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Problem #1
Peter Haynes contributed land, inventory and P300,000 cash to a partnership. The land has a book value of
P450,000 and a market value of P 2,350,000. The inventory has a book value of P700,000 and a market value
of P550,000. The partnership also assumed a P250,000 note payable owed by Haynes that was used to
purchase the land. Sabio Mariano agreed to put up cash equivalent to Haynes net investment.
Required: Prepare the journal entry to record Haynes and Marianos investment in the partnership.
Problem #2
Villa and Dela Mon formed a partnership and invested the following assets and liabilities:
Fair Market Value
Villa:
Cash
Land
Dela Mon:
Cash
Building
Mortgage Payable
Carrying Value
P200,000
500,000
400,000
800,000
(450,000)
Answer key:
Problem #1
Cash 300 000
Hayne, Capital
300 000
2 350 000
Inventory
550 000
Hayne, Capital
550 000
Hayne, Capital
250 000
Notes Payable
250 000
Cash
300 000
Land
2 350 000
Inventory
550 000
Notes Payable
250 000
Hayne, Capital
2 950 000
Cash 2 950 000
Hayne, Capital
2 950 000
P200,000
200,000
400,000
720,000
(450,000)
Problem #2
Book of Villa
Land 300 000
Villa, Capital
300 000
80 000
Chapter 2
Problem #1
Anate, Ashe, and Noira agreed to share profits and losses according to the ratio of their respective
investments at the beginning of the year of P400,000, P550,000, and P250,000. Calculate the share of each
partner under the following conditions: (a) P300,000 profit; (b) P440,000 loss.
Problem #2
Riley and Chichay divide partnership profits and losses solely on the basis of their average capital balances.
Riley had P650,000 invested during all of 2016; Chichay had P400,000 invested from January 1 to September
30, and he invested another P300,000 on October 1. If profit was P3,000,000 during 2016, how much should
each partner receive?
Answer key:
Problem #1
Profit Anate 300 000 x 400 000/1200000 = 100 000
Ashe 300 000 x 550 000/1200000 = 137 500
Noira
300 000 x 250 000/1200000 = 62 500
300 000
Loss
Anate, Capital
Anate
146 666.67
Ashe
Noira
Problem #2
Riley, Capital
Riley
Chichay, Capital
Chichay
Income summary
3 000 000
Riley, Drawing
1 902 439
Chichay, Drawing
1 097 561
Chapter 3
Problem #1
Cordero purchases a 1/5 interest from Coloma by paying P200,000.
Problem #2
Cordero purchases 1/5 interest from the old partners by paying P30,000.
Answer key:
Problem #1
Coloma, Capital
200 000
Cordero, Capital
200 000
Problem #2
Coloma, Capital
Claudio, Capital
Cordero, Capital
Problem #4.a
20 000
10 000
30 000
Total Assets
8,000
136,000
144,000
44,800
2,000
3,200
38,000
24,000
32,000
144,000
The other assets were sold for P140,000. Profits and Losses are shared based on 4:4:2.
Problem #4.b
Elena, Reese, and Ventis
Statement of Financial Position
December 31, 2016
Assets
Cash
Non cash Assets
50 000
2 050 000
Total Assets
2 100 000
The Non cash assets were sold for P2,650,000. Profits and Losses are shared equally.
Answer key:
Problem #1
Encina, Endrada, and Elina
Statement of Liquidation
December 1-31. 2016
Balance
Before
Liquidation
Sale of
Cash
Other
Assets
8,000 136,000
140,000 (136,000)
Liabilities
44,800
Loan
Endrada
2,000
Loan
Elina
3,200
Capital
Encina-40% Endrada-40% Elina-20%
38,000
24,000
32,000
1,600
1,600
800
Assets and
Distribution
of gain
Balances
148,000
44,800
Payment of
Liabilities
(44,800)
(44.800)
Balances
Payment to
Partners
2,000
3,200
39,600
25,600
32,800
103,200
2,000
3,200
39,600
25,600
32,800
(103,200)
(2.000)
(3,200)
(39,600)
(25,600)
(32.800)
Problem #2
Elena, Reese, and Ventis
Statement of Liquidation
December 1-31, 2016
Cash
Balance
Before
Liquidation
50 000
Sale of
Assets and
Distribution
of gain
2 650 000
Non cash
Assets
2 050 000
Liablilities
400 000
(2 050 000)
Balances
2 700 000
400 000
Payment of
Liabilities
(400 000)
(400 000)
Balances
Payment to
Partners
Elena
800 000
Capital
Reese
500 000
Ventis
400 000
200 000
200 000
200 000
1 000 000
700 000
600 000
2 300 000
1 000 000
700 000
600 000
(2 300 000)
(1 000 000)
(700 000)
(600 000)