Multiple Choice Answers and Solutions: Partnership - Basic Considerations and Formation 1

Partnership Basic Considerations and Formation
CHAPTER 1
MULTIPLE CHOICE ANSWERS AND SOLUTIONS
1-1: a
1-2: b
1-2: c
Jose's capital should be credited for the market value of the computer contributed by
him.
(40,000 + 80,000) 2/3 = 180,000 x 1/3 = 60,000.
1-3: a
Cash
Land
Mortgage payable
P100,000
300,000
( 50,000)
Net assets (Julio, capital)
P350,000
Total Capital (P300,000/60%)

Perla's interest
P500,000
______40%
Perla's capital
Less:Non-cash asset contributed at market value
Land
P 70,000
Building
90,000
Mortgage Payable
( 40,000)
P200,000
Cash contribution
P 80,000
1-4: b
1-5: d
_120,000
- Zero, because under the bonus method, a transfer of capital is only required.
1-6: b
Reyes
Santos
P200,000
Cash
Inventory
Building
Equipment
Mortgage payable
________
P300,000
150,000
400,000
150,000
( 100,000)
Net asset (capital)
P350,000
P750,000
AA
BB
CC
P55,000
P55,000
1-7: c
Cash
Property at Market Value
Mortgage payable
Equipment at Market Value
P 50,000
_______
P 80,000
( 35,000)
_______
Capital
P 50,000
P 45,000
2
Chapter 1
1-8: a
PP
RR
SS
Cash
Computer at Market Value
P 50,000
__25,000
P 80,000
_______
P 25,000
__60,000
Capital
P 75,000
P 80,000
P 85,000
Maria
Nora
1-9: c
Cash
Merchandise inventory
Computer equipment
Liability
Furniture and Fixtures
P 30,000
200,000
P 90,000
160,000
( 60,000)
________
Total contribution
P230,000
P190,000
Total agreed capital (P230,000/40%)

Nora's interest
P575,000
______60%
Nora's agreed capital

Less: investment
P345,000
190,000
Cash to be invested
P155,000
1-10: d
Roy
Sam
Tim
Cash
Office Equipment
Note payable
P140,000
________
P220,000
_( 60,000)
______
Net asset invested
P140,000
P160,000
Agreed capitals, equally (P300,000/3) =
P100,000
1-11: a
Lara
Mitra
Cash
Computer equipment
Note payable
P130,000
________
P200,000
50,000
_( 10,000)
Net asset invested
P130,000
P240,000
Goodwill (P240,000 - P130,000) =
P110,000
1-12: a
Perez
Cash
Office Equipment
Merchandise
Furniture
Notes payable
P 50,000
30,000
_______
Reyes
P 70,000
110,000
100,000
( 50,000)
Net asset invested

P 80,000
P230,000
3
Bonus Method:
Total capital (net asset invested)
P310,000
Goodwill Method:
Net assets invested
Add: Goodwill (P230,000-P80,000)
P310,000
_150,000
Net capital
P460,000
1-13: b
Required capital of each partner (P300,000/2)
Contributed capital of Ruiz:
Total assets
P105,000
Less Liabilities
__15,000
P150,000
Cash to be contributed by Ruiz
P 60,000
__90,000
1-14: d
Total assets:
Cash
Machinery
Building
Less: Liabilities (Mortgage payable)
P 70,000
75,000
_225,000
P370,000
__90,000
Net assets (equal to Ferrer's capital account)

Divide by Ferrer's P & L share percentage
P280,000
____70%
Total partnership capital
P400,000
Required capital of Cruz (P400,000 X 30%)

Less Assets already contributed:
Cash
P 30,000
Machinery and equipment
25,000
Furniture and fixtures
__10,000
P120,000
Cash to be invested by Cruz
P 55,000
__65,000
1-15: d
Adjusted assets of C Borja
Cash
P 2,500
Accounts Receivable (P10,000-P500)
9,500
Merchandise inventory (P15,000-P3,000) 12,000
Fixtures
__20,000
Asset contributed by D. Arce:
Cash
P 20,000
Merchandise
__10,000
__30,000
Total assets of the partnership
P 74,000
P 44,000
4
Chapter 1
1-16: a
Cash to be invested by Mendez:
Adjusted capital of Lopez (2/3)
Unadjusted capital
Adjustments:
Prepaid expenses
Accrued expenses
Allowance for bad debts (5% X P100,000)
P158,400
17,500
( 5,000)
_( 5,000)
Adjusted capital
P165,900
Total partnership capital (P165,900/2/3)

Multiply by Mendez's interest
P248,850
Mendez's capital
Less Merchandise contributed
P 82,950
__50,000
Cash to be invested by Mendez
P 32,950
Total Capital:
Adjusted capital of Lopez
Contributed capital of Mendez
P165,900
__82,950
Total capital
P248,850
1-17: d
Moran, capital (40%)
Cash
Furniture and Fixtures
Divide by Moran's P & L share percentage
P 15,000
_100,000

Multiply by Nakar's P & L share percentage
Required capital of credit of Nakar:
Contributed capital of Nakar:
Land
Building
Total assets
Less Liabilities
Required cash investment by Nakar
P115,000
______40%
P287,500
______60%
P172,500
P 45,000
15,000
__65,000
P125,000
__30,000
P 95,000
P 77,500
1-18: c
Garcia's adjusted capital (see schedule 1)
Divide by Garcia's P & L share percentage
P40,500
______40%

Flores' P & L share percentage
P101,250
______60%
Flores' capital credit
P 60,750
Flores' contributed capital (see schedule 2)
__43,500
Additional cash to be invested by Flores
P 17,250
Schedule 1:
Garcia, capital:
Unadjusted balance
Adjustments:
Accumulated depreciation
Allowance for doubtful account
P 49,500
( 4,500)
( 4,500)
Adjusted balance
P 40,500
Schedule 2:
Flores capital:
Unadjusted balance
Adjustments:
Accumulated depreciation
Allowance for doubtful accounts
P 57,000
( 1,500)
( 12,000)
Adjusted balance
P 43,500
1-19: d
Ortiz
Ponce
Total
( 60%)
( 40%)
P133,000
P108,000
P241,000
Unadjusted capital balances

Adjustments:
Allowance for bad debts
Inventories
Accrued expenses
( 2,700)
3,000
_( 2,400)
Adjusted capital balances
P130,900
( 1,800)
2,000
( 1,600)
P106,000
( 4,500)
5,000
( 4,000)
P237,500
Total capital before the formation of the new partnership (see above) P237,500
Divide by the total percentage share of Ortiz and Ponce (50% + 30%) ______80%
Total capital of the partnership before the admission of Roxas
Multiply by Roxas' interest
P296,875
______20%
Cash to be invested by Roxas
P 59,375
1-20: d
Merchandise to be invested by Gomez:
Total partnership capital (P180,000/60%)
P300,000
Gomez's capital (P300,000 X 40%)

Less Cash investment
P120,000
__30,000
Merchandise to be invested by Gomez
P 90,000
Cash to be invested by Jocson:

Adjusted capital of Jocson:
Total assets (at agreed valuations)
Less Accounts payable
P180,000
__48,000
P132,000
Required capital of Jocson
_180,000
Cash to be invested by Jocson
P 48,000
6
Chapter 1
1-21: b
Unadjusted Ell, capital (P75,000 P5,000)
Allowance for doubtful accounts
Accounts payable
P 70,000
( 1,000)
( 4,000)
Adjusted Ell, capital
P 65,000
Total partnership capital (P113,640/1/3)

Less David's capital
P340,920
_113,640
Cortez's capital after adjustments

Adjustments made:
Allowance for doubtful account (2% X P96,000)
Prepaid expenses
Accrued expenses
P227,280
Cortez's capital before adjustments
P211,200
1-22: c
1,920
( 16,000)
( 5,200)
___3,200
1-23: a
Total assets at fair value
Liabilities
Capital balance of Flor
P4,625,000
(1,125,000)
P3,500,000
Total capital of the partnership (P3,500,000 70%)

Eden agreed profit & loss ratio
Eden agreed capital
Eden contributed capital at fair value
Allocated cash to be invested by Eden
P5,000,000
30%
1,500,000
812,000
P 688,000
1-24: c
1-25: c
__Rey
__Sam_ __Tim
__Total_
Contributed capital (assets-liabilities)P471,000 P291,000 P195,000 P957,000
Agreed capital (profit and loss ratio) 382,800 382,800 191,400 957,000
Capital transfer (Bonus)
P 88,200 P(91,800) P 3,600
1-26: d
Total agreed capital (P90,000 40%)
Contributed capital of Candy (P126,000+P36,000-P12,000)
Total agreed capital (P90,000 40%)
Candy, agreed capital interest
Agreed capital of Candy
Contributed capital of Candy
Withdrawal
P225,000
150,000
225,000
60%
135,000
150,000
P 15,000
1-27: a
Total agreed capital (210,000 70%)
Noras interest
Agreed capital of Nora
Cash invested
Cash to be invested by Nora
P300,000
30%
P 90,000
42,000
P 48,000
Contributed capital of May (P194,000 - P56,000)

Agreed capital of May (P300,000 x 70%)
Cash to be invested by May
P138,000
210,000
P 72,000
1-28: a
1-29: c
Contributed capital
Agreed capital
Capital invested
__Alex_
P100,000
92,000
P( 8,000)
_Carlos_
P84,000
92,000
P 8,000
__Total__
P184,000
184,000
-
8
Chapter 1
SOLUTIONS TO PROBLEMS
Problem 1 1
1.
a. Books of Pedro Castro will be retained by the partnership

To adjust the assets and liabilities of Pedro Castro.
1. Pedro Castro, Capital............................................................
Merchandise Inventory.....................................................
600

Allowance for Bad Debts.................................................
200
3. Accrued Interest Receivable.................................................

Pedro Castro, Capital........................................................
35
Computation:
P1,000 x 6% x 3/12 =
P2,000 x 6% x 2/12 =
600
200
35
P15
_20
Total................................P35
Accrued Interest Payable..................................................
(P4,000 x 5% x 6/12 = P100)
100

Accumulated Depreciation Furniture and Fixtures........
800
6. Office Supplies.....................................................................
Pedro Castro, Capital........................................................
400
100
800
400
To record the investment of Jose Bunag.

Cash. ........................................................................................... 15,067.50
Jose Bunag, Capital..............................................................
Computation:
Pedro Castro, Capital
(1)
P600 P31,400
(2)
200
35 (3)
(4)
100
400 (6)
(5) ___800
P1,700 P31,835
15,067.50
P30,135
Jose Bunag, Capital : 1/2 x P30,135 = P15,067.50
b.
A new set of books will be used

Books of Pedro Castro
To adjust the assets and liabilities.
See Requirement (a).
To close the books.
Notes Payable..............................................................................
Accounts Payable........................................................................
Accrued Interest Payable.............................................................
Allowance for Bad Debts............................................................
Accumulated Depreciation Furniture and Fixtures...................
Pedro Castro, Capital...................................................................
Cash......................................................................................
Notes Receivable..................................................................
Accounts Receivable.............................................................
Accrued Interest Receivable.................................................
Merchandise Inventory.........................................................
Office Supplies.....................................................................
Furniture and Fixtures...........................................................
4,000
10,000
100
1,200
1,400
30,135
6,000
3,000
24,000
35
7,400
400
6,000
New Partnership Books

To record the investment of Pedro Castro.
Cash ..........................................................................................
Notes Receivable.........................................................................
Accounts Receivable...................................................................
Accrued Interest Receivable........................................................
Merchandise Inventory................................................................
Office Supplies............................................................................
Furniture and Fixtures.................................................................
Notes Payable.......................................................................
Accounts Payable..................................................................
Accrued Interest Payable......................................................
Allowance for Bad Debts......................................................
Accumulated Depreciation Furniture and Fixtures.............
Pedro Castro, Capital............................................................
To record the investment of Jose Bunag.
6,000
3,000
24,000
35
7,400
400
6,000
4,000
10,000
100
1,200
1,400
30,135
Cash. ........................................................................................... 15,067.50

Jose Bunag, Capital..............................................................
15,067.50
10
Chapter 1
2.
Castro and Bunag Partnership

Balance Sheet
October 1, 2008
Assets
Cash ..........................................................................................................
P21,067.50
Notes receivable.........................................................................................
3,000.00
Accounts receivable................................................................................... P 24,000
Less Allowance for bad debts..................................................................... ___1,200 22,800.00
Accrued interest receivable........................................................................
35.00
Merchandise inventory...............................................................................
7,400.00
Office supplies ..........................................................................................
400.00
Furniture and fixtures.................................................................................
6,000
Less Accumulated depreciation.................................................................. ___1,400 __4,600.00
Total Assets.......................................................................................
P59,302.50
Liabilities and Capital
Notes payable ..........................................................................................
Accounts payable.......................................................................................
Accrued interest payable............................................................................
Pedro Castro, Capital..................................................................................
Jose Bunag, Capital....................................................................................
Total Liabilities and Capital..............................................................
P 4,000.00
10,000.00
100.00
30,135.00
_15,067.50
P59,302.50
Problem 1 2
Contributed Capitals:
Jose:
Capital before adjustment..................................................... P 85,000

Notes Payable.......................................................................
62,000
Undervaluation of inventory.................................................
13,000
Underdepreciation................................................................. ( 25,000)
Pedro: Cash......................................................................................
Pablo: Cash......................................................................................
11,000
Marketable securities............................................................ _57,500
Total contributed capital.............................................................................
Agreed Capitals:
Bonus Method:
Jose (P231,500 x 50%)................................................................ P115,750
P 135,000
28,000
___68,500
P 231,500
Pedro (P231,500 x 25%).............................................................

57,875
Pablo (P231,500 x 25%).............................................................. __57,875
Total. ........................................................................................... P231,500
11
Goodwill Method. To have a goodwill, the only possible base is the capital of Pablo. The
computation is:
Contributed
Capital
Jose
Pedro
Pablo
Total
Agreed
Capital
P135,000
28,000
__68,500
P231,500
Goodwill
P137,000 (50%)
68,500 (25%)
__68,500 (25%)
274,000
2,000
40,500
_____
42,500
Total agreed capital (P68,500 25%) = 274,000

Jose, Pedro and Pablo Partnership
Balance Sheet
June 30, 2008
Assets:
Cash
Accounts receivable (net)
Marketable securities
Inventory
Equipment (net)
Goodwill
Total
Bonus Method
Goodwill Method
P 49,000
48,000
57,500
85,000
45,000
______
P284,500
P 49,000
48,000
57,500
85,000
45,000
__42,500
P327,000
P 53,000
115,750
57,875
__57,875
P284,500
P 53,000
137,000
68,500
__68,500
P327,000
Liabilities and Capital:

Accounts payable
Jose, capital (50%)
Pedro, capital (25%)
Pablo, capital (25%)
Total
Problem 1 3
1.
Books of Pepe Basco

To adjust the assets.
a. Pepe Basco, Capital.....................................................................
3,200
Estimated Uncollectible Account..........................................

b. Pepe Basco, Capital.....................................................................
Accumulated Depreciation Furniture and Fixtures.............
3,200
500
500
12
Chapter 1
To close the books.

Estimated Uncollectible Account......................................................
Accumulated Depreciation Furniture and Fixtures.........................
Accounts Payable..............................................................................
Pepe Basco, Capital...........................................................................
Cash. ...........................................................................................
Furniture and Fixtures.................................................................
2.
4,800
1,500
3,600
31,500
400
16,000
20,000
5,000
Books of the Partnership

To record the investment of Pepe Basco.
Cash...................................................................................................
Accounts Receivable.........................................................................
Merchandise Inventory......................................................................
Furniture and Fixtures........................................................................
Estimated Uncollectible account.................................................
Accumulated Depreciation Furniture and Fixtures...................
Pepe Basco, Capital.....................................................................
400
16,000
20,000
5,000
4,800
1,500
3,600
31,500
To record the investment of Carlo Torre.

Cash...................................................................................................
Carlo Torre, Capital....................................................................
Computation:
Pepe Basco, capital (Base)..........................................................
Divide by Pepe Basco's P & L ratio............................................
Total agreed capital.....................................................................
Multiply by Carlo Torre's P & L ratio.........................................
Cash to be invested by Carlo Torre.............................................
Problem 1 4
a.
Roces' books will be used by the partnership

Books of Sales
1. Adjusting Entries
47,250
47,250
P31,500
___40%
P78,750
___60%
P47,250
(a) Sales, Capital........................................................................

Accumulated Depreciation Fixtures..............................
3,200
(b) Goodwill...............................................................................
Sales, Capital....................................................................
32,000
3,200
32,000
2.
13
Closing Entry
Accumulated Depreciation Delivery Equipment......................
Accumulated Depreciation Fixtures.........................................
Notes Payable..............................................................................
Accrued Taxes.............................................................................
Sales, Capital...............................................................................
Cash......................................................................................
Accounts Inventory...............................................................
Prepaid Insurance..................................................................
Delivery Equipment..............................................................
Fixtures.................................................................................
Goodwill...............................................................................
12,800
8,000
91,200
64,000
40,000
8,000
224,000
4,800
72,000
192,000
3,200
48,000
96,000
32,000
Books of Roces (Books of the Partnership)

1.
2.
Adjusting Entries
(a) Roces, Capital.............................................................................
1,600
(b) Accumulated Depreciation Fixtures.........................................

Roces, Capital.......................................................................
16,000
(c) Merchandise Inventory................................................................

Roces, Capital.......................................................................
8,000
(d) Goodwill.....................................................................................
Roces, Capital.......................................................................
40,000
1,600
16,000
8,000
40,000
To record the investment of Sales.

Cash...................................................................................................
Prepaid Insurance..............................................................................
Delivery Equipment...........................................................................
Fixtures..............................................................................................
Goodwill............................................................................................
4,800
72,000
192,000
3,200
48,000
96,000
32,000
12,800
8,000

Notes Payable..............................................................................
Accrued Taxes.............................................................................
Sales, Capital...............................................................................
91,200
64,000
40,000
8,000
224,000
14
Chapter 1
b.
Sales' books will be used by the partnership

Books of Roces
2. Closing Entry
Accrued Taxes.............................................................................
Roces, Capital.............................................................................
Cash......................................................................................
Accounts Receivable.............................................................
Prepaid Insurance..................................................................
Delivery Equipment..............................................................
Fixtures.................................................................................
Goodwill...............................................................................
1,600
12,800
64,000
104,000
6,400
224,000
14,400
57,600
132,800
4,800
19,200
144,000
40,000
Books of Sales (Books of the Partnership)

1.
Adjusting Entries
2.
To record the investment of Roces.

Cash...................................................................................................
Delivery Equipment...........................................................................
Fixtures..............................................................................................
Goodwill............................................................................................
14,400
57,600
132,800
4,800
19,200
144,000
40,000
1,600
12,800
64,000
104,000
Accrued Taxes.............................................................................
Roces, Capital.............................................................................
6,400
224,000
c.
15
A new set of books will be opened by the partnership

Books of Roces
2. Closing Entry
See Requirement (b).
Books of Sales
2. Closing Entry
To record the investment of Roces and Sales.
Cash...................................................................................................
Delivery Equipment (net)..................................................................
Fixtures (net).....................................................................................
Goodwill ..........................................................................................
Notes Payable..............................................................................
Accrued Taxes.............................................................................
Roces, Capital.............................................................................
Sales, Capital...............................................................................
19,200
129,600
324,800
8,000
46,400
84,800
72,000
14,400
168,000
40,000
14,000
224,000
224,000
16
Chapter 1
Problem 1 5
1.
To close Magno's books.

Allowance for Bad Debts...................................................................
Accounts Payable..............................................................................
Notes Payable....................................................................................
Accrued Interest Payable...................................................................
R. Magno, Capital..............................................................................
Cash. ...........................................................................................
Equipment...................................................................................
Other Assets................................................................................
2.
5,000
13,000
12,000
3,000
9,000
To adjust the books of Lagman.

Goodwill............................................................................................
J. Lagman, Capital.......................................................................
3.
1,000
6,000
10,000
300
24,700
8,000
210
7,790
To record the investment of Magno.

Cash...................................................................................................
Equipment.........................................................................................
Other Assets......................................................................................
Notes Payable..............................................................................
Accrued Interest Payable.............................................................
R. Magno, Capital.......................................................................
5,000
13,000
12,000
3,000
9,000
1,000
6,000
10,000
300
24,700
To adjust the investments of the partners.

Cash...................................................................................................
R. Magno, Capital.......................................................................
(P35,000 P24,700 = P10,300)
10,300
10,300
J. Lagman, Capital.............................................................................
Cash. ...........................................................................................
Accounts Payable to J. Lagman...................................................
(P63,000 + P7,790 = P70,790 P35,000 = P35,790)
35,790
23,300
12,490
4.
17
Lagman and Magno

Balance Sheet
December 31, 2008
Assets
Cash...................................................................................................
Accounts receivable...........................................................................
Less Allowance for bad debts............................................................
Merchandise inventory......................................................................
Equipment.........................................................................................
Other assets........................................................................................
Goodwill ..........................................................................................
Total Assets.................................................................................
P
P34,000
1,210
32,790
21,000
8,000
46,000
___8,000
P115,790

Accounts payable...............................................................................
Notes payable....................................................................................
Accrued interest payable....................................................................
Accounts payable to J. Lagman.........................................................
J. Lagman, capital..............................................................................
R. Magno, capital..............................................................................
Total Liabilities and Capital........................................................
P 18,000
15,000
300
12,490
35,000
__35,000
P115,790
Problem 1 6
1.
Books of Toledo
Toledo, Capital............................................................................
Allowance for Bad Debts (15% x P32,000)..........................
4,800
4,800
Books of Ureta
Ureta, Capital..............................................................................
Allowance for Bad Debts (10% x P24,000)..........................
2,400
Cash (90% x P12,000).................................................................

Loss from Sale of Office Equipment...........................................
Office Equipment..................................................................
10,800
1,200
2,400
12,000
Toledo, Capital (1/4 x P1,200)....................................................

Ureta, Capital..............................................................................
Loss from Sale of Office Equipment.....................................
300
900
1,200
18
Chapter 1
2.
3.

Cash. ...........................................................................................
Merchandise................................................................................
Office Equipment........................................................................
Notes Payable.......................................................................
Toledo, Capital.....................................................................
To record the investment of Toledo.
3,200
32,000
40,000
10,000
Cash. ...........................................................................................
Merchandise................................................................................
Toledo, Capital............................................................................
Allowable for Bad Debts......................................................
Ureta, Capital........................................................................
To record the investment of Ureta.
22,800
24,000
36,000
300
Cash...................................................................................................
Ureta, Capital..............................................................................
To record Ureta's cash contribution.
3,400
Computation:
Toledo, capital (P68,400 P300)................................................
Divide by Toledo's profit share percentage.................................
Total agreed capital of the partnership........................................
Multiply by Ureta's profit share percentage.................................
Agreed capital of Ureta...............................................................
Ureta, capital...............................................................................
Cash contribution of Ureta..........................................................
or
Toledo, capital (P68,400 P300)................................................
Less Ureta, capital.......................................................................
Cash contribution of Ureta..........................................................
4,800
10,000
2,000
68,400
2,400
16,000
64,700
3,400
P 68,100
____50%
P136,200
____50%
P 68,100
__64,700
P 3,400
P 68,100
__64,700
P 3,400
4.
19
Toledo and Ureta Partnership

Balance Sheet
July 1, 2008
Assets
Cash...................................................................................................
Accounts receivable...........................................................................
Less Allowance for bad debts............................................................
Merchandise......................................................................................
Office equipment...............................................................................
Total Assets.................................................................................
P 29,400
P56,000
__7,200
48,800
76,000
__10,000
P164,200

Accounts payable...............................................................................
Notes payable....................................................................................
Toledo, capital...................................................................................
Ureta, capital.....................................................................................
Total Liabilities and Capital........................................................
P 26,000
2,000
68,100
__68,100
P164,200

Multiple Choice Answers and Solutions: Partnership - Basic Considerations and Formation 1

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Multiple Choice Answers and Solutions: Partnership - Basic Considerations and Formation 1

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Partnership Basic Considerations and Formation

Net assets (Julio, capital)

Total Capital (P300,000/60%)

Net asset (capital)

Total agreed capital (P230,000/40%)

Nora's agreed capital

Net asset invested

Agreed capitals, equally (P300,000/3) =

Net asset invested

Goodwill (P240,000 - P130,000) =

Net asset invested

Cash to be contributed by Ruiz

Net assets (equal to Ferrer's capital account)

Total partnership capital

Required capital of Cruz (P400,000 X 30%)

Cash to be invested by Cruz

Total assets of the partnership

Total partnership capital (P165,900/2/3)

Cash to be invested by Mendez

Total partnership capital

Total partnership capital

Flores' capital credit

Flores' contributed capital (see schedule 2)

Additional cash to be invested by Flores

Partnership Basic Considerations and Formation

Unadjusted capital balances

Adjusted capital balances

Cash to be invested by Roxas

Gomez's capital (P300,000 X 40%)

Merchandise to be invested by Gomez

Cash to be invested by Jocson:

Required capital of Jocson

Cash to be invested by Jocson

Adjusted Ell, capital

Total partnership capital (P113,640/1/3)

Cortez's capital after adjustments

Cortez's capital before adjustments

Total capital of the partnership (P3,500,000 70%)

Partnership Basic Considerations and Formation

Contributed capital of May (P194,000 - P56,000)

a. Books of Pedro Castro will be retained by the partnership

2. Pedro Castro, Capital............................................................

3. Accrued Interest Receivable.................................................

5. Pedro Castro, Capital............................................................

To record the investment of Jose Bunag.

A new set of books will be used

New Partnership Books

Cash. ........................................................................................... 15,067.50

Castro and Bunag Partnership

Capital before adjustment..................................................... P 85,000

Pedro (P231,500 x 25%).............................................................

Total agreed capital (P68,500 25%) = 274,000

Liabilities and Capital:

Books of Pepe Basco

Estimated Uncollectible Account..........................................

To close the books.

Books of the Partnership

To record the investment of Carlo Torre.

Roces' books will be used by the partnership

(a) Sales, Capital........................................................................

Partnership Basic Considerations and Formation

Books of Roces (Books of the Partnership)

(b) Accumulated Depreciation Fixtures.........................................