Exercise 1-1.

True or False

1. True 6. True 11. True

2. False 7. False 12. True
3. True 8. True 13. False
4. True 9. True 14. True
5. True 10. False 15. True

Exercise 1-2. Multiple Choice

1. B 6. C 11. D
2. D 7. D 12. B
3. A 8. D 13. C
4. A 9. D 14. B
5. A 10. B (at any will) 15. C
Problem 1 - 5. Open-ended Questions

1. P500,000 6. P550,000
2. P250,000 7. P408,000
3. P1,000,000 8. A = P75,000 ; B = P60,000
4. P400,000 9. A = P65,000 ; B = P81,000
5. P500,000 10. P200,000

Problem 1 - 6. Multiple Choice

1. C 6. C
2. D (P1,660,000) 7. A
3. C 8. D
4. B 9. C
5. D (P300,000) 10. B
Problem 1 -1
A.
1. The mortgage balance was not assumed by the partnership.

Marsha Mila
Cash 250,000 Cash
Service Vehicl 210,000 Land
Marsha, Capital 460,000 Mila, Capital
Marsha Initial Investment Mila Initial Investment

Assets Liabilities and Owner's Equity

Cash 550,000 Marsha, Capital
Service Vehicle 210,000 Mila, Capital
Land 700,000
Total Assets 1,460,000 Total Liabilities and Owner's Equ

2. The mortgage balance was assumed by the partnership.

Marsha Mila
Cash 250,000 Cash
Service Vehicl 210,000 Land
Marsha, Capital 460,000 Mortgage Payable
Marsha Initial Investment Mila, Capital
Mila Initial Investment

Assets Liabilities and Owner's Equity

Cash 550,000 Mortgage Payable
Service Vehicle 210,000 Marsha, Capital
Land 700,000 Mila, Capital
Total Assets 1,460,000 Total Liabilities and Owner's Equ

B.
1. Rick and Nick are to contribute equal cash for a total agreed capitalization of P500,000.

Cash 500,000
 Rick, Capital 250,000
Nick, Capital 250,000
Initial Cash Investment of Rick and Nick

2. Rick and Nick agreed to contribute a total of P360,000 cash. Rick will contribute 1/3 of the total agreed capitaliza

Cash 360,000
Rick, Capital 120,000
Nick, Capital 240,000
Initial Cash Investment of Rick and Nick

3. Rick will contribute land with a fair market value of P600,000 and book value of P500,000 plus cash. Nick will con

Land 600,000 Cash

Cash 400,000 Nick, Capital
Rick, Capital 1,000,000 Cash Investment of Nick
Rick Initial Investment

OR

Cash 1,900,000
Land 600,000
Rick, Capital 1,000,000
Nick, Capital 1,500,000
Initial Investment of Rick and Nick

4. Rick to contribute cash of P500,000 while Nick will contribute his skill as industrial partner to share 25% of profits

Cash 500,000
Rick, Capital 500,000
Cash Investment of Rick

Memo Entry: Nick is an industrial partner and is entitled to a 25% profit share.

5. Rick to contribute his skill as industrial partner plus P50,000 while Nick will contribute P150,000.

Cash 50,000 Cash

Rick, Capital 50,000 Nick, Capital
Cash Investment of Rick Cash Investment of Nick

Memo Entry: Rick is a capitalist-industrial partner and shall earn an additional share in profit.
OR

Cash 200,000
Rick, Capital 50,000
Nick, Capital 150,000
Initial Cash Investment of Rick and Nick

Memo Entry: Rick is a capitalist-industrial partner and shall earn an additional share in profit.
 Mila
300,000
700,000
Mila, Capital 1,000,000
Mila Initial Investment

Liabilities and Owner's Equity

rsha, Capital 460,000
1,000,000

tal Liabilities and Owner's Equ 1,460,000

Mila
300,000
700,000
Mortgage Payable 250,000
Mila, Capital 750,000
Mila Initial Investment

Liabilities and Owner's Equity

rtgage Payable 250,000
rsha, Capital 460,000
750,000
tal Liabilities and Owner's Equ 1,460,000

n of P500,000.
ntribute 1/3 of the total agreed capitalizationwhile Nick will contribute the remaining 2/3.

alue of P500,000 plus cash. Nick will contribute P1,500,000 for a 60% claim in the partnership.

1,500,000
Nick, Capital 1,500,000
sh Investment of Nick

industrial partner to share 25% of profits.

a 25% profit share.

ill contribute P150,000.

150,000
Nick, Capital 150,000
sh Investment of Nick

earn an additional share in profit.

earn an additional share in profit.
Problem 1 - 2

1. Compute for the capital account balance of Diana before partnership formation.

Cash 9,000
Accounts receivable 189,000
Allowance for uncollectible accounts 6,000
Merchandise Inventor 420,000
Store Equipment 150,000
Accumulated Depreciation 15,000
Diana, Capital 747,000

2. Prepare the necessary journal entries in the books of Diana.

Allowance for uncollec 4,000

Diana, Capital 4,000
To increase the allowance

Merchandise Inventor 40,000

Diana, Capital 40,000
To increase the merchandise inventory

Store Equipment - AD 5,000

Diana, Capital 5,000
To decrease the store equipment

Allowance 4,000
Merchandise Inventor 40,000
Store Equipment 5,000
Diana, Capital 41,000
To record the adjustments in Diana Capital

3. Prepare a journal entry to close the books of Diana

Allowance for uncontro 40,000
Accumulated Deprecat 5,000
Diana, Capital 788,000
Cash 9,000
Accounts Receivable 189000
Merchandise Inventory 460,000
Store Equipment 150,000
To close Diana's books
4. Prepare the journal entries to record the contribution of Diana and Denny in the books of the partnership
New Partnership Books
Cash 9,000 Cash
Accounts Receivable 189,000 Denny, Capital
Merchandise Inventor 460000 Net Investm
Store Equipment 140,000
Allowance for uncontrollable acc 10,000
Diana, Capital 788,000
Accumulated depreciation - Stor 10,000
Net investment of Diana

5. Prepare a statement of financial position after the partnership formation.

DD Partnership
Statement of Financial Position
April 1, 2022

Assets
Cash P2,364,000
Accounts Receivable P 189,000
Less: Allowance for UA 10,000 179000
Merchandise Inventory 460000
Store Equipment 140000
Total Assets P 2,364,000
f the partnership

1,576,000
Denny, Capital 1,576,000
Net Investment of Denny

p
Position

Liabilities and Owner's Equity

Diana, Capital P 788,000
Denny, Capital 1,576,000

Total Capital P 2,364,000

Problem 1 - 3

a. The adjustments in Nash's books.

Accounts Receivable 10,000

Nash, Capital 10,000
To increase in Accounts Receivable

Merchandise Inventory 10,000

Nash, Capital 10,000
To decrease in Merchandise Inventory

Accumulated depreciat 14,000

Nash, Capital 14,000
To increase in Accumulated Depreciation

Nash, Capital 34,000

Accounts Receivable 10,000
Merchandise Inventory 10,000
Accumulated Depreciation 14,000

To record the adjustments in Nash's capital

b. The closing entry in the books of Nash.

Allowance for UA 10,000
Accumulated Depreciat 30,000
Accounts payable 64,000
Nash, Capital 136,000
Cash 20,000
Accounts receivable 50,000
Merchandise Inventory 90,000
Store Equipment 80,000
To close the books of Nash

c. The opening entries in the books of the partnership to record the investments of Nash
New Partnership Book
Cash 384,000
Accounts receivable 50,000
Merchandise Inventory 90,000
Store Equipment 50,000
Allowance for UA 10,000
 Accounts payable 64,000
Nash, Capital 500,000
Accumulated Depreciation - Stor 300,000
Net investment of Nash

Additional Cash for Nash:

Agreed Nash Capital 500,000
Less: Adjusted capital 136,000
Additional cash contribution 364,000
tnership Book
Cash 150,000
Merchandise Invent 100,000
Store Equipment 250,000
Neville, Capital 500,000
Net investment of Neville
Problem 1 - 4

Case A
1. Record the investments of Ryan and Harvey in the books of the partnership.
Books of Partnership
Cash 25,000 Cash
Accounts Receivable 120,000 Accounts Rece
Equipment 250,000 Equipment
Accounts Payable 125,000 Accounts Payable
Ryan, Capital (450,000×60%) 270,000 Notes Payable
Net Investment of Ryan Harvey, Capital (450,000×4
Net Investmen

2. Prepare the statement of financial position for RH Trading.

RH Trading
Statement of Financial Position

Assets
Cash P 50,000
Accounts Receivable 270,000
Equipment 380,000
Total Assets P 700,000

Liabilities and Owner's Equity

Accounts Payable P 150,000
Notes Payable 100,000
Ryan, Capital 270,000
Harvey, Capital 180,000
Total Liabilities and Owner's Equity P 700,000

Case B
1. Prepare the necessary journal entries to adjust and close the books of Raffy and Gabby and to record their inves

Books of Raffy
1 Raffy, Capital 21,500
Uncollectible accounts 6,500
Accumulated Depreciation 15,000
 To adjust the capital of Raffy
2 Allowance for Uncolle 6,500
Accumulated Deprecia 15,000
Accounts Payable 360,000
Raffy, Capital 463,500
Cash 85, 000
Accounts receivable 140,000
Merchandise Inventory 230,000
Furniture and Fixtures 340,000
Prepaid Expense 50,000
To close the books of Raffy

Books of Partnership
1 Cash 110,000
Accounts receivable 245,000
Merchandise Inventor 395,000
Furniture and Fixtures 435,000
Prepaid Expense 65,000
Allowance for Uncollectible accoun 11,000
Accounts Payable 505,000
Raffy, Capital 463,500
Gabby, Capital 270,500
Net Investment of Raffy and Gabby

2. Prepare the statement of financial position for RG Partnership

RG PARTNERSHIP
Statement of Financial Position
Date

Assets
Cash P 110,000
Accounts receivable P 245,000
Less: Uncollectable accounts 11,000 234,000
Merchandise Inventory 395,000
Prepaid Expense 65,000
Furniture and Fixtures 435,000
Total Assets P 1,249,000
 25,000
150,000
130,000
Accounts Payable 25,000
Notes Payable 100,000
rvey, Capital (450,000×40%) 180,000
Net Investment of Harvey

and to record their investments in the books of the partnership.

Books of Gabby
1 Gabby, Capital 4,500
Allowance for Uncollectible Accounts 4,500
To set-up uncollectible accounts
 2 Uncollectible Accounts 4,500
Accounts Payable 145,000
Gabby, Capital 270,500
Cash P 25,000
Accounts receivable 105,000
Merchandise Inventory 165,000
Furniture and Fixtures 110,000
Prepaid Expense 15,000
To close the books of Gabby

G PARTNERSHIP
ent of Financial Position
Date

Liabilities and Owner's Equity

Accounts Payable P 505,000

Capital

Rabby, Capital 463,500

Gabby, Capital 270,500 744,000
Total Liabilities and Owner's Equity P 1,249,000
Exercise 2 - 1. True or False Exercise 2 - 3. Multiple Choi
1. True 6. False 11. False 1. D
2. True 7. True 12. True 2. A
3. True 8. False 13. False 3. B
4. True 9. False 14. False 4. B
5. False 10. False 15. True 5. B

Exercise 2 - 2. True or False Exercise 2 - 5. Multiple Choice

1. False 11. False 1. B
2. True 12. True 2. B
3. True 13. False 3. C
4. True 14. False 4. D
5. False 15. False 5. A
6. True 16. False
7. False 17. False
8. True 18. True
9. True 19. True
10. True 20. True
 6. C 11. C
7. C 12. C
8. D 13. A
9. D 14. C
10. C 15. D

ultiple Choice
6. D
7. D
8. C
9. A
10. D
 JAMES MARK
1. 2/5 x P200,000 P80,000 P120,000
3/5 x P200,000

2. b P80,000 P120,000

3. 9% Interest on OC P18,000 P27,000

Remainder, equally 77,500 77,500
P95,500 P104,500

4. Salary allowance P66,000 P72,000

Remainder, equally 31,000 31,000
P97,000 P103,000
TOTAL
P200,000

P200,000

P45,000
155,000
P200,000

P138,000
62,000
P200,000
1. L
ANA
A. Int. on. ave. cap. at 9% P31,500 CR.
Salary allowances
( 80,000) 54,000 CR.
P 43,000 x 0.25 = P10,750 ---
Remainder, 4:3:3 44,900 CR.
Partners' profit share P130,400 CR.

B. Int. on. ave. cap. at 9% P31,500 CR.

Salary allowances 54,000 CR.
Remainder, 4:3:3 A(30,800) DR.
Partners' profit (loss) share P54,700 CR.

C. Int. on. ave. cap. at 9% P31,500 CR.

Salary allowances 54,000 CR.
Remainder, 4:3:3 A((102,800) DR.
Partners' profit (loss) share A(P17,300) DR.

2. A
a. Income Summary 300,000
Ana, Capital 130,400
Helen, Capital 126,475
Marie, Capital 43,125

b. Income Summary 100,000

Marie, Capital 13,650
Ana, Capital 54,700
Helen, Capital 58,950

c. Ana, Capital 17,300

Marie, Capital 67,650
Helen, Capital 4,950
Income Summary 80,000
 HELEN MARIE TOTAL
P22,050 CR. P9,450 CR. P63,000 CR.
60,000 CR. --- 114,000 CR.
10,750 CR. --- 10,750 CR.
33,675 CR. 33,675 CR. 112,250 CR.
P126,475 CR. P43,125 CR. P300,000 CR.

P22,050 CR. P9,450 CR. P63,000 CR.

60,000 CR. --- 114,000 CR.
HI((23,100) DR. HELLO(23,100) DR. hELLO(77,000) DR.
P58,950 CR. HELLO(P13,650) DR. P100,000 CR.

P22,050 CR. P9,450 CR. P63,000 CR.

60,000 CR. --- 114,000 CR.
asap(77,100) DR. ASAP(77,100) DR. HELLO(257,000) DR.
P4,950 CR. hI(P67,650) DR. ASAP(P80,000) DR.
Requirement 1

Accounts Receivable 100,000

Merchandise Inventory 260,000
Prepaid Expenses 15,000
Office Equipment 280,000
Allowance for Uncollectible Accounts 10,000
Accounts Payable 190,000
Rockford, Capital 455,000
Net Investment of Rockford

Cash 455,000
Jewel, Capital 455,000
Cash Investment of Jewel

Requirement 2
Jewel and Rockford
Statement of Financial Position
September 30, 2022

Assets
Cash P455,000
Accounts Receivable P100,000
Allowance for Uncollectible Account 10,000 90,000
Merchandise Inventory 260,000
Prepaid Expenses 15,000
Office Equipment 280,000
Total Assets P1,100,000

Liabilities and Partners' Equity

Accounts Payable P190,000
Jewel, Capital 455,000
Rockford, Capital 455,000 910,000
Total Liabilities and Partners' Equity P1,100,000

Requirements 3
Income Summary 600,000
Jewel, Drawing 00 - 220,000 = (20,000) DR.
Rockford, Drawing 000 - 300,000 = 100,000 CR.
 To close Income Summary

Requirement 4
Rockford, Drawing 100,000
Jewel, Capital 20,000
Rockford, Capital 100,000
Jewel, Drawing 20,000
To close Drawing accounts
equirement 1
Cebu Superstore
Statement of Comprehensive Income
In the year ended December 31,2022

Sales P2,450,000
Less cost of sales 1,420,000
Gross profit P1,030,000
Less operating expenses:
Salaries Expense P460,000
Rent Expense 210,000
Insurance Expense 35,000
Utilities Expense 45,000 730,000
Profit P300,000

ision of profit:
Aquino 30% P90,000
Castro 30% P90,000
Modesto 40% P120,000
P300,000

equirement 2
Cebu Superstore
Statement of Changes in Partners' Equity
In the year ended December 31,2022

Aquino Castro Modesto Total

Partners' Equity, Jan. P75,000 P300,000 P150,000 P525,000
Add: Add'l Investment 45,000 30,000 --- 75,000
Profit share 90,000 90,000 120,000 300,000
Total P210,000 P420,000 P270,000 P900,000
Less withdrawals --- 50,000 40,000 90,000
Partners' Equity, Dec. P210,000 P370,000 P230,000 P810,000

equirement 3
Cebu Superstore
Statement of Financial Position
As of December 31, 2022

Assets Liabilities and Partners' Equity

Cash P150,000 Accounts Payable
Accounts Receivable 100,000 Notes Payable
Merchandise Inventory 665,000 Total Liabilities
Prepaid Rent 20,000 Partners' Equity
Prepaid Insurance 15,000 Aquino, Capital
Castro, Capital
Total Assets P950,000 Modesto, Capital

Total Liabilities and Partners' Equity

ities and Partners' Equity
 P60,000
80,000
P140,000
ers' Equity
210,000
370,000
230,000 810,000

Partners' Equity P950,000