On January 1, 2020, X and Y agreed to form a partnership with X to contribute cash of P10,000 and an equipment costing P

equipment has market value of P8,000 at the date of partnership formation. Y is to contribute cash of P8,000 and a parcel of l
him P20,000. They agreed to share profits in the ratio of 40% and 60% for X and Y respectively. On January 2, after the pa
formation, the land was sold for P25,000.

1.     Record the formation of the partnership on January 1, 2020.

2.     Journal entry to record the sale of the land on January 2, 2020.

Solution:
Formation of Partnership
1. 1-Jan
Cash ₱ 18,000.00
Equipment ₱ 8,000.00
Land ₱ 20,000.00
X's Capital ₱ 18,000.00
Y's Capital ₱ 28,000.00

2. 2-Jan
To record the sale of Land
Cash ₱ 25,000.00
Land ₱ 20,000.00
Gain on sales of Land ₱ 5,000.00
000 and an equipment costing P5,000. The
cash of P8,000 and a parcel of land that cost
ively. On January 2, after the partnership
The students shall solve and submit solutions for the following problem as a form of assessment of whether the specific learning objectives w

R, S and M formed a partnership on January 1, 2019 with the following capital contributions: R – 60,000; S – 75,000 and M – 40,000. At the

Additional investments
R dated March 31
S dated August 1
M dated Sept. 30

1. Profits are divided in accordance with the beginning capital

Statement of Partner's Capital

Profit: 290,000
R S
Capital Beginning ₱ 60,000.00 ₱ 75,000.00
Add: Additional Investment
Total
Less: Withdrawal
Capital Balance before Profit
Add: Profit shares ₱ 99,428.57 ₱ 189,130.43
Capital Balance Ending ₱ 159,428.57 ₱ 264,130.43

R S
Capital Beginning ₱ 60,000.00 ₱ 75,000.00
Add: Additional Investment 25000( march 31) 20000 (august 1)
Total ₱ 85,000.00 ₱ 95,000.00
Less: Withdrawal 15000 (july 31) 10000 (april 31)
Capital Balance before Profit ₱ 70,000.00 ₱ 85,000.00
Add: Profit shares
Capital Balance Ending

R
Date
Jan 1 balance ₱ 60,000.00 ₱ 3.00
March 31 investment ₱ 85,000.00 ₱ 4.00
July 31 withdrawal ₱ 70,000.00 ₱ 5.00

Average Capital
Profit share
Profit
290,000
5.     Profits are distributed as follows
▪       Allowed salaries per year for all partners 20,000 each.
▪       5% interest on original capital contribution of the partners.
▪       R as managing partner will received a bonus of 20% of net income after deducting the interest, salaries and bonus.
▪       Balance of the profits to be divided 3:3:4 for R, S and M respectively.

Capital Beginning ₱ 60,000.00 ₱ 75,000.00

Add: Additional Investment ₱ 25,000.00 ₱ 20,000.00
Total
Less: Withdrawal -₱ 15,000.00 -₱ 10,000.00
Capital Balance before Profit ₱ 70,000.00 ₱ 85,000.00
Add: Profit shares ₱ 54,300.00 ₱ 72,400.00
Capital Balance Ending ₱ 124,300.00 ₱ 157,400.00
ssessment of whether the specific learning objectives were achieved.

utions: R – 60,000; S – 75,000 and M – 40,000. At the end of 2019, the business earned profits of 290,000 before salaries, interest and bonus. Distribute t

25,000
20,000
30,000
Withdrawals
R dated July 31 15,000
S dated April 31 10,000
M dated July 1 15,000
2.Profits are divided 60%, 30% and 10% for R, S and M respectively

Statement of Partner's Capital

Profit: 290,000
M R
₱ 40,000.00 Capital Beginning ₱ 60,000.00
Add: Additional Investment
Total
Less: Withdrawal
Capital Balance before Profit
₱ 290,000.00 Add: Profit shares ₱ 174,000.00
₱ 330,000.00 Capital Balance Ending ₱ 234,000.00

M
₱ 40,000.00
30000 (sept 30)
₱ 70,000.00
15000 (july 1)
₱ 55,000.00

S
Date
₱ 180,000.00 Jan 1 balance ₱ 75,000.00
₱ 340,000.00 Aug 1 investment ₱ 95,000.00
₱ 350,000.00 April 31 withdrawal ₱ 85,000.00
₱ 870,000.00
₱ 72,500.00
₱ 92,080.29
the interest, salaries and bonus.

₱ 40,000.00 Profit
₱ 30,000.00
Less: salary
-₱ 15,000.00 5% interest on capital contribution
₱ 55,000.00 Total
₱ 54,300.00 Less:R's bonus 20%
₱ 109,300.00 Net
est and bonus. Distribute the profits under each of the following agreements:

R, S and M respectively
3.Profits are divided in the ratio of ending capital ratio after considering the fo
Statement of Partner's Capital
Profit: 290,000
S M R
₱ 75,000.00 ₱ 40,000.00 Capital Beginning ₱ 60,000.00
Add: Additional Investment ₱ 25,000.00
Total
Less: Withdrawal -₱ 15,000.00
Capital Balance before Profit ₱ 70,000.00
₱ 87,000.00 ₱ 29,000.00 Add: Profit shares ₱ 96,666.67
₱ 162,000.00 ₱ 69,000.00 Capital Balance Ending ₱ 166,666.67

M
Date
7 ₱ 525,000.00 Jan 1 balance ₱ 40,000.00
2 ₱ 190,000.00 Sept 30 investment ₱ 70,000.00
3 ₱ 255,000.00 July 1 withdrawal ₱ 55,000.00
₱ 970,000.00
₱ 80,833.33
₱ 102,664.23
 ₱ 290,000.00
R S M Total
₱ 20,000.00 ₱ 20,000.00 ₱ 20,000.00 ₱ 60,000.00
₱ 1,250.00 ₱ 1,000.00 ₱ 1,500.00 ₱ 3,750.00
₱ 226,250.00
₱ 45,250.00 ₱ 45,250.00
₱ 181,000.00
apital ratio after considering the following additional investment and withdrawals

S M
₱ 75,000.00 ₱ 40,000.00
₱ 20,000.00 ₱ 30,000.00

-₱ 10,000.00 -₱ 15,000.00
₱ 85,000.00 ₱ 55,000.00
₱ 176,071.43 ₱ 290,000.00
₱ 261,071.43 ₱ 345,000.00

9 ₱ 360,000.00
3 ₱ 210,000.00
6 ₱ 330,000.00
₱ 900,000.00
₱ 75,000.00 ₱ 228,333.33 Total
₱ 95,255.47
 To assess that the desired learning outcomes are achieved, the following assessment exercises shall be

Evaluation Problem:

Mark and Mon are partners with capital balances of P250,000 and P500,000 respectively. They share profits in the ratio of 4:
new capital of the partnership after the admission of Arnel is b to

Required: For each of the following independent cases, prepare the journal entries to record the admittanc

1.     Arnel invested P250,000 for a one-fourth interest in the new capital.
2.     Arnel invested P200,000 for a one-fifth interest in the new capital
3.     Arnel invested P200,000 for a one-fourth interest in the new capital.
4.     Arnel invested P250,000 for one-fifth interest in the new capital.
5.     Arnel invested P150,000 for a 30% interest in a new capital

6.     Assuming that instead of investment, Arnel purchased one-fifth of the interest of Mark and Mon for P200,000. The partne

Solution:
1. Cash ₱ 250,000.00
Arnel's Capital ₱ 250,000.00

Mark (40%) ₱ 250,000.00 ₱ 300,000.00 ₱ 50,000.00

Mon (60%) ₱ 500,000.00 ₱ 450,000.00 -₱ 50,000.00
Arnel ₱ 250,000.00 ₱ 250,000.00 ₱ -
₱ 1,000,000.00 ₱ 1,000,000.00

Mon Capital ₱ 50,000.00

Mark Capital ₱ 50,000.00

6) 5*200,000=1,000,0000
1,000,000-750,000=250,000

Mark Capital (250,000+250,000(1/4))=312,500

Mon capital (500,000+250,000(1/4))=562,500
Arnel Capital ₱ 125,000.00
ng assessment exercises shall be solved by the students. Answers shall be submitted.

ey share profits in the ratio of 4:6. Arnel is to be admitted as a partner by making an investment. The agreed
er the admission of Arnel is b to be P1,000,000.

l entries to record the admittance of Arnel. Show supporting computations in good form.

d Mon for P200,000. The partners agreed to adjust the asset of the partnership into its market value.

2.Cash ₱ 200,000.00 3. Cash

Arnel's Capital ₱ 200,000.00

Mark (40%) ₱ 250,000.00 ₱ 320,000.00 ₱ 70,000.00 Mark (40%)

Mon (60%) ₱ 500,000.00 ₱ 480,000.00 -₱ 20,000.00 Mon (60%)
Arnel ₱ 200,000.00 ₱ 200,000.00 ₱ - Arnel
₱ 950,000.00 ₱ 1,000,000.00

Asset ₱ 50,000.00 Asset

Mon Capital ₱ 20,000.00 Mon Capital
Mark Capital ₱ 70,000.00
 4. Cash
Arnel's Capital Arnel's Capital

₱ 250,000.00 ₱ 300,000.00 ₱ 50,000.00 Mark (40%) ₱ 250,000.00

₱ 500,000.00 ₱ 450,000.00 -₱ 50,000.00 Mon (60%) ₱ 500,000.00
₱ 200,000.00 ₱ 250,000.00 ₱ 50,000.00 Arnel ₱ 250,000.00
₱ 950,000.00 ₱ 1,000,000.00 ₱ 1,000,000.00

₱ 50,000.00 Mon Capital

₱ 50,000.00 Arnel Capital
Mark Capital ₱ 50,000.00 Mark Capital
Arnel Capital ₱ 50,000.00
 5. Cash
Arnel's Capital

₱ 320,000.00 ₱ 70,000.00 Mark (40%) ₱ 250,000.00 ₱ 280,000.00

₱ 480,000.00 -₱ 20,000.00 Mon (60%) ₱ 500,000.00 ₱ 420,000.00
₱ 200,000.00 -₱ 50,000.00 Arnel ₱ 150,000.00 ₱ 300,000.00
₱ 1,000,000.00 ₱ 900,000.00 ₱ 1,000,000.00

₱ 20,000.00 Asset ₱ 100,000.00

₱ 50,000.00 Mon Capital ₱ 80,000.00
₱ 70,000.00 Mark Capital
Arnel Capital
 To assess students achievement of the course objectives, they will be asked to solve the fo

The following accounts were taken from the December 31, 20019 Balance Sheet of Beth, Jonna a

Cash 135,000
Non-cash assets 1,600,000
Liabilities 750,000
Jonna Loan to partnership 20,000
Grace loan to partnership 40,000
Beth Capital 450,000
Jonna Capital 300,000
Grace Capital 175,000

Required:
Prepare Statement of Liquidation and Journal entries to record the liquidation process under each of the following situations:
1.     Non -cash assets are sold at a lump sum price of P1,200,000.
2.     Non-cash assets are sold as follows:
Book value Selling Price
January 600,000 450,000
February 300,000 200,000
March 400,000 200,000
April 300,000 200,000

Solution:
1.Non -cash assets are sold at a lump sum price of P1,200,000.
Cash Non-Cash Assets Accts Payable Jonnah Loan Grace Loan

₱ 135,000.00 ₱ 1,600,000.00 ₱ 750,000.00 ₱ 20,000.00 ₱ 40,000.00

₱ 1,200,000.00 -₱ 1,600,000.00
₱ 1,335,000.00 ₱ - ₱ 750,000.00 ₱ 20,000.00 ₱ 40,000.00
-₱ 750,000.00 -₱ 750,000.00
₱ 585,000.00 ₱ - ₱ - ₱ 20,000.00 ₱ 40,000.00
-₱ 40,000.00
-₱ 20,000.00 -₱ 20,000.00
₱ 565,000.00 ₱ - ₱ - ₱ - ₱ -
-₱ 565,000.00 ₱ - ₱ - ₱ - ₱ -
-0- -0- -0- -0-

2.Non-cash assets are sold as follows:

Non-Cash Loans
Cash Liabilities
Assets Jonna
Beginning Balances ₱ 135,000.00 ₱ 1,600,000.00 ₱ 750,000.00 ₱ 20,000.00
Realization of Assets –
January ₱ 450,000.00 -₱ 600,000.00
Realization of Assets –
February ₱ 200,000.00 -₱ 300,000.00
Realization of Assets –
March ₱ 200,000.00 -₱ 400,000.00
Absorption by loan

Realization of Assets – April

₱ 200,000.00 -₱ 300,000.00
Balances ₱ 1,185,000.00 ₱ - ₱ 750,000.00 ₱ 20,000.00
Payment of Liabilites -₱ 750,000.00 -₱ 750,000.00
Payment of Loan to Jonna -₱ 20,000.00 -₱ 20,000.00
Balances ₱ 415,000.00 ₱ - ₱ - ₱ -
Absorption of Deficiency
Balances ₱ 415,000.00 ₱ - ₱ - ₱ -
Payment of Capital -₱ 415,000.00 ₱ - ₱ - ₱ -
Balances ₱ - ₱ - ₱ - ₱ -
 ves, they will be asked to solve the following problems and submit the solutions in good form

20019 Balance Sheet of Beth, Jonna and Grace who share profits and losses 2:3:5 respectively:

er each of the following situations:

m price of P1,200,000.
Beth Capital Jonnah Capital Grace Capital Cash
₱ 450,000.00 ₱ 300,000.00 ₱ 175,000.00 Beth Capital
-₱ 80,000.00 -₱ 120,000.00 -₱ 200,000.00 Jonna capital
₱ 370,000.00 ₱ 180,000.00 -₱ 25,000.00 Grace Capital
Non Cash Asset
₱ 370,000.00 ₱ 180,000.00 -₱ 25,000.00
₱ 40,000.00 Liabilities
Cash
₱ 370,000.00 ₱ 180,000.00 ₱ 15,000.00
-₱ 370,000.00 -₱ 180,000.00 -₱ 15,000.00 Jonnah's Loan
-0- -0- -0- Cash

-cash assets are sold as follows:

Loans Capital January
Grace Beth Jonna Grace
₱ 40,000.00 ₱ 450,000.00 ₱ 300,000.00 ₱ 175,000.00 Cash

-₱ 30,000.00 -₱ 45,000.00 -₱ 75,000.00 Beth Capital

 -₱ 20,000.00 -₱ 30,000.00 -₱ 50,000.00 Jonna capital

-₱ 40,000.00 -₱ 60,000.00 -₱ 100,000.00 Grace Capital

-₱ 40,000.00 ₱ 40,000.00

-₱ 20,000.00 -₱ 30,000.00 -₱ 50,000.00

₱ - ₱ 340,000.00 ₱ 135,000.00 -₱ 60,000.00 Liabilities

₱ - ₱ 340,000.00 ₱ 135,000.00 -₱ 60,000.00 To record the absorption of Deficie

-₱ 24,000.00 -₱ 36,000.00 ₱ 60,000.00
₱ - ₱ 316,000.00 ₱ 99,000.00 ₱ - Beth Capital
₱ - -₱ 316,000.00 -₱ 99,000.00 ₱ - Jonna capital
₱ - ₱ - ₱ - ₱ -
₱ 1,200,000.00 Grace Capital ₱ 40,000.00
₱ 80,000.00 Grace Loan
₱ 120,000.00
₱ 200,000.00 Beth Capital ₱ 370,000.00
₱ 1,600,000.00 Jonna capital ₱ 180,000.00
Grace Capital ₱ 15,000.00
₱ 750,000.00 Cash
₱ 750,000.00

₱ 20,000.00
₱ 20,000.00

February

₱ 450,000.00 Cash

₱ 30,000.00 Beth Capital

 ₱ 45,000.00 Jonna capital

₱ 75,000.00 Grace Capital

Non Cash Asset ₱ 600,000.00 Non Cash Asset

₱ 750,000.00 Jonna Loan

Cash ₱ 750,000.00 Cash

the absorption of Deficiency To record the payment of partners

₱ 24,000.00 Beth Capital

₱ 36,000.00 Jonna capital
Grace Capital ₱ 60,000.00 Cash
₱ 40,000.00

₱ 565,000.00

March

₱ 200,000.00 Cash ₱ 200,000.00

₱ 20,000.00 Beth Capital ₱ 40,000.00

₱ 30,000.00 Jonna capital ₱ 60,000.00

₱ 50,000.00 Grace Capital ₱ 100,000.00

₱ 300,000.00 Non Cash Asset ₱ 400,000.00

₱ 20,000.00 Grace Capital ₱ 40,000.00

₱ 20,000.00 Grace Loan ₱ 40,000.00

₱ 316,000.00
₱ 99,000.00
₱ 415,000.00
April

Cash ₱ 200,000.00

Beth Capital ₱ 20,000.00

Jonna capital ₱ 30,000.00

Grace Capital ₱ 50,000.00

Non Cash Asset ₱ 300,000.00