Advanced accounting by baysa lupisan chapter 01

CHAPTER Partnership Formation and Operations EXERCISES Exercise –1 1.a Campos, Capital Allowance for Uncollectible Accounts 14,000 Goodwill Campos, Capital 30,000 14,000 30,000 Accumulated Depreciation Campos, Capital Furniture and Fixtures 1.b 6,000 6,500 12,500 Campos, Capital Cash 40,000 Cash (P83,500 x 1/2) Tomas, Capital To record contributions of Tomas 41,750 40,000 41,750 Req Campos and Tomas Partnership Statement of financial Position July 1, 2008 Assets Cash Accounts Rec’l Less Allowance for Uncol Accts Inventory Furniture Goodwill TOTAL ASSETS P41,750 P60,000 24,000 Liabilities & Owners’ Equity Accounts Payable Campos, Capital Tomas, Capital P90,000 83,500 41,750 36,000 100,000 7,500 30,000 P215.250 TOTAL LIABILITIES & OWNERS’ EQUITY P215,250 Exercise 1-2 Cash Accounts Receivable Merchandise Inventory Equipment Allowance for Uncollectible Accounts Accounts Payable Notes Payable Bernal, Capital Cash Camino, Capital 90,000 36,000 54,000 25,000 2,000 21,000 18,000 164,000 100,000 100,000 AA - Chapter (2008 edition) page Exercise –3 Cash Land Building Legaspi, Capital Sabino, Capital 800,000 540,000 900,000 Cash Land Building Legaspi, Capital Sabino, Capital 800,000 540,000 900,000 800,000 1,440,000 1,120,000 1,120,000 Exercise - Income Summary Santos, Capital (P238,000 x 260/425) Abad, Capital (P238,000 x 165/425) 238,000 Income Summary Santos, Capital (P238,000 x 3,125/5,000) Abad, Capital (P238,000 x 1,875/5,000) 238,000 145,600 92,400 148,750 89,250 Santos: Jan – Mar 31 Apr – Apr 30 May – July 31 Aug – Dec 31 P260,000 x 290,000 x 360,000 x 320,000 x P780,000 290,000 1,080,000 1,600,000 P3,750,000/12 P312,500 Abad: Jan – May 31 June – Aug 31 Sept.1 – Dec 31 P825,000 645,000 780,000 P2,250,000/12 Income Summary Santos, Capital Abad, Capital Interest on ave capital Salaries to partners Balance - equally Net Profit P165,000 x 215,000 x 195,000 x 238,000 147,750 90,250 Santos P 18,750 150,000 ( 21,000) P 147,750 Abad Total 11,250 P 30,000 100,000 250,000 ( 21,000) (42,000) P 90,250 P238 000 P Income Summary Santos, Capital Abad, Capital 238,000 164,840 73,160 Santos Bonus to Santos P187,500 Abad Total AA - Chapter (2008 edition) page 25% (P238,000 - B) Interest of 6% on excess average investment 6% (P312,500 - P187,500) Balance - 3:2 Net Profit P 47,600 7,500 109,740 P 164,840 P 47,600 73,160 P73,160 Income Summary Santos, Capital (P238,000 x 15/25) Abad, Capital (P238,000 x 10/25) 7,500 182,900 P238,000 238,000 142,800 95,200 Exercise – Sanchez and Gomez Schedule of Distribution of Net Profit December 31, 2008 Sanchez Gomez 6% interest on average capital P 6,246 P 14.440 10% bonus on net profit after interest 8,331 Salaries 20,000 30,000 Balance – 70%, 30% 17,488 7,495 Net Profit P52,065 P51,935 Total P 20,686 8,331 50,000 24,983 P104,000 Computation of average capital: Jan Apr Sanchez, Capital P81,600 x P 244,800 P111,600 x 1,004,400 P1,249,200 Ave capital (P1,249,200/12) P104,100 Jan Aug Gomez, Capital P224,000 x P1,568,000 P264,000 x 1,320,000 P2,888,000 Ave capital (P2,888,000/12) P240,667 Computation of bonus: P160,000 x 65%= P104,000– P20,686 x 10% = P8,331 Sanchez and Gomez Statement of Partners’ Capital For the Year Ended December 31, 2008 Capital, January Additional investment Net profit Drawings Capital, December 31 6% interest on average capital 10% bonus on net profit after interest Balance – Salary ratio Net Profit Exercise 1-6 Sanchez P 81,600 30,000 52,065 ( 41,600) P122,065 Gomez P224,000 40,000 51,935 ( 41,600) P274,335 Total P305,600 70,000 104,000 ( 83,200) P396,400 Sanchez P 6,246 8,331 34,083 P48,660 Gomez P14.440 Total P 20,686 8,331 74,983 P104,000 40,000 P 55,340 AA - Chapter (2008 edition) page 8% interest on beg capital Salaries Balance 3:2 Net Profit Mercado P 48,000 225,000 ( 38,700) P234,300 Puzon P 54.000 112,500 ( 25,800) P140,700 Total P102,000 337,500 ( 64,500) P375,000 8% interest on beg capital Balance – Salary ratio Net Profit Mercado P 48,000 182,000 P230,000 Puzon P 54.000 91,000 P145,000 Total P102,000 273,000 P375,000 Puzon P375,000 x 2/3 = P150,000; however, minimum guaranteed amount is P160,000 Mercado P375,000 – P160,000 = P215,000 Exercise – Net profit after salary, interest and bonus Interest P200,000 x 10% Salary P8,000 x 12 Net profit before interest and salary Bonus rate Amount of bonus to Lirio P374,000 P20,000 96,000 116,000 P490,000 x 25% P122,500 Exercise – B = 25 x P500,000 = P125,000 B = 25 x P500,000 = P100,000 1.25 B T B B = = = = B B B B B = 25 (P500,000 - B - Tax) = 25 (P50,0000 - B - P175,000) = P81,250 - 25B = P81,250/1.25 = P65,000 25 (P500,000 - Tax) 35 x P500,000 = P175,000 25 (P500,000 – P175,000) P 81,250 Exercise - Salary Bonus Interest Balance Total Estrella P40,000 6,000 10,000 26,900 P82,900 Felipe P20,000 4,000 9,000 26,900 P59,900 Garcia Jimenez P 4,000 26,900 P30,900 P 9,400 26,900 P36,300 Total P 60,000 10,000* 32,400 107,600 P210,000 AA - Chapter (2008 edition) page *B = 5% (P210,000 – B) = P10,000 Estrella P40,000 10,000 ( 43,100) P 6,900 Salary Interest Balance Total Felipe P20,000 9,000 ( 43,100) (P 14,100) Garcia Jimenez P 4,000 ( 43,100) (P39,100) P 9,400 ( 43,100) (P33,700) Felipe Garcia P 9,000 P 4,000 4,000 12,533 _ P25,533 P 4,000 P37,600 x 2/ = P12,533 Jimenez P 9,400 Total P 60,000 32,400 (172,400) (P 80,000) Interest Bonus Salary Total Estrella P10,000 6,000 25,067 P41,067 *P37,600 x 4/ = P25,067; P 9,400 Total P 32,400 10,000 37,600* P 80,000 Exercise 1-10 Fees Earned Joseph, Capital Luis, Capital Operating Expenses Income Summary 750,000 50,000 Income Summary Joseph Capital Luis, Capital Nicolas, Capital 500,000 200,000 100,000 500,000 150,000 250,000 100,000 Exercise – 11 Capital balances before payment of cash Required capital balances based on on profit and loss ratio Cash received (paid) Benito Cabral Duenas Total P120,000 P100,000 P100,000 P320,000 128,000 (P 8,000) 112,000 (P 12,000) 80,000 P 20,000 320,000 - Journal entry on the partnership books Duenas, Capital Benito, Capital Cabral, Capital 20,000 8,000 12,000 Capital balances before additional cash investment Required capital balances based on lowest possible cash investment* Benito Cabral Duenas Total P120,000 P100,000 P100,000 P320,000 160,000 140,000 100,000 400,000 AA - Chapter (2008 edition) page Required additional cash investment P 40,000 P 40,000 P 80,000 * P120,000/40% = P300,000; P100,000/35% = P285,174; P100,000/25% = P400,000 Journal entry on the partnership books Cash Benito, Capital Cabral, Capital 80,000 40,000 40,000 Capital balances Required capital Additional investment(withdrawals) Benito P120,000 120,000 Cabral P100,000 105,000 5,000 Duenas P100,000 75,000 (P 25,000) Duenas, Capital Cash Cabral, Capital Total P320,000 300,000 P 20,000 25,000 20,000 5,000 Exercise – 12 Enriquez and Flores Schedule Showing Adjustments in Capital For the Year Ended December 31, 2008 Reported net profit Adjustments: Equipment purchased charged to expense Depreciation on equipment Overstatement of 2008 ending inventory P400,000 P200,000 ( 20,000) ( 24,000) P156,000 x 65% Corrected net profit 101,400 P501,400 Distribution of 2008 net profit Salaries Interest Balance Distribution of 2008 corrected net profit Salaries Interest Balance Adjustments Equipment Enriquez P120,000 30,000 51,000 P201,000 Flores P120,000 45,000 34,000 P199,000 Total P240,000 75,000 85,000 P400,000 P120,000 30,000 111,840 P261,840 P 60,840 P120,000 45,000 74,560 P239,560 P 40,560 P240,000 75,000 186,400 P501,400 P101,400 200,000 AA - Chapter (2008 edition) page Enriquez, Capital Flores, Capital Accumulated Depreciation Inventory Income Tax Payable 60,840 40,560 20,000 24,000 54,600 PROBLEMS Problem – 1 a b c d e f g Merchandise, Inventory Ruiz, Capital 60,000 Ruiz, Capital Allowance for Uncollectible Accounts 30,000 60,000 30,000 Interest Receivable Ruiz, Capital P150,000 x 6% x 2/12 = P1,500 1,500 Ruiz, Capital Interest Payable P300,000 x 10% x 3/12 = P7,500 7,500 Accumulated Depreciation Ruiz, Capital Furniture and Fixtures Office Supplies Ruiz, Capital 1,500 7,500 180,000 60,000 240,000 5,000 5,000 Cash Santos, Capital 524,500 524,500 Ruiz and Santos Statement of Financial Position December 1, 2008 Assets Cash Notes Receivable Accounts Receivable Less Allowance for Uncollectible Accounts Interest Receivable Merchandise Inventory Office Supplies Furniture and Fixtures Total Assets Liabilities and Capital Notes Payable Accounts Payable Interest Payable P P900,000 90,000 P300,000 630,000 7,500 764,500 150,000 810,000 1,500 300,000 5,000 480,000 P2,511,000 AA - Chapter (2008 edition) page Total Liabilities Ruiz, Capital Santos, Capital Total Capital Total Liabilities and Capital P 937,500 P1,049,000 524,500 1,573,500 P2,511,000 Problem 1-2 Cash Merchandise Inventory Tomas, Capital 518,000 1,152,000 Accounts Receivable Merchandise Inventory Office Equipment Goodwill Allowance for Uncollectible Accounts Accounts Payable Vicente, Capital 1,792,000 256,000 160,000 198,000 1,670,000 160,000 576,000 1,670,000 Tomas and Vicente Statement of Financial Position June 1, 2008 Assets Cash Accounts Receivable Less Allowance for Uncollectible Accounts Inventories Office Equipment Goodwill Total Assets Liabilities and Capital Accounts Payable Tomas, Capital Vicente, Capital Total Liabilities and Capital P P1,792,000 160,000 518,000 1,632,000 1,408,000 160,000 198,000 P3,916,000 P 576,000 P1,670,000 1,670,000 3,340,000 P3,916,000 Problem – Merchandise Inventory Goodwill Accumulated Depreciation Allowance for Uncollectible Accounts Equipment Rosas, Capital Cash Accounts Receivable Merchandise Inventory Equipment Furniture and Fixtures 3,000 3,000 900 1,000 2,000 3,900 5,000 46,000 108,000 12,000 9,000 AA - Chapter (2008 edition) page Goodwill Allowance for Uncollectible Accounts Accounts Payable Perlas, Capital 3,000 Cash Accounts Receivable Merchandise Inventory Equipment Furniture and Fixtures Goodwill Allowance for Uncollectible Accounts Accounts Payable Perlas, Capital 5,000 46,000 108,000 12,000 9,000 3,000 Cash Accounts Receivable Merchandise Inventory Equipment Goodwill Allowance for Uncollectible Accounts Accounts Payable Rosas, Capital 7,000 49,000 75,000 7,000 3,000 Problem – Cash Inventories Equipment Notes Payable Serrano, Capital Cash Land Mortgage Payable Torres, Capital 4,000 54,000 125,000 4,000 54,000 125,000 5,000 36,000 100,000 900,000 1,500,000 3,000,000 1,050,000 4,350,000 600,000 6,000,000 1,950,000 4,650,000 Torres, Capital Serrano, Capital 150,000 Purchases Accounts Payable 900,000 Accounts Payable Cash 720,000 Mortgage Payable Interest Expense Cash 300,000 120,000 Notes Payable Interest Expense Cash 225,000 75,000 150,000 900,000 720,000 420,000 300,000 AA - Chapter (2008 edition) page 10 Accounts Receivable Sales 3,450,000 Cash Accounts Receivable 3,150,000 3,450,000 3,150,000 Selling and General Expenses Cash Accumulated Depreciation Accrued expenses 870,000 Serrano, Drawing Torres, Drawing Cash 351,000 351,000 Income Tax Income Tax Payable 204,750 630,000 150,000 90,000 702,000 204,750 Inventories, end Sales Inventories, beginning Purchases Selling and General Expenses Interest Expense Income Tax Income Summary 600,000 3,450,000 1,500,000 900,000 870,000 195,000 204,750 380,250 Income Summary Serrano, Capital Torres, Capital Interest on beginning capital Salaries Remainder – 60%, 40% Net Profit Serrano, Capital Torres, Capital Serrano, Drawing Torres, Drawing 380,250 192,150 188,100 Serrano Torres Total P180,000 150,000 ( 137,850) P192,150 P180,000 100,000 ( 91,900) P188,100 P360,000 250,000 ( 229,750) P380,250 351,000 351,000 351,000 351,000 Serrano and Torres Partnership Statement of Recognized Income and Expenses For the Year Ended December 31, 2008 Sales Cost of Goods Sold: Inventories, beginning Purchases Cost of Goods Available for Sale Less Inventories, end P3,450,000 P1,500,000 900,000 P2,400,000 600,000 1,800,000 AA - Chapter (2008 edition) page 11 Gross Profit Selling and General Expenses Operating Income Interest Expense Net Profit before Income Tax Income Tax Net Profit P1,650,000 870,000 P 780,000 195,000 P 585,000 204,750 P 380,250 Serrano and Torres Partnership Statement of Financial Position December 31, 2008 Assets Current Assets: Cash Accounts Receivable (P3,450,000 – P3,150,000) Inventories Property, Plant and Equipment: Land Equipment P3,000,000 Less Accumulated Depreciation 150,000 Total Assets Liabilities Current Liabilities: Accounts Payable (P900,000 – P720,000) Accrued Expenses Income Tax Payable Long-term Liabilities: Notes Payable (P1,050,000 – P225,000) Mortgage Payable (P1,950,000 – P300,000) Total Liabilities P1,878,000 300,000 600,000 P 2,778,000 P6,000,000 2,850,000 P180,000 90,000 204,750 P 825,000 1,650,000 8,850,000 P11,628,000 P 474,750 2,475,000 P 2,949,750 Capital Serrano, Capital Torres, Capital Total Capital P4,341,150 4,337,100 8,678,25 P11,628,000 Total Liabilities and Capital Problem - P2,700,000 (P200,000 + P1,100,000 + P500,000 + P1,500,000 – P600,000 = P2,700,000) P2,600,000 (P2,500,000 + P2,700,000) / = P2,600,000 Problem – Income Summary Bernabe, Capital Burgos, Capital 700,000 505,800 194,200 AA - Chapter (2008 edition) Interest on beg capital Balance – 3:1 Net Profit Bernabe: Jan – May 31 June – Oct 31 Nov, – Dec 31 Total P 64,000 636,000 P700 000 700,000 284,000 416,000 Bernabe P 140,000 48,000 96,000 P 284,000 Burgos P 260,000 60,000 96,000 P 416,000 Total P400,000 P108,000 96,000 P700 000 700,000 394,150 305,850 Bernabe P 90,000 49,000 255,150 P 394,150 P360,000 x 460,000 x 400,000 x Burgos: Jan – June 30 P440,000 x July – Oct 31 Nov.1 – Dec 31 360,000 x 500,000 x P P Burgos 170,000 50,800 Total P260,000 99,800 85,050 305,850 340,200 P700 000 P1,800,00 2,300,000 800,000 P4,900,000/12 P408,333 P2,640,00 1,440,000 1,000,000 P5,080,000/12 P423,333 Income Summary Bernabe, Capital Burgos, Capital Salaries Interest on average cap Balance – 40%, 60% Net Profit Burgos 35,200 159,000 P 194,200 P Income Summary Bernabe, Capital Burgos, Capital Salaries Interest on average cap Balance – 3:1 Net Profit Bernabe P 28,800 477,000 P 505,800 Income Summary Bernabe, Capital Burgos, Capital Salaries Interest on end capital Balance – Equally Net Profit page 12 700,000 267,567 432,433 Bernabe P 100,000 40,833 126,734 P 267,567 P P Burgos 200,000 42,333 Total P300,000 83,166 190,100 432,433 316,834 P700 000 Income Summary Bernabe, Capital Burgos, Capital 700,000 329,360 370,640 Bernabe Burgos Total AA - Chapter (2008 edition) page 13 Salaries Interest on beg cap Bonus Balance – 2:3 Net Profit B = 10%(NI –S – I) P 100,000 28,800 43,600 156,960 P 329,360 P P 100,000 35,200 P220,000 64,000 43,600 392,400 P700 000 235,440 370,640 Problem – 6% interest on capital Salaries Balance – 5:3:2 Net Profit 6% interest on capital Salaries Balance – 5:3:2 Net Profit Sandy P 16,800 ( 74,500) P(57,700) P 16,800 ( 32,000) P( 15,200) Tammy P 12,000 48,000 ( 44,700) P 15,300 Manny P 7,200 40,000 ( 29,800) P 17,400 Total P 36,000 88,000 (149,000) P(25,000) P 12,000 48,000 ( 19,200) P 40,800 P 7,200 40,000 ( 12,800) P 34,400 P 36,000 88,000 ( 64,000) P 60,000 P P 36,000 88,000 13,500 112,500 P250,000 6% interest on capital P 16,800 P 12,000 Salaries 48,000 Bonus 13,500 Balance – 5:3:2 56,250 33,750 Net Profit P 73,050 P107,250 B = (P250,000 – P36,000 – P88,000 – P72,000)25% = P13,500 7,200 40,000 22,500 P 69,700 Problem - 5% interest on capital Salaries 20% bonus on net profit Balance – capital ratio Net Profit Delmar P 2,500 12,000 22,100 40,250 P76,850 Pilar P 1,500 8,000 24,150 P33,650 Sales Cost of Goods Sold Operating Expenses Income Taxes Income Summary 480,000 Income Summary Delmar, Capital Pilar, Capital 110,500 Total 4,000 20,000 22,100 64,400 P110,500 P 210,000 100,000 59,500 110,500 76,850 33,650 Delmar, Capital Pilar, Capital Delmar, Drawing Pilar, Drawing 6,000 10,000 6,000 10,000 Delmar and Pilar Company Statement of Changes in Partners’ Capital AA - Chapter (2008 edition) page 14 For the Year Ended December 31, 2008 Capital balances, January 1, 2008 Add Distribution of net income for 2008: Interests Salaries Bonus Balance - capital ratio Total share in net profit Total Less Drawings Capital balances, December 31, 2008 Delmar P 50,000 Pilar P30,000 Total P 80,000 P 2,500 12,000 22,100 40,250 P 76,850 P 1,500 8,000 P 24,150 P33,650 4,000 20,000 22,100 64,400 P110,500 P126,850 6,000 P120,850 P63,650 10,000 P53,650 P190,500 16,000 P174,500 Problem - Ramos, Gonzales and Martinez Statement of Changes in Partners’ Capital For Three Years Ended December 31, 2008 Capital, January 1, 2006 Distribution of net loss (Sch 1) Withdrawals Capital, December 31, 2006 Distribution of net profit (Sch 2) Withdrawals Capital, December 31, 2007 Distribution of net profit (Sch 3) Withdrawals Capital, December 31, 2008 Ramos P 80,000 ( 2,000) (12,000) P 66,000 7,960 (13,960) P 60,000 21,840 (20,400) P 61,440 Gonzales P 48,000 ( 1,520) (14,480) P 32,000 8,320 (16,320) P 24,000 18,840 (24,000) P 18,840 Martinez P 40,000 ( 2,000) (16,000) P 22,000 7,720 (17,720) P12,000 18,120 (21,200) P 8,920 Total P 168,000 ( 5,520) (42,480) P120,000 24,000 (48,000) P 96,000 58,800 (65,600) P 89,200 Gonzales P 12,000 2,880 (16,400) P( 1,520) Martinez P 12,000 2,400 (16,400) P( 2,000) Total P 33,600 10,080 P 49,200 P( 5,520) Gonzales P 12,000 Martinez P 12,000 Total P 33,600 Schedule - Distribution of 2006 net loss Salaries to partners Interest of 6% on beg Capital Balance – equally Net income Ramos P 9,600 4,800 (16,400) P( 2,000) Schedule - Distribution of 2007 net profit Salaries to partners Ramos P 9,600 AA - Chapter (2008 edition) page 15 Interest of 6% on beg Capital Balance – equally Net income 3,960 ( 5,600) P 7,960 1,920 ( 5,600) P 8,320 1,320 ( 5,600) P 7,720 7,200 (16,800) P 24,000 Gonzales P 12,000 1,440 Martinez P 12,000 720 5,400 18,840 5,400 18,120 Total P 33,600 5,760 3,240 16,200 58,800 Schedule - Distribution of 2008 net profit Salaries to partners Interest of 6% on beg Capital Bonus - 20% (P58,800 - P39,360 - B) Balance – equally Net income Ramos P 9,600 3,600 3,240 5,400 21,840 Problem -10 Robles, Bernal and Reyes Statement of Partners’ Capital For the Year Ended December 31, 2008 Robles Berna Reyes Total l Capital balances before closing the nominal accounts Add Distribution of net profit: Drawing allowance Interest on average capital Balance - 60%, 30%, 10% Total Deduct Cash distribution Capital, December 31, 2008 P120,000 P ( 2,000) P20,000 P138,000 20,000 7,200 58,800 P206,000 122,720 P 83,280 14,000 240 29,400 P41,640 10,000 560 9,800 P40,360 26,480 P13,880 44,000 8,000 98,000 P288,000 149,200 P138,800 P41,640 P206,000 / 60% = P343,333; P40,360 / 10% = P403,600 P41,640 / 30% = P138,800 (required total capital) Problem - 11 Chavez, Roman, and Valdez Statement of Changes in Partners’ Capital January to November 1, 2008 Chavez Loan Beginning balances Loan from Chavez Transfer of equipment to Valdez Balances Distribution of loss on realization* Salary to Valdez Int to Chavez for months Chavez Capital P 80,000 Roman Capital P 80,000 Valdez Capital P 80,000 P 80,000 ( 16,000) P 64,000 P 60,000 P 60,000 P 80,000 24,000 2,100 Total P240,000 60,000 ( 16,000) P284,000 24,000 2,100 AA - Chapter (2008 edition) Balance divided equally* Balances Dist of cash in final settlement page 16 P 60,000 60,000 ( 76,700) P 5,400 5,400 ( 76,700) P 3,300 3,300 *Total partners’ equity as shown above Less Cash available for distribution Loss on realization Less Salary and interest Total loss to be divided equally ( 76,700) P 11,300 11,300 ( 230,100) P 80,000 80,000 P284,000 80,000 P204,000 26,100 P230,100 Problem - 12 Canlas, David, Estrella and Fajardo Statement of Changes in Partners’ Capital Accounts For the Year Ended December 31, 2008 Investment Net profit Total Less: Excess rent (P225 x 6) Withdrawals Uncollectible accounts Capital, December 31 Canlas P309,000 237,700 P546,700 David P159,000 186,230 P345,230 P 78,000 18,000 P 96,000 P450,700 P 66,000 6,750 P 72,750 P272,480 Estrella P327,000 140,310 P467,310 P 13,500 87,000 Fajardo P 24,010 P 24,010 P100,500 P366,810 P 37,500 P(13,490) Total P 795,000 588,250 P1,383,250 P 13,500 268,500 24,750 P 306,750 P1,076,500 P 37,500 Supporting computations: Revenue from fees Expenses: Total expenses, excluding depreciation and uncollectible accounts (P290,000 - P13,500) Depreciation [(P195,000 x 10%) + (P75,000 x 5%) Doubtful accounts (P24,000 x 50%) Net profit P 900,000 P 276,500 23,250 12,000 311,750 P588,250 Distribution of net income Canlas 20% of gross fees from respective clients 20% of fees after April after expenses but before bad debts Balance -Canlas-40%, David-35%, Estrella-25% Total P 66,000 171,700 P237,700 David P 36,000 150,230 P186,230 Estrella Fajardo P 33,000 107,310 P140,310 Total P135,000 P24,010* 24,010 P24,010 429,240 P588,250 AA - Chapter (2008 edition) page 17 Revenues Expenses before uncollectible accounts (P276,500 + P23,250) x 180 / 900 Share of Fajardo After April P 180,000 59,950 P120,050 20% P 24,010 Problem 1-13 Equipment Accumulated Depreciation Profit and Loss 13,500 1,350 12,150 Profit and Loss Interest Payable P87,500 x 6% x 10/12 = P4,375 4,375 Profit and Loss Abaya, Capital Reyes, Capital 159,025 63,700 95,505 Salaries Bonus [25% x (NI – B – S) ] Balance – equally Total 4,375 Abaya P 39,000 24,610 P 63,610 Reyes P 58,500 12,305 24,610 P 95,415 Abaya, Capital Reyes, Capital Abaya, Drawing Reyes, Drawing Total P 97,500 12,305 49,220 P159,025 36,000 62,500 36,000 62,500 Problem 1-14 Jaime = 5/10 x 80% = 40% Madrid = 3/10 x 80% = 24% Corrected net income = P250,000 – (P12,000 – P31,000 – P20,000 + P15,000 + P9,000 x 65%) = P240,250 Jaime = P240,250 x 40% = P96,100 Madrid = P240,250 x 24% = P57,660 Soriano = 2/10 x 80% = 16% Matias = 20% Soriano = P240,250 x 16% = P38,440 Matias = P240,250 x 20% = P48,050 MULTIPLE CHOICE D D A C Abena – MV – Cost (P90,000 – P60,000) Buendia – MV – Cost (P60,000 – P70,000) Total P30,000 ( 10,000) Abena (60%) P18,000 ( 6,000) Buendia (40%) P12,000 ( 4,000) AA - Chapter (2008 edition) Actual Inequity A C B B page 18 P20,000 ( 20,000) P P12,000 ( 30,000) (P18,000) Molina’s contribution (P190,000 – P60,000) Nuevo’s tangible contribution Total capital contributions P 8,000 10,000 P18,000 P130,000 100,000 P230,000 x 60% P 138,000 130,000 P 8,000 Capital credit of Molina Contribution of Molina Bonus to Molina Roxas = P596,250 - P5,550 = P590,700 Bernardo = P335,000 - P4,050 - P9,000 = P321,950 10 Roxas = (P590,700 + P321,950) x 60% = P547,590 Bernardo = (P590,700 + P321,950) x 40% = P365,060 11 Roxas = P650,000 – P590,700 = P59,300 Bernardo = P400,000 – P321,950 = P78,050 12 Bruno = P150,000 - P90,000 = P60,000 13 Total assets = Total liab + Total capital = P25,000 + P300,000 = P325,000 14 Cash contribution = (P248,850 x 1/3) – P50,000 = P32,950 15 Total capital = (P158,400 + P17,500 – P5,000 – P5,000) ÷ 2/3 = P248,850 16 Required capital of Esteban (P287,500 x 60%) Non-cash contributions of Esteban (P125,000 – P30,000) Cash contribution P172,500 95,000 P 77,500 17 Contribution of Diaz Contribution of Esteban (P125,000 – P30,000 + P50,000) Total partnership capital P115,000 145,000 P260,000 18 C P115,000 + P95,000 = P210,000/2 P105,000 19 A Net increase (decrease) in capital Add Withdrawals Total Less Additional investments Profit share Profit share percentage Total partnership net profit (P120,000) 260,000 (P140,000) 50,000 P 90,000 ÷ 30% P300,000 20 C AA - Chapter (2008 edition) 21 22 B C 23 24 D page 19 Net profit (exclusive of salary, interest and bonus) Salary (P2,000 x 12) Interest (P50,000 x 5%) Net profit after deduction of bonus Bonus = 20 (P120,000 + Bonus) = P24,000 + 20 Bonus = P24,000/.80 = P30,000 C 10% x P1,000,000 20% x P1,500,000 5% (P1M – P400,000) Balance – equally Net income 25 A Interest Salaries Balance – equally 26 C B D A Bustos Cancio P30,000 680,000 P30,000 680,000 Campos P12,000 40,000 (70,000) Torres Ocampo P 8,000 ( 70,000) 6,800 Torres (1,200) Torres 12,000 3,400 P19,400 1,000 22,000 17,000 P44,000 Velasco P 2,000 Total P 2,000 12,000 (600) P13,400 1,000 22,000 (3,000) P22,000 Velasco P 2,000 Total P 2,000 10,364 P12,364 1,000 19,000 P22,000 P 1,000 P8,636 Average capital of Tamayo P100,000 x = P 600,000 160,000 x = 960,000 P1,560,000/12 P130,000 Average capital of Banson - P150,000 Total P 44,000 100,000 ( 210,000) Total P 4,000 P 1,000 P10,000 (1,200) Total P 100,000 300,000 60,000 2,040,000 Velasco P 4,000 P 1,000 P10,000 6,800 Sison Bonus - 10%(P22,000 - B) Interest on capital in excess of P100,000 Balance – Salary ratio 29 Ramos P24,000 60,000 ( 70,000) P14,000 Sison Bonus - 10%(P22,000 - B) Interest on capital in excess of P100,000 Salaries to partners Balance - 4:4:2 28 680,000 P1,080,000 Sison Bonus - 10%(P44,000 - B) Interest on capital in excess of P100,000 Salaries to partners Balance - 4:4:2 27 Alberto P 100,000 300,000 P 93,500 24,000 2,500 P120,000 Average capital of Vidal P225,000 x = P2,025,000 155,000 x = 465,000 P2,490,000/12 P207,500 AA - Chapter (2008 edition) page 20 Total int on ave capital= (P130,000 + P207,500 + P150,000) 10% = P48,750 30 D Interest on ave capital Salaries to partners Balance - divided equally 31 B Total capital before net income (P475,000 + P60,000 – P70,000) Add Net profit Total capital, Dec 31, 2008 32 D Int on average capital Salaries to partners Balance - equally Net increase (decrease) 33 C P 48,750 144,000 9,000 P 201,750 Andal P 47,250 122,325 (139,308) P 30,267 A 35 36 37 D A A 38 Briones P 23,865 (139,308) P(115,443) Camba P 16,235 82,625 (139,308) P( 40,448) Net income = Net sales - CGS - Depr - Oper exp Others) = P228,000 - P123,000 - P7,500 - P58,100 x 65% Mariano P10,000 1,561 8,781 P 20,342 Salary to partner for 10 mos Bonus to managing partner Balance – based on orig cap TOTAL share in profit 34 P465,000 201,750 P666,750 TOTAL share in profit Add Capital, beginning TOTAL Less Withdrawals Capital, end Belen Interest Salaries Balance Add’l profit for Edna Net profit B Salaries Bonus Interest Balance Total P 20,342 125,000 P145,342 20,000 P125,342 P25,610 Lucas total P 10,000 1,561 14,049 P 25,610 P 5,268 P 5,268 P 5,268 75,000 P 80,268 30,000 P 50,268 Total P 87,350 204,950 (417,924) P(125,624) P 25,610 200,000 P 225,610 50,000 P 175,610 Lorna Ursula P 5,000.00 10,000.00 10,000.00 P 2,500.00 6,000.00 10,000.00 P 2,500.00 P2,000.00 6,666.67 6,666.67 P12,000.00 16,000.00 33,333.34 P25,000.00 P18,500.00 _ P9,166.67 3,333.33 P12,000.00 3,333.33 P64,666.67 Puno P40,000 13,000 1,000 7,000 P61,000 Edna Quirino P36,000 Romero P13,650 750 7,000 P43,750 4,600 7,000 P25,200 Total Total P 89,650 13,000 6,350 21,000 P130,000 AA - Chapter (2008 edition) Computation of average capital: Puno, capital Jan – P10,000 x Apr 9,000 x July - 11,000 x Oct - 10,000 x Quirino, capital Jan – P 6,000 x July - 10,000 x Oct - 8,000 x Romero, capital Jan – P40,000 x Apr - 38,000 x July - 53,000 x page 21 P 30,000 27,000 33,000 30,000 P120,000 / 12 P10,000 P 36,000 30,000 24,000 P 90,000 / 12 P 7,500 P120,000 114,000 318,000 P552,00 / 12 P46,000 Let X = Net Income P40,000 + 10% X + P1,000 + 1/3 (X – P89,650 – 10% X – P6,350 = P61,000 P40,000 + 10% X + P1,000 + 1/3 (90% X – P96,000) = P61,000 P40,000 + 10% X + P1,000 + 30% X – P32,000 = P61,000 10% X + 30% X = P61,000 – P40,000 – P1,000 + P32,000 40% X = P52,000 X = P130,000 39 D Legarda- 5/10 x 80% = 40% Madrigal-3/10 x 80% = 24% Sotto - 2/10 x 80% = 16% Pimentel 20% 40 C Share of Legarda = P25,000 – ( P1,200 - P3,100 - P2,000 + P1,500 + P 900 x 65%) = P24,025 x 40% = P9,610 41 C Serrano 2008 Net income (P50,000 – P8,000) Salary to Serrano Remainder Divided equally P42,000 ( 36,000) P 6,000 ( 6,000) Understatement in 2007 NI Divided 60:40 P8,000 ( 8,000) Income allocation Toledo P36,000 3,000 P 3,000 4,800 3,200 P43,800 P 6,200 ...AA - Chapter (2008 edition) page Exercise –3 Cash Land Building Legaspi, Capital Sabino, Capital 800,000... Santos, Capital Abad, Capital 238,000 164,840 73,160 Santos Bonus to Santos P187,500 Abad Total AA - Chapter (2008 edition) page 25% (P238,000 - B) Interest of 6% on excess average investment 6% (P312,500... 6,246 8,331 34,083 P48,660 Gomez P14.440 Total P 20,686 8,331 74,983 P104,000 40,000 P 55,340 AA - Chapter (2008 edition) page 8% interest on beg capital Salaries Balance 3:2 Net Profit Mercado P