 shares
authorized and 8,500 shares issued
Subscribed Ordinary Shares
Total Issued and Subscribed Preference and Ordinary
Share Premium:
Accumulated Profits (Losses)
77
Assumption 2
Assumption 3
850,000
100,000
P 950,000
P 1,810,000
P 58,000
5,000
63,000
85,000
P 1,958,000
Organization Cost
Ordinary Share
250,000 shares x P200 =
P 60,000 P 50,000
=
Organization Cost
Ordinary Share
250 shares x P250
=
250 shares x P200
=
250 shares x P50
=
Organization Cost
Ordinary Share
60,000
P
50,000
10,000
50,000
12,500
50,000
500,000
50,000
500,000
50,000
500,000
45,000
5,000
28,000
2,000
50,000
10,000
P
62,500
62,500
50,000
12,500
P
50,000
Monte Alegre Development Corporation

Assumption 1
Assumption 2
Assumption 3
79
360,000
500,000
860,000
Farmingstone, Inc.
Assumption 1
78
Land
P
Preference Share (5,000 x P100)
Share Premium Preference (P550,000 P500,000)
550,000
Land (5,000 x P110)

Preference Share
550,000
Land
Preference Share
Land
Ordinary Share
Ordinary Share
Share premium Ordinary
500,000
Mandarin Corporation
Instruction 1
50,000
30,000
59
Cash
Ordinary Share
Instruction 2
Ordinary Share
par value
P 97,000 =
P100
20,000
4,000
P
24,000
10,000
5,000
10,000
10,000
15,000
8,000
10,000
500,000
200,000
300,000
21,000
321,000
500,000
321,000
500,000
500,000
125,000
970 shares
7 10
Assumption A
1)
2)
3)
Cash
Ordinary Share
Capital in Excess of Stated Value Ordinary
Cash
Ordinary Share
Cash
Ordinary Share
Cash
Ordinary Share
Cash
Ordinary Share
Cash
Ordinary Share
15,000
8,000
2,000
10,000
Assumption B
1)
2)
3)
15,000
8,000
10,000
7 11 Diamond Corporation
Requirement 1 -
Froilan Ampil
Requirement 2 -
100,000 shares
Requirement 3 -
Cash
Receivable from Highest Bidder


Cash
Cash

Ordinary Share
500,000
200,000
300,000
21,000
321,000
500,000
40,000 shares for Ampil

60,000 shares for Lopez
100,000 shares
======
Requirement 4 -
Treasury Shares

Ordinary Share (for 100,000 shares)
321,000
500,000
7 12 Raja Buayan Marketing Corporation

Requirement 1
Ordinary Share
Authorized to issue
2,000 shares at par value of P1,000.
.
March 20A
3
Cash
(500 x P1,000)
500,000
125,000
60
Cash
Tano 200 x 1,000

Santos 100 x 1,000
August
15
16
20
21
Requirement 2 -
Subscription
= P 200,000
=
100,000
P 300,000
Payment
50,000
25,000
75,000
=
=
=
225,000
P
225,000
300,000
30,000
6,000
24,000
5,000
29,000
30,000
29,000
30,000
10,000
3,000
7,000
500
7,500
10,000
7,000
500
7,500
10,000
Balance
P150,000
75,000
P 225,000

Ordinary Share
Cash


Cash
Cash

Ordinary Share
Baugbog 25
Yao
5
30 shares
Treasury Shares

Ordinary Share
Cash


Cash
Cash

Ordinary Share
300,000
30,000
6,000
24,000
5,000
29,000
30,000
29,000
30,000
7 13 Duhat Corporation
Requirement 1
a)
b)
c)
d)
e)
f)
Sabado
Esparaguera
10,000
3,000
7,000
500
7,500
10,000
- 120 shares
- 80 shares (balance)
200 shares
Requirement 2

Cash
500
Treasury Shares
7,500

Ordinary Share
(100 shares are issued to the corporation)
7,000
10,000
61
7 14 Yummy Cakes and Pastries

a)
Accounts Payable
Receivable from Corporation
Cash
Merchandise
Furniture and Equipment
To transfer the net assets of the
Partnership to the corporation.
P 20,000
40,000
150,000
P 40,000
70,000
100,000
No entry
b)
No entry
c)
No entry
Unissued Share Capital

Authorized Share Capital
To record authorization
5,000 shares at P50 par
Value per share.
P250,000
Subscribed Share Capital
To record subscription
at par value of the
following
incorporators.
P175,000
Share Subscribed
Casulla
Landicho
Supapo
Beltran
Eno
d)
d)
Casulla, Capital
Landicho, Cpital
Supapo, Capital
To finally close the partnership
book.
P 50,000
60,000
40,000
P150,000
Cash
Merchandise
Furniture and Equipment
Accounts Payable
To record receipts of
assets and assumption
Of liabilities of the
partnership.
Casulla
Landicho
Supapo
e)
f)
1,000
1,200
800
250
250
3,500
Amount
P 50,000
60,000
40,000
12,500
12,500
P 175,000
P 40,000
70,000
80,000
P 40,000
150,000
P 25,000
P 25,000
P 12,500
12,500
P 25,000

To record issuance of
Certificate
to
the
following
incorporators/
shareholders.
Shares
Casulla
1,000
Landicho
1,200
Supapo
800
Beltran
250
Eno
250
P175,000
P 50,000
60,000
40,000
P150,000
Cash
To record collection
from subscription of
the ff:
Beltran
Eno
P250,000
P175,000
P175,000
Paid-up
Amount
P 50,000
60,000
40,000
12,500
12,500
P 3,500
62
7 15 Kalahi Store
Book of Partnership
a)
b)
c)
d)
Corpuz, Capital
Ciudadano, Capital
Salazar, Capital
Income and Expense Summary.
P21,000
21,000
21,000
Salazar, Capital
Corpuz, Capital
Ciudadano, Capital
Merchandise
P48,467
48,467
48,466
P63,000
P30,000
95,400
20,000

Accounts Payable
Corpuz, Loan
Cash
Accounts Receivable
Merchandise
P521,600
60,000
40,000
400,000
30,000
Share of Stock-Corporation
P521,600
P170,000
300,000
381,000
200,000
P521,600
Book of the Corporation

a)
b)
c)
P521,600
Cash
Accounts Receivable
Merchandise
Accounts Payable
Corpuz, Loan
P170,000
300,000
381,600
160,000

Ordinary Share
P521,600
P521,600
P60,000
400,000
30,000
521,600
P521,600
*** Multiple Choice ***

7 I Negros Sugar planters, Inc.
Q-1
Q-2
8% Preference Share
Less: Subscription Receivable-Preference
Ordinary Share
Subscription Receivable-Ordinary
Legal Capital
Share Capital
8% Preference Share
Less: Subscription Receivable-Preference
Ordinary Share
Less: Subscription Receivable-Ordinary
Share Premium
Discount on Preference Share
Share Premium-Ordinary
Accumulated Profits and Losses
Other Components of Equity
Revaluation Increment of Property
Q-3
P400,000
P300,000
75,000
P100,000
50,000
225,000
700,000
50,000
P1,375,000
(A)
P400,000
P300,000
75,000
225,000
700,000
P100,000
50,000
( 2,000)
40,000
50,000
38,000
1,835,000
15,000
P3,263,000
(A)
Same as in Q-1, P1,375,000 (A)
63
7 II Davao Metro Stars Corporation

Q-4
Answer (A)
Preference, 2,000 shares x P100 = P200,000
Q-5
Ordinary Share, 5,000 x P150 = P750,000
Answer (A)
Preference,2,000 x 25% = 500 shares
Q-6
Ordinary Share, 5,000 x 25% = 1,250 shares
Answer (A)
Preference P2,000 x 25% x 25% = P12,500 Ordinary Share, P750,000 x 25% x 25% = P46,875
7 III Madraza Corporation

Q-7 to Q-8
Debit
Credits
Cash Land
Discount on Ordinary
Share Capital
Share Capital Share Premium
1)
P11,040
P 960
P12,000
2)
50,000
38,000
P12,000
3)
25,000
20,000
5,000
Q 7 (B) P70,000
P17,000
Q 8 (A)
7 IV Dumaguete Jewelry Corporation

Q-9 20,000 Shares x P100 par value = P2,000,000 (B)
Q-10
P300,000 (B)
Q-11
P1,200,000 x P100 = 12,000 shares (C)
7 V Davao Metro Sales Corporation

Q-12
Number of shares authorized to issue

x par value per share
Authorized Share Capital
400
P
100
P400,000 (C)
Q-13

x Subscription Requirement
Q-14
100,000 x 25% = 25,000 (A)
Q-15
Equivalent to the subscribed Share Capital of P100,000 par value of P100 = 1,000 shares (A)
Q-16

- 970 shares outstanding
30 shares in the treasury (A)
P 400,000
25%
P 100,000 (A)
7 VI Dadiangas Farmingtown Corporation

Q-17 10% Preference Share authorized to issue
par value of
No. of preference share authorized to issue
P1,000,000
P
100
10,000 shares (A)
Q-18 Authorized Ordinary Share

x par value
Authorized Share Capital - Ordinary
15,000
100
P1,500,000
Q-19 Preference 10,000 shares x 25% = 2,500 shares

Ordinary - 15,000 shares x 2 5% = 3,750 shares
(A)
Q-20 Preference 2,500 shares x P100 par value = P62,500

Ordinary 3,750 shares x P100 par value = 93,750
(A)
Q-21 Share Subscribed - 100 shares x P105

P10,500
Share Subscribed at par -100 shares x P100 10,000
Credited to share premium
P 500
(A)
Q-22 Shares Subscribed 100 shares x P105

Less: Share Premium
Credited to share capital
(B)
P10,500
500
P10,000
shares
(B)
64
7 VII Valencia Fruit Processing Corporation

Q-23 300 shares were declared delinquent (C)
Q-24 Dagohoy (C)
Q-25 Subscription of Monta (300 x P150)
= P45,000
Subscription balance (unpaid)
= 27,000
Payment made by Monta on her subscribed shares P18,000
(A)
Q-26 Due from Highest Bidder

(A)
P27,000
P27,000
Q-27 130 for Monta and 170 for Dagohoy (A)

Q-28 Treasury Shares
Due from Highest Bidder
P27,560
P27,560
(A)
7 VIII Davao Grains, Inc.

Q-29
March 10 (25,000 x P20)

March 25 (1,000 x P40)
Sept. 17 5,000 x P60)
Share Premium at Dec. 31, 20A
P500,000
40,000
300,000
P840,000
7 IX
Q-30 Land
Ordinary Shares
Share Premium
P350,000
P300,000
50,000
(B)
7X
Q-31
Since the cost of the service is not known, the fair value of the share is used, P130,000 (1,000 x P130)
(B)
7 XI
Q-32
7 XII
Q-33
Q-34

Less: Unissued Ordinary Share
Issued
Share Premium
Accumulated Profits and Losses-Unappropriated
Accumulated Profits and Losses-Appropriated
Total
Less: Treasury Shares
Preference Share, P100 par

Ordinary Share P10 par
Legal Capital
P5,000,000
2,000,000
P3,000,000
P1,000,000
400,000
P 600,000
300,000
600,000
500,000
900,000
P5,000,000
( 100,000 )
P4,900,000 (A)
P 2,300,000
5,250,000
50,000
P7,600,000 (B)
Answer A
Preference Share, P2,550,000 P15 par
Ordinary Share
3,000 P50 par
= 170,000 shares
= 60,000 shares
Chapter 8
Accumulated Profits (Losses) Dividends
and
Treasury Shares
1.
2.
3.
4.
5.
True
False
True
True
True
6.
7.
8.
9.
10.
True
False
True
True
True
11. False
12. False
13. True
14. False
15. True
16.
17.
18.
19.
20.
True
False
True
True
False
5. B
6. B
7. A
8. D
21.
22.
23.
24.
25.
True
False
True
True
True
26. False
27. True
28. True
29. False
30. True
Test II Multiple Choice

1. D
2. C
3. D
4. C
9. B
10. D
11. B
12. D
65
*** EXERCISES/PROBLEMS ***

81
Requirement 1:
Accumulated Profits and Losses balance Jan. 1, 20B
a) accrued salaries not recorded, understate expenses and
overstates Profit
b) understatement of ending inventory, understates profit
c) overstatement of depreciation, understates profit
d) expense portion of prepaid insurance not recorded,
understates expense and overstates profit
Corrected Acc. Profits and Loss-Jan. 1, 20B
165,000
(15,000)
4,000
2,000
(5,000)
151,000
Requirement 2:
a) Accumulated Profits and Losses
Accrued Salaries
P 15,000
b) Merchandise Inventory
P 4,000
c) Accumulated Depreciation
P 2,000
d) Accumulated Profits and Losses

Prepaid Insurance
P 5,000
82
P 15,000
P
4,000
2,000
5,000
Bacolod Sugarland Corporation
Requirement 1:
170,000
P
170,000
260,000
90,000
100,000
100,000
Requirement 2:
Acc. Profits and Losses Appropriated for Plant Expenses
Acc. Profits and Losses Appropriated for Treasury Shares
350,000
Requirement 3:
Declaration:
Cash Dividends Payable
Payment:
Cash Dividend Payable
Cash
100,000
100,000
Requirement 4:
Bacolod Sugarland Corporation
Statement of Accumulated Profits and Losses
For the year ended 31 December 20A
Add: Profit for the year
Total
Less: Cash Dividends Declared and Paid
Current years appropriation:
For Plant Expansion
For Treasury Shares
Acc. Profits and Losses Unappropriated or Free, Dec. 31
Acc. Profits and Losses Appropriated:
For Plant Expansion
For Treasury Shares
Accumulated Profits and Losses, Dec. 31, 20A
P 950,000
170,000
P1,010,000
P 100,000
P 260,000
90,000
350,000
P 260,000
290,000
450,000
P 670,000
350,000
P1,020,000
Requirement 5:
Acc. Profits and Losses Appropriated for Plant Expansion
260,000
P
260,000
66
83
Marco Polo Corporation

a)
b)
c)
d)
84
5,000
200
P 4,800
200
P 960,000


Cash
Issued and Outstanding

Issued and Outstanding after treasury shares
x cash dividend per share
Amount of Dividends Declared
960,000
P
960,000
960,000
960,000
5,000 shares
200
4,800 shares
P 25.00
P 120,000


Cash

Issued and Outstanding after Treasury Shares
10% x P1,200
120,000
P
120,000
120,000
120,000
5,000 shares
200
4,800
P
120
P 576,000

Share Dividends Distributable

Share Capital

Issued and Outstanding after Treasury Shares
20% x P1,000
576,000
P
576,000
576,000
576,000
5,000 shares
200
4,800
P
200
P 960,000


Share Capital
960,000
P
960,000
960,000
18,000
18,000
19,500
19,500
960,000
Casablaca, Inc.
Aug. 1
Sept. 1
Dec. 1
85
Issued and Outstanding Shares

Issued and Outstanding after treasury shares
P1,000 x 20%
Acc. Profits and Losses

Cash Dividend Payable

Cash
(1,500 x P12)

Share Dividend Distributable

Share Capital
(P130 x 10% x 1,500 shares)
18,000
18,000
19,500
19,500
Negros Grains, Incorporated
Requirement 1:
Upon Declaration:
Cash Dividends Payable-Preference
Cash Dividends Payable-Ordinary
Pxx
Pxx
xx
67
Upon Payment:
Cash Dividends Payable-Preference
Cash Dividends Payable-Ordinary
Cash
Pxx
xx
Pxx
Requirement 2:
a) Preference Shares are Non-Cumulative and Non-Participating
Total
Preference Dividends:
Current year: P100,000 x 7% x 1year
Ordinary Dividends:
Balance, all to ordinary
Dividends as distributed
Shares issued
Dividends per share
7,000
73,000
80,000
Preference
Ordinary
7,000
7,000
2,000
3.50
73,000
73,000
3,000
24.33
b) Preference Shares are Cumulative and Non-Participating

Total
Arrears: P100,000 x 7% x 2
Current: P100,000 x 7% x 1
Ordinary Dividends:
Shares issued
Dividends per share
14,000
7,000
59,000
80,000
Preference
Ordinary
14,000
7,000
21.000
2.000
10.50
59,000
59,000
3,000
19.67
c) Preference Shares are Non-Cumulative and Fully-Participating

Total
Current year: P100,000 x 7% x 1
Ordinary Dividends:
Current year: P300,000 x 7% x1
Balance for Participating, P52,000
Preference P100,000/P400,000 x P52,000
Ordinary P300,000/P400,000 x P52,000
Shares issued
Dividends per share
7,000
Preference
7,000
21,000
13,000
39,000
80,000
Ordinary
21,000
13,000
20,000
2,000
10,000
39,000
60,000
3,000
20,000
d) Preference Shares are Cumulative and Fully-Participating

Total
Arrears: P100,000 x 7% x 2
Current: P100,000 x 7% x 1
Ordinary Dividends:
Current year: P300,000 x 7% x1
Balance for Participating, P52,000
Preference P100,000/P400,000 x P38,000
Ordinary P300,000/P400,000 x P38,000
Shares issued
Dividends per share
86
14,000
7,000
Preference
14,000
7,000
21,000
9,500
28,500
80,000
Ordinary
21,000
9,500
30,500
2,000
15.25
28,500
49,500
3,000
16.50
Cagayan de Oro Motorama, Incorporated

Requirement A Preference Share is Non-Cumulative and Non-Participating
Total
Preference Share Dividends:
Current: P90,000 x 10% x 1 yr.
Ordinary Dividends:
As distributed
Preference
9,000
9,000
61,000
70,000
9,000
Ordinary
61,000
61,000
68
Requirement B Preference Share is Cumulative and Non-Participating

Total
Arrears: P90,000 x 10% x 1 yr.
Current: P90,000 x 10% x 1
Ordinary Dividends:
Balance all to Ordinary Share (70,000-P18,00)
As distributed
Preference
9,000
9,000
9,000
9,000
52,000
70,000
18,000
Ordinary
52,000
52,000
Requirement C Preference Share is Non-Cumulative and Fully -Participating

Total
Current: P90,000 x 10% x 1
Ordinary Dividends:
Current Year: P100,000 x 10% x 1
Balance all to Ordinary Share, P51,000
Preference P90,000/190,000 x P51,000
Ordinary 100,000/190,000 x P51,000
As distributed
Preference
9,000
Ordinary
9,000
10,000
10,000
24,158
26,842
70,000
24,158
33,158
26,842
36,842
Requirement D Preference Share is Cumulative and Fully-Participating

Total
Arrears: P90,000 x 10% x 1 yr.
Current: P90,000 x 10% x 1yr.
Ordinary Dividends:
Current Year: P100,000 x 10% x 1yr.
Balance for Participation, P42,000
Preference P90,000/190,000 x P42,000
Ordinary 100,000/190,000 x P42,000
As distributed
87
Preference
9,000
9,000
Ordinary
9,000
9,000
10,000
10,000
19,895
22,105
70,000
19,895
37,895
22,105
32,105
Musuan Agro-Industrial Corporation

Requirement 1:
No. of Shares issued and outstanding
x Par Value per share
Par Value of issued and outstanding shares
x Rate of Dividends declared
Dividends Declared
Par Value
Equivalent Share to be issued
8,000 shares
P
100
P 800,000
10%
P 80,000
P
100
800 shares
Requirement 2:
Dividends
No. of shares issued and outstanding
Dividends per share
P 80,000
8,000
P
10
Requirement 3:
Upon Declaration:
80,000
P
80,000
80,000
5,500
5,500
5,500
500
Upon Distribution:
Ordinary Share
88
80,000
Valencia Frutti Corporation

Requirement 1:
Treasury Share
Cash
Cash
Treasury Share
Cash
Treasury Share
Share Premium-Treasury Share
5,500
Requirement 2:
a)
b)
5,500
6,000
69
c)
89
Cash
Treasury Shares
5,000
500
P
5,500
36,000
21,600
5,400
Macopa Corporation
Requirement 1:
Treasury Share (1,500 x P24)
Cash
Cash (900 x P30)

Treasury Shares (900 x P24)
Share Premium-Treasury Shares
36,000
27,000
*** MULTIPLE CHOICE PROBLEM ***

8I
Cabana Corporation
Q1
Income and Expense Summary, credit

Income and Expense Summary, debit
Profit
Q2

Q3
8 II
P 1,800,000
1,050,000
P 750,000 (B)
P 750,000
P 750,000
Acc. Profits and Losses Balance, Jan. 1, 20A

Add: Profit of 20A
Acc. Profits and Losses Balance, Dec. 31, 20A
P
P
(B)
100,000
750,000
850,000 (C)
Misamis Oriental Ferries, Incorporated
Q4
5,000 shares x P100

Dividends to be declared
Amount of dividends declared
Q5

P 500,000 (Share Capital)

10%
P 50,000 (C)
P 50,000
Q6
Prepare a list of shareholders on record (A)
Q7

Cash
P 50,000
(C)
P 50,000
(B)
P 50,000
Q8
Current Liability (B)
Q9
Cash Dividend
Share Outstanding
Cash Dividend per share
Q 10
1,000 shares x P10,000 dividend per share = P 10,000 (A)
P 50,000
5,000
P 10.00 (B)
8 III Metro Cebu Central, Incorporated

Q 11
Authorized Share
- Issued Share
Unissued Share
3,000 shares
1,000
2,000 (C)
Q 12
Issued Share
Less: Treasury Share
Outstanding Share
1,000 shares
200
800 (A)
Q 13
The free or Unappropriated portion of Accumulated Profits and Losses P60,000 (B)
Q 14
1,000 issued shares less 200 treasury = 800 shares outstanding x 10% = 80 shares (A)
Q 15
Shares to be issued as share dividends

x Par Value (par value is to be used
because the market value is not given)
Amount of Acc. Profits and Losses to be capitalized
Q 16
Total Shareholders Equity before share dividends

Less: Decrease in Acc. Profits and Losses
upon declaration of Share Dividends
Total
Add: Increase in capital upon distribution of
share dividends
Total Shareholders Equity after share dividends
(No effect on Shareholders Equity)
80
P 100
P8,000
(A)
P 160,000
8,000
P 152,000
8,000
P 160,000 (B)
70
Q 17
8 IV
P 21,000
20,000
P 1,000
Dapitan Motors Corporation
Q 18
8V
Proceeds from the sale of Treasury Share (200 x P105)

Cost of Treasury Share acquired
Gains to be credited
Revenue
Expense
Profit
P 4,500,000
3,800,000
P 700,000
Acc. Profits & Losses

Profit
Total
Dividends Declared and Paid
650,000
700,000
P 1,350,000
( 500,000)
P 850,000 (A)
Visayan Corporation
Q 19
Under Cost Method of Accounting for treasury share, the re issuances would result in a credit to:
Cash
P190,000
Treasury Share
8 VI
P120,000
70,000 (D)
Gazebo Corporation
Q 20
Market Value (8,000 x 6% x P500) = 240,000 (C)
8 VII Dreamboy Corporation

Q 21
4,000 shares/20,000 = 20% share dividends

Acc. Profits and Losses before share dividends
Less: Share Dividends (4,000 x 100)
Acc. Profits and Losses after share dividends
P1,500,000
400,000
P1,100,000 (A)
To record the declaration of share dividend:

P400,000
To record the issuance of share dividend:

Ordinary Share
P400,000
P400,000
P400,000
8 VIII Dreamboy Corporation

Q 22
30,000 x 15% = 4,500 x P120,000 = 540,000 (B)

(When a corporation declaring stock dividend is with listed share, we used the market value when
the declaration is less than 20%, and if the declaration is more than 20%, we used the par value.)
Q 23
30,000 x 25% = P7,500 x P100 = P750,000 (A)
Chapter 9
Corporate Financial Statements
91
Beleleng Corporation
Requirement 1:
Shareholders Equity
December 31, 20A
Share Capital
Preference Share, 3,000 shares issued at par, P50
Ordinary Share, 7,000 shares at par, P100
Share Premium
Share premium Preference
Share premium Ordinary
Other Components of Equity
Revaluation Increment on Property
150,000
700,000
2,000
5,000
400,000
10,000
P 1,267,000
71
Requirement 2:
Statement of Changes in Shareholders Equity
For the year ended 31 December 20A
Share Capital
Preference
Ordinary
P 150,000
P 700,000
Jan. 1 Balance
Add: Profit
for the year
Dec. 31 - Balance
92
P 150,000
Share Premium
Preference
Ordinary
2,000
5,000
P 700,000
2,000
5,000
Accu.
P&L
150,000
Revaluation
Increment
10,000
250,000
400,000
10,000
Total
P1,017,000
250,000
10,000
New Era Corporation

New Era Corporation
Shareholders Equity
December 31, 20A
Share Capital
10% Preference Share, P50 par value, 6,000 shares issued
P 100,000
60,000
Ordinary Shares, P75 par value, 4,000 shares issued

Less: Subscription Receivable Ordinary
P 37,500
10,000
27, 500
4,000
8,000
12,000
40,000
300,000
Share Premium:
Revaluation Increment on Property
Total Contributed Capital and Retained Earnings
Less: Treasury Shares at Cost
95
300,000
520,000
30,000
P 1,229,500
8,000
P 1,221,500
Iligan Water Spring Resort Corporation

Requirement 1
Ordinary Shares at par value, P100, 4,000 shares are
issued
Share Premium
Less: Treasury Shares at cost
Shares Outstanding
Book Value per Share
P 400,000
10,000
180,000
(10,000)
P 580,000
3,900 shares
P 148.72
Requirement 2
Profit
Shares Outstanding
Earnings per Share
96
P100,000
3,900 shares
P 25.64
Surigao Bus Line Corporation

Requirement 1:
Ordinary Shares, par value of P100, issued share 6,000:
Subscribed Share Capital
Share Premium
Shares Outstanding
Book Value per Share
P600,000
P100,000
50,000
50,000
4,000
250,000
P904,000
6,000
P 150.67
Requirement 2:
Profit (P250,000 P150,000) = P100,000
Shares Outstanding
6,000
= P16.67
72
97
Metropolitan Corporation
Requirement 1:
Preference Shares Equity:
Liquidation Value, P200 x 2,400 shares
Dividends in Arrears, 6% x P360,000 x 3
Current year dividends, 6% x P360,000 x 1
Preference Shareholders Equity
P480,000
64,800
21,600
P566,400
Requirement 2:
Ordinary Shares Equity:
Less: Preference Shares Equity
Ordinary Shareholders Equity
P883,000
566,400
P316,600
Requirement 3:
Book Value per Preference Share
Preference Share: P566,400 2,400 = P236.00
Ordinary Share: P316,600 2,350 = 134.72
9 8
Metro Cebu Corporation

Requirement 1:
Preference Shares:
Current year dividend, 10% x P500,000
Shares Outstanding
= Book Value per Preference Share
P900,000
50,000
P950,000
5,000
P190.00
Ordinary Shares:
Less: Preference Shareholders Equity
Shares Outstanding
= Book Value per Ordinary Share
P1,330,000
950,000
P 380,000
5,000
P76.00
Requirement 2:
Preference Shares:
Current year dividend, 10% x P500,000
Shares Outstanding
P 500,000
50,000
P 550,000
5,000
P 110.00
Ordinary Shares Equity:

Less: Preference Shares Equity
Shares Outstanding
P1,300,000
550,000
P 780,000
3,000
P 260.00
Chapter 10
Presentation and Analysis of Financial Statements
10 1
RFM Corporation
Requirement 1a:
Current Assets
Working Capital
507,000
130,000
377,000
Requirement 1b:
Current Assets
Current Liabilities
507,000
130,000
Current or Bankers Ratio
3.9:1
73
Requirement 1c:
Quick Assets
Current Liabilities
265,000
130,000
Acid-Test Ratio
2.04:1
(Mdse. Inventory is excluded because it takes time to sell and collect account sales. Prepaid expense is also
excluded because when it expires it becomes expense.)
Requirement 2:
For every one peso of obligation, it has P3.90 of current asset to pay. The same interpretation as in acid-test ratio.
10 2
R. Kudemus Co. and Baligala Co.
Requirement 1:
Kudamus Co.
Working Capital
Current Assets
Working Capital
Baligala Co.
320,000
50,000
270,000
Requirement 2:
Bankers Ratio
Current Assets
Current Liabilities
Bankers Ratio
=
=
Requirement 3:
Acid Test Ratio
Quick Assets
Current Liabilities
Acid Test Ratio
=
=
320,000
50,000
6.4:1
185,000
50,000
3.7:1
234,000
40,000
194,000
=
=
=
=
234,000
40,000
5.8:1
160,000
40,000
4:1
(Merchandise Inventory is excluded because it takes time to sell and collect the receivable. Prepaid expense is
also excluded because when it expires it becomes expense.)
10 3
Reyes Corporation
Reyes Corporation
Common-Size Statement of Comprehensive Income
For the year ended December 31, 20A
Sales
Less: Sales Returns and Allowances
Net Sales
Less: Cost of Sales
Gross Profit
Less: Operation Expense
Profit
10 4
105%
5%
100%
75%
25%
20%
5%
Vismin Jewelry Store, Inc.

Vismin Jewelry Store
Comparative Statement of Comprehensive Income
For the months ended 30 November and 31 December
Sales
Sales Return & allowances
Sales Discounts
Net Sales
Cost of Sales
Gross Profit
Operating Expenses
Profit
December
November
Amount of
Increase
(Decrease)
100,000
1,000
500
1,500
98,500
45,000
53,500
19,000
34,500
90,000
2,000
2,000
88,000
50,000
38,000
20,000
18,000
10,000
(1,000)
500
(500)
10,500
(5,000)
15,500
(1,000)
16,500
% of increase
(Decrease)
11
(50)
100
(25)
12
(10)
41
(5)
92
74
10 5
S. Bolivar Enterprises
Requirement A:
Receivable Turnover
Credit Sales
Average Capital
Requirement B:
Average Collection Period
200,000
4 times
91.25 days
50,000
365 days
Receivable Turnover
365
4 times
Requirement C:
Inventory Turnover
Cost of Sales
Average Inventory
210,000
70,000
3 times
Requirement D:
Average Age of Inventory
365 days
Inventory Turnover
365
3
121.66 days
10 6
Dreamworld Corporation
Requirement 1:
Dreamworld Company
As of December 31, 20B and 20A
Cash
Accounts Receivable
Inventories
Plant and Equipment (Net)
Accounts Payable
5% Bonds Payable
Share Capital (P10 par)
Accumulated Profit
20B
P 150,000
120,000
90,000
360,000
P 720,000
20A
P 130,000
80,000
70,000
300,000
P 580,000
Amount of
Increase
(Decrease)
P 20,000
40,000
20,000
60,000
P 140,000
P 100,000
200,000
260,000
160,000
P 720,000
80,000
200,000
200,000
100,000
P 580,000
% of
Increase
(Decrease)
15.38%
50.00%
28.57
20.00%
24.14%
20,000
-060,000
60,000
P 140,000
25.00%
.00%
30.00%
60.00%
24.00%
Requirement 2:
Dreamworld Company
As of December 31, 20B and 20A
Sales
Cost of Goods Sold
Gross Profit
Operating and Non-Operating Expense
Profit before Income Tax
100.00%
55.56%
44.44%
27.78%
16.1%
100.00%
58.33%
41.67%
25.00%
16.67%
Requirement 3A:
Current Ratio
Credit Assets
Current Liabilities
360,000
100,000
3.60
Quick Assets
Current Liabilities
270,000
100,000
2.70
Credit Sales
Average Receivable
360,000
100,000
3.60 times
No. of days in a year

Receivable Turnover
365 days
3.60
101.39 days
Cost of Sales
Average Inventory
200,000
80,000
2.50 times
Requirement 3B:
Acid Test Ratio
Requirement 3C:
Receivable Turnover
Requirement 3D:
Requirement 3E:
Inventory Turnover
75
10 7
Bluemoon Trading Corporation
Requirement 1:
20A Sales and Cost of Sales
Sales
=
=
=
Accounts Receivable Turnover x Average Receivable

8 x P 80,000
P 640,000
Cost of Sales
=
=
=
Inventory Turnover x Average Inventory

6 x P 100,000
P 600,000
Requirement 2:
Expected Sales and Cost of Sales for 20B
Sales
=
=
=
Average Receivable x Receivable Turnover

P 130,000 x 12 times
P 1,560.00
365 days
Receivable Turnover
30 days
365 days
?
Receivable Turnover
365 days
30
Cost of Sales
=
=
=
Average Inventory x Inventory Turnover

P 100,000 x 9
P 900,000
365 days
Inventory Turnover
365 days
?
COMPUTATION:
12 times
COMPUTATION:
No. of days Sales in Inventory
Inventory Turnover
9 times
10 8 D&T Shafer Corporation

Requirement 1:
a)
b)
c)
d)
e)
20B
20A
Gross Profit Percentage

Gross Profit
Net Sales
610,000
1,460,000
41.78%
320,000
1,100,000
29.09%
Rate of Return on Sales

Profit
Net Sales
360,000
1,460,000
24.65%
20,000
1,100,000
.01%
Rate of Return on Investment

Profit
Ave. Investment
360,000
1,200,000
30%
20,000
1,500,000
.01%
850,000
210,000
4.04 tomes
780,000
195,000
4 times
1,460,000
290,000
5.03 times
1,100,000
190,000
5.78 times
Inventory Turnover
Cost of Sale
Ave. Inventory
Accounts Receivable Turnover
Credit Sales
Ave. Receivable
76
10 9
Krizzie Corporation
a)
b)
c)
d)
Current Ratio
Quick Ratio
Working Capital
Debt Ratio
Current Assets
Current Liabilities
1,080,000
300,000
Quick Assets
Current Liabilities
420,000
300,000
Accounts Receivable
Turnover
Inventory Turnover
1.4:1
Current Assets Current Liabilities
1,080,000 300,000 = 780,000
f)
3.6:1
e)
Total Liabilities
Total Assets
960,000
2,400,000
40%
18 times
6.2 times
Credit Sales
Ave. Receivable
5,580,000
310,000
Cost of Sales
Ave. Inventory
3,348,000
540,000
77

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Partnership and Corporation

Maria Julieta Lopez Allera-Alegrado

Ruben Realty Co.

Raul Langbid Co.

Blas Sardido Co.

- none of the choices

VIII. Alfredo Yao Co.

Solution Manual in Partnership and Corporation 2014-2015

Rolando Ibaez Enterprises

Vicente Chotangco, Jr.

E. Detoya & Sons

XIII. Laureano Cacho Trading

XIV. Santos Advertising Agency

61 days and over

= 13,100 8,000 = 5,100 - A

Leopoldo Medina Trading

250 units x P31 = P7,750

P27,605 835 x 315 = P10,413.86 Average

XVI. Lucky Strike Co.

Solution Manual in Partnership and Corporation 2014-2015

XVII. Universal Financing Co.

P50,000 x 15% 90 days = P 1,875

Finished Goods, Beg.

Test IV Multiple Choice (Problem)

Raw Materials, Beg.

Solution Manual in Partnership and Corporation 2014-2015

Cost of Goods Manufactured:

Cost of Goods Manufactured

Sanada and Estrebilla

Maula, Montecina and Maceda

Jeremy Maceda was admitted in the partnership as an

** (Same notation for Maceda)

Solution Manual in Partnership and Corporation 2014-2015

Malquisto and Rocabo

Est. Uncollectible Accounts

Total Liabilities & Owners Equity

Malquisto, Beringuel and Alemanza

Solution Manual in Partnership and Corporation 2014-2015

Closing Entries in their respective sole proprietorship book.

Compound Opening Journal Entry

(Accumulated Depreciation-Equipment is no longer shown in the opening-entry)

Laureto and Auditor Partnership

Requirement 1: Journal Entries to close their Respective Sole Proprietorships Book

Journal Entries to record investment in the Partnership Book

Solution Manual in Partnership and Corporation 2014-2015

Closing Entries in their Respective Sole Proprietorship Book

Mendez and Salazar

Journal Entries to record investment in the Partnership Book

Dabucol and Miranda

Solution Manual in Partnership and Corporation 2014-2015

Torralba and Rosada

Total Liability & Partners Equity

Galbog and Torrequemada

Solution Manual in Partnership and Corporation 2014-2015

Journal Entries to close the books of Glabog

2-10. Angie Aguilon Company

Capital Contribution of Zulueta

Capital contribution of Zulueta is equal to P280,000,Matching the adjusted capital of Aguilon.

2-11. Misamis Construction Supply

Multiple Choice (Problem)