PARTNERSHIPS

DE LEON/ DE LEON/ DE LEON

 PARTNERSHIP FORMATION
1 & 2 Net Investment Method

A B C TOTAL

Assets P735,000 P 664,755 P655,400 P 2,055,155

Liabilities (95,730) (61,000) (122,675) (279,405)

Net assets 639,270 P603,755 P532,725 P1,775,750

36% 34% 30%
 3. Journal Entry
Cash P 500,000
Accounts Receivable 104,405
Inventory 310,750
PPE 1,140,000
PPE Mortgages P 279,405
A, Capital 639,270
B, Capital 603,755
C, Capital 532,725
4. Bonus Method
A (P1,775,750 * 40%) 710,300
B (P 1,775,750 * 30%) 532,725
C (P 1,775,750 * 30%) 532,725
TOTAL P1,775,750
5. Journal Entry
Cash P 500,000
Accounts Receivable 104,405
Inventory 310,750
PPE 1,140,000
PPE Mortgages P 279,405
A, Capital 710,300
B, Capital 532,725
C Capital 532,725
 MULTIPLE CHOICE:
1. C
Justine’s total contribution P 525,000
Divide by her interest ratio 30%
Total implied capital P1,750,000
Mult. by Baser’s interest ratio 70%
Baser’s required contribution and
capital credit P1,225,000
Baser’s initial Contribution
(920,000+295,000-87,000) 1,128,000
Additional Contribution by Baser P 97,000
2. C
Celso’s contribution at book value P1,100,160
Net decrease to FV (P11,520 – 7,680- 19,200 – 13,440 ) ( 28,800)
Celso’s contribution at fair value P1,071,360
Multiply by 5/4
Fair value of Norma’s contribution P1,339,200
Less Norma’s cash contribution 748,800
Fair value of equipment invested by Norma P 590,400
Plus fair value of F&F (P514,560 + P11,520) 526,080
Total fixed assets P1,116,480
3. A
I/R PARTNERS TAC CNA DIFF
57% Norma 1,374,019 1,339,200 34,819
43% Celso 1,036,541 1,071,360 (34,819)
100% Total 2,410,560 2,410,560 0
PARTNERSHIP- OPERATIONS
* Average capitals and interests.

G: P 350,000 * 12/12 P350,000 N: P220,000*12 /12 P220,000

32,000 * 9/12 24,000 (50,000) * 6/12 (25,000)

( 4,000) * 3/12 ( 1,000) 93,000 * 4/12 31,000

8,000 * 0/12 -

Average capital P373,000 Ave. Cap. P226,000

5% 5%
Interest P 18,650 Interest P 11,300
PARTNERSHIP OPERATIONS
Net Income,
, P 406,200
GEORGE NORRIE TOTAL
Interest* P 18,650 P11,300 P29,950
Salaries 30,000 30,000 60,000
Bonus* 28,750 28,750
Unallocated NI 172,500 115,000 287,500
Total P249,900 P156,300 P406,200

Bonus to GEORGE = 10% * (P406,200- 29,950- 60,000- Bonus)

= P 28,750
 GEORGE NORRIE TOTAL
Initial capital P 350,000 P220,000 P 570,000
Addl investment 32,000 101,000 133,000
Capital withdrawal ( 4,000) ( 50,000) ( 54,000)
Drawings ( 7,500) ( 7,500) ( 15,000)
Share in net income 249,900 156,300 406,200

Capitals,
P 620,400 P419,800 P1,040,200
12/31/19
MULTIPLE CHOICE- OPERATIONS
1. A LYNNE MAR TOTAL
2018 income to allocate
(P25,000 – P4,000) P 21,000
Salary 18,000 P18,000
Remainder to divide 1,500 1,500 3,000
P21,000
2017 income understatement P 4,000

Divided in the 2017 60:40 ratio 2,400 1,600 P 4,000

P21,900 P3,100
2. B
Increase in Capital 15,000
Less: Additional Investment (25,000)
Add: Withdrawal 130,000
Share in the Net Income P120,000

Divide by the P/L ratio of 30% P 400,000

3. D
Net Income,
, P44,000
E F G TOTAL

Interest P 4,000 P 3,000 P 2,500 P 9,500

Salaries 10,000 8,000 6,000 24,000
Unallocated NI 3,500 3,500 3,500 10,500
Unadj Share in NI P 17,500 P14,500 P12,000 P44,000

Guarantee to G P (3,000) P(3,000) P 6,000 --

Adj Share in NI P 14,500 P11,500 P 18,000 P44,000

 4. A
Net Loss,, P (33,000)
X Y Z TOTAL

Interest P12,000 P 6,000 P 4,000 P 22,000

Salaries 30,000 20,000 50,000
Unallocated NL (35,000) (35,000) (35,000) (105,000)
Total P 7,000 P( 9,000) P(31,000) P(33,000)
 5. B
,
JOYCE MARIE TOTAL
2017 NI, P9,000
Allocated using 4:6 ratio P 3,600 P 5,400 P 9,000
2017 corrected NI, 13,400
(9,000+ 3,600 + 800)
Salary 4,000 6,000 10,000
Unallocated Balance 3:1 2,550 850 3,400
TOTAL 6,550 6,850 P 13,400
Amount for Further
2,950 1,450
Distribution
 DISSOLUTION:
Admission of a New Partner
Purchase Method
1. A & B
ELMO LITO ROMY TOTAL
Beginning Balances 475,000 131,000 606,000
Revaluation Increase
(100,000 + 75,000) 105,000 70,000 175,000
Adjusted Balances 580,000 201,000 781,000
Purchase of Interest (58,000) (20,100) 78,100 -
Ending Balances 522,000 180,900 78,100 781,000
Partnership Dissolution- Admission
Journal Entry
Inventory P 75,000
Land 100,000
ELMO, Capital P105,000
LITO, Capital 70,000

ELMO, Capital (P580,000 x 10%) P 58,000

LITO, Capital (P201,000 x 10%) 20,100
ROMY, Capital 78,100
Partnership Dissolution- Admission
Cash Received by Old Partners

ELMO: (P580,000 * 10%) P 58,000 (4,860) P 53,140

LITO: (P201,000 * 10%) 20,100 (3,240) 16,860

P 78,100 P (8,100) P 70,000
Investment Method
I/R PARTNERS TAC CNA DIFF
ELMO 570,940 580,000 (9,060)
LITO 194,960 201,000 (6,040)
10% ROMY 85,100 70,000 15,100
Total 851,000 851,000 0
Cash 70,000
ELMO, Capital 9,060
LITO, Capital 6,040
ROMY, Capital 85,100
MULTIPLE CHOICE
1. C
SARAH OPEL TINA TOTAL
Beginning Balances 140,000 60,000 200,000
Net Income, 27,500 20,625 6,875 27,500
Adjusted Balances 160,625 66,875 227,500
P. of Interest, 40% (64,250) (26,750) 91,000 -
Ending Balances 96,375 40,125 91,000 227,500
MULTIPLE CHOICE
2. A
SARAH: (P160,625 * 40%) P 64,250 6,750 P 71,000

OPEL: (P66,875 * 40%) 26,750 2,250 29,000

P 91,000 P 9,000 P 100,000

MULTIPLE CHOICE
3. D
I/R PARTNERS TAC CNA DIFF
SARAH 137,375 160,625 (23,250)
OPEL 59,125 66,875 (7,750)
40% TINA 131,000 100,000 31,000
Total 327,500 327,500 0
MULTIPLE CHOICE
4. C
I/R PARTNERS TAC CNA DIFF
ABNER 335,000 312,500 22,500
BLANCHE 265,000 250,000 15,000
20% CANDY 150,000 187,500 (37,500)
Total 750,000 750,000 0
 MULTIPLE CHOICE
5. D
ABNER: (P335,000 * 15%) 50,250 6,000 56,250
BLANCHE: (P265,000 * 15%) 39,750 4,000 43,750
CANDY: (P150,000 * 15%) 22,500 2,500 25,000
112,500 12,500 125,000
 MULTIPLE CHOICE
6. B
Blanche balance before
admission P265,000
Transferred Interest (39,750)

P225,250
 Partnership Dissolution - Retirement
TONY LIZA CORY Total
Capitals P208,750 P134,375 P281,250 P624,375
Adjustments
(150,000 +
P150,000) 120,000 60,000 120,000 300,000

Adj Capital 328,750 194,375 401,250 924,375

Total cash paid
to TONY (315,625) - - (315,625)

Bonus (13,125) 4,375 8,750 -

Ending Capital - P198,750 P410,000 P608,750
 RETIREMENT OF PARTNER
Income summary P150,000
Other assets 150,000
Tony, Capital 120,000
60,000
Liza, Capital 120,000
Cory, Capital

Tony, Loan 25,625

Tony, Capital 328,750
Liza, Capital 4,375
Cory, Capital 8,750
Cash 341,250
 Multiple Choice
1. A BETH DAISY MAYA Total

BBL P375,000 P375,000 P125,000 P875,000

Adjustments 125,000 100,000 25,000 250,000

Adj. interests 500,000 475,000 150,000 1,125,000

Total cash paid

(505,000) (505,000)
to DAISY

Bonus ( 25,000) 30,000 (5,000) -

Ending Capital 475,000 - P145,000 P620,000
2. B
A B C TOTAL
Beginning balances P125,000 P250,000 P375,000 P750,000
Net loss from operations ( 7,500) (7,500) (10,000) (25,000)
Ending balances P 117,500 P242,500 P365,000 P725,000
Payment to C (312,500) (312,500)
Bonus to remaining
partners 26,250 26,250 ( 52,500) -
Balances, 12/31/17 P143,750 P268,750 -- P412,500
Net income for 1st qtr 4,375 4,375 8,750
Adjusted balances P148,125 P273,125 D P421,250
Admission of D ( 24,250) ( 24,250) 248,500 200,000
Balances after
admission P123,875 P248,875 248,500 P621,250
Net income – balance 6,125 6,125 5,250 17,500
Balances, 12/31/18 P130,000 P255,000 P253,750 P638,750
35% 35% 30%
3. D
 Multiple Choice
4. B D E F Total

BB P 87,500 P 81,250 P187,500 P356,250

Adjustments 15,000 15,000 45,000 75,000

Adj Capital 102,500 96,250 232,500 431,250

Cash paid for

(127,500)
D’s capital (127,500)

Bonus 25,000 ( 6,250) (18,750) -

Ending Capital - 90,000 P213,750 P303,750
 INCORPORATION
1. A

Book value of net assets (P106,250 + P93,750) P200,000

Net adjustment P(6,250 + 2,500 - 20,000 + 5,000) P 6,250 cr
FV of net assets contributed to the corporation P206,250

Less total PV of shares (P206,250 x 70%) P144,375

Total credit to APIC for the excess contribution P 61,875

2. D

Tess’ FV contribution (P93,750 + P3,125 P96,875

Multiply by 70%
Total par value of shares issued to Tess P67,812.50

Number of shares received by Tess

(P67,812.50 / P312.50 PV per share) 217 shares
3. B

FV of net assets (P150,000 + P22,500) P172,500

PV of shares issued (10,000 shares * P12.50) 125,000

Amount credited to APIC P47,500
PARTNERSHIP LIQUIDATION.
1. LUMP-SUM
Cash OA A/P Ellery, Loan DONNA JANICE ELLERY
BBL 68,750 451,250 130,370 5,000 76,250 200,880 107,500
Soncadol 212,500 (451,250) - (47,750) (71,625) (119,375)
Balance 281,250 130,370 5,000 28,500 129,255 (11,875)
sA/P (130,370) (130,370) - - - -
paid
Balances 150,880 5,000 28,500 129,255 (11,875)
ROO ( 5,000) - - 5,000
Balance 150,880 - 28,500 129,255 (6,875)
sAI 5,125 - - 5,125
Balances 156,005 28,500 129,255 (1,750)
Absorption (700) (1,050) 1,750
Balance 156,005 27,800 128,205
sCash Paid (156,005) (27,800) (128,205)
- -
LIQUIDATION- JOURNAL ENTRY (Lump Sum)
Cash 212,500
Donna, capital 47,750
Janice capital 71,625
Ellery, capital 119,375
Other Assets 451,250
Accounts Payable 130,370
Cash 130,370
Ellery, Loan 5,000
Ellery, Capital 5,000

Cash 5,125
Ellery, capital 5,125
 LIQUIDATION- JOURNAL ENTRY (Lump Sum)
.

Donna, Capital 700

Janice, Capital 1,050
Ellery, capital 1,750

Donna, Capital 27,800

Janice, Capital 128,205
Cash 156,005
 1. A MULTIPLE CHOICE
EDONG SALLY ZARAH TOTAL
BBL P600,000 P784,000 P240,000 1,624,000
Net Income 262,400 262,400 131,200 656,000
Adj Balance 862,400 1,046,400 371,200 2,280,000
Cum Loss (155,840) (155,840) (77,920) (389,600)
Cash Pymt 706,560 890,560 293,280 1,890,400
Cash + NCA = Liab + Equity
520,000 + NCA = 1,160,000 + 2,280,000
NCA= 2,920,000
BV of NCA 2,920,000
Less: LOR 389,600
Proceeds 2,530,400
 MULTIPLE CHOICE
2. C
MIKEE ROSA TOTAL
BBL P 32,000 P 16,000 P 48,000
Cum Loss (11,040) (7,360) ( 18,400)
Cash Pymt 20,960 8,640 29,600

Cumulative Loss:
Inventory (32,000- 20,000) 12,000
A/R (20,000- 16,800) 3,200
Expenses 3,200
18,400
 3. C
R 30% S 50% T 20% TOTAL
Tot. Interest 321,600 200,000 180,800 702,400
Cum. Loss (81,600) (136,000) (54,400) (272,000)
Cum. Pymnt 240,000 64,000 126,400 430,400
C 4.

APPLE (40) BRYAN (20) CECILE (40)

Balances P22,000 P 14,000 P(12,000)
APL ( 8,000) ( 4,000) 12,000
Free Interests P14,000 P 10,000 P --
PARTNERSHIP LIQUIDATION.
1. INSTALLMENT
Cash OA A/P D, Loan C, Cap D, Cap O, Cap

BBL 15,360 271,360 51,200 20,480 49,152 73,728 92,160

Soncadol 81,920 (133,120) (15,360) (15,360) (20,480)
Balance 97,280 138,240 51,200 20,480 33,792 58,368 71,680
sExpens (4,100) (1,230) (1,230) (1,640)
es paid
Balances 93,180 138,240 51,200 20,480 32,562 57,138 70,040
Liab Paid (40,000) (40,000)
Balance 53,180 138,240 11,200 20,480 32,562 57,138 70,040
sCash Paid(41,980)
 PARTNERSHIP LIQUIDATION
INSTALLMENT METHOD

Computations for Safe Payments, end of Period 1.

Celia Dave Oleg Total

Total interest 32,562 77,618 70,040 180,220
Loss (41,472) (41,472) ( 55,296 (138,240)
Balances ( 8,910) 36,146 14,744 41,980
APL 8,910 ( 3,819) ( 5,091) -
Free interest - 32,327 9,653 41,980
PARTNERSHIP LIQUIDATION.
1. INSTALLMENT
Cash OA A/P D, Loan C, Cap D, Cap O, Cap

BBL 15,360 271,360 51,200 20,480 49,152 73,728 92,160

Soncadol 81,920 (133,120) (15,360) (15,360) (20,480)
Balance 97,280 138,240 51,200 20,480 33,792 58,368 71,680
sExpens (4,100) (1,230) (1,230) (1,640)
es paid
Balances 93,180 138,240 51,200 20,480 32,562 57,138 70,040
Liab Paid (40,000) (40,000)
Balance 53,180 138,240 11,200 20,480 32,562 57,138 70,040
sCash Paid (41,980) (20,480) - (11,847) (9,653)
Balance 11,200 138,240 11,200 - 32,562 45,291 60,387
s
PARTNERSHIP LIQUIDATION.
1. INSTALLMENT
Cash OA A/P C, Cap D, Cap O, Cap

BBL 11,200 138,240 11,200 32,562 45,291 60,387

Soncadol 51,200 (76,800) (7,680) (7,680) (10,240)
Balance 62,400 61,440 11,200 24,882 37,661 50,147
sExpens (4,800) (1,440) (1,440) (1,920)
es paid
Balances 57,600 61,440 11,200 23,442 36,171 48,227
Liab Paid (11,200) (11,200)
Balance 46,400 61,440 - 23,442 36,171 48,227
sCash Paid (40,000)
 PARTNERSHIP LIQUIDATION
INSTALLMENT METHOD

Computations for Safe Payments, end of Period 2.

C D O TOTAL
Total interest 23,442 36,171 48,227 107,840
TPL (61,440 + 6,400) (20,352) (20,352) (27,136) 67,840
Free interest 3,090 15,819 21,091 P40,000
PARTNERSHIP LIQUIDATION.
1. INSTALLMENT
Cash OA A/P C, Cap D, Cap O, Cap

BBL 11,200 138,240 11,200 32,562 45,291 60,387

Soncadol 51,200 (76,800) (7,680) (7,680) (10,240)
Balance 62,400 61,440 11,200 24,882 37,661 50,147
sExpens (4,800) (1,440) (1,440) (1,920)
es paid
Balances 57,600 61,440 11,200 23,442 36,171 48,227
Liab Paid (11,200) (11,200)
Balance 46,400 61,440 - 23,442 36,171 48,227
sCash Paid (40,000) (3,090) (15,819) (21,091)
Balances 6,400 61,440 - 20,352 20,352 27,136
 PARTNERSHIP LIQUIDATION
INSTALLMENT METHOD

Period 3 Cash NCA C. Cap. D. Cap. O. Cap.

Balance 6,400 61,440 20,352 20,352 27,136
Soncadol 35,840 (61,440) ( 7,680) ( 7,680) (10,240)
Balance 42,240 - 12,672 12,672 16,896
Expenses paid (3,600) (1,080) (1,080) (1,440)
Balance 38,640 11,592 11,592 15,456
Paid to partners (38,640) (11,592) (11,592) (15,456)
- - - -
VII. 2 CASH DISTRIBUTION PROGRAM

INTERESTS PAYMENTS
C D O C D O
BBL 49,152 94,208 92,160
Divide by 30% 30% 40%
LAA 163,840 314,026 230,400
Priority #1 ( 83,626) ________ 25,088
Balances 163,840 230,400 230,400
Priority #2 (66,560 (66,560) 19,968 26,624
Balances 163,840 163,840 163,840 - 45,056 26,624
Priority #3: All partners will receive cash in the original profit and loss ratio.
 PARTNERSHIP LIQUIDATION
3. PERIODIC CASH DISTRIBUTION

1. P 41,980 at end of 1P:

C D O TOTAL
Priority #1 P25,088
Payable now ( 25,088) 25,088 25,088
Priority #1 balance P -

Priority #2 P46,592
Payable now 16,892 -- 7,239 9,653 16,892
Priority #2 balance P29,700 -- 32,327 9,653 41,980
 PARTNERSHIP LIQUIDATION
2. P40,000 at end of 2P:
C D O TOTAL _
Priority #2 balance P29,700
Payable now (29,700) 12,729 16,971 29,700
Priority #2 balance P --

Priority #3 P10,300 3,090 3,090 4,120 10,300

Totals 3,090 15,819 21,091 40,000

3. P38,640 at end of 3P:

Priority #3 P38,640 11,592 11,592 15,456 38,640

 MULTIPLE CHOICE
1. D CHESTER JOANA JOHN TOTAL

BBL P44,000 P 31,000 P 28,000 103,000

Loss (31,500) (15,750) ( 15.750) (63,000)

Cash Payment P 12,500 P 15,250 P 12,250 40,000

Cash Available for Payment = Beg Cash+ Proceeds- Liab – Exp – Cash w/held
Cash w/held= Beg Cash+ Proceeds- Liab – Exp – Cash Available for Payment
= 24,000 + 64,000 - 40,000 – 2,000- 40,000
= 6,000
2. D A B C

BBL P74,000 P130,000 P96,000

Max loss (112,000) (112,000) (56,000) (P 280,000)
Balances P(38,000) P18,000 P40,000
Absorption 38,000 (25,333) (12,667)
Balances P - (7,333) P27,333
Absorption P - 7,333 (7,333)
Cash Pymt P - P - P20,000

Max Loss = Loss on Real + Exp +Theoretical Loss + Cash w/held

= 100,000 + 0 +180,000 +0
= 280,000
 MULTIPLE CHOICE
3. C
A B C

BBL P74,000 P130,000 P96,000

Cum loss (71,000) (71,000) (35,500) (P 177,500)
Balances P 3,000 P59,000 P60,500
 Cash = Beg Cash+ Proceeds- Liab – Exp – Cash w/held
4. A = 132,000 -100,000= 32,000
P B A TOTAL
Total interest P306,000 P 618,000 P 274,000 1,198,000
Theor. Loss ( 349,800) ( 583,000) ( 233,200) (1,166,000)
Balances P( 43,800) P 35,000 P 40,800 32,000
APL (P43,800) 43,800 ( 31,286) ( 12,514) -
Free interests P - P 3,714 P 28,286 32,000

Max Loss = Loss on Real + Anticipated Exp +Theoretical Loss +

Cash w/held = P1,166,000
 MULTIPLE CHOICE
5. B E F G

BBL P100,000 P250,000 P170,000

Cum loss (136,000) (136,000) (68,000) (P 340,000)
Balances P (36,000) P114,000 P102,000
Absorption 36,000 (24,000) (12,000)
Cash Pymt P - P 90,000 P90,000
Max Loss = Loss on Real +Theoretical Loss + Cash w/held
= 130,000 + 200,000 +10,000
= 340,000
6. C
Loss absorption capabilities
Partner Claudia (P48,000 / 40%) P 120,000
Partner Petra ( 21,600 / 30%) 72,000
Parttner Mona ( 34,400/ 20%) 172,000
Partner Hilda ( 17,000 / 10%) 170,000

First Allocation is to Mona (P172,000 –

P170,000) = P2,000 x 20% P 400

Only C is correct, the others are all incorrect as would be reflected

in a full cash distribution schedule prepared just before the start
of liquidation.