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Partnership and Corporation

Solution Manual
2014-2015

Chapter 1
Review of the Accounting Process
** Quizzers Problems **
I.

B 25,000

B 100,000

II.

Maria Julieta Lopez Allera-Alegrado


Liabilities
=
+
Accrued
Accounts
Accrued
Alegado
Income = Payable
Expense + Capital
48,000
=
+ 100,000

Assets

Beg. Bal.
AJE
#1

Cash
150,000
5,000

A/R
80,000
(5,000)

(6,000)
(3,000)
8,000
8,000

72,000

A-

VII.

15,000

57,000

100,000
+

8,000
130,000

(58,000)

172,000

P. Amandoron Company
350,000
1,200,000
125,000
575,000

1,550,000
700,000
850,000

-D

Ruben Realty Co.


36,000
12

P3,000 x 5

P15,000 - A

36,000
12

P3,000 x 7

P21,000 - B

Evelyn T. Alegre
Cash in Bank
Office Equipment
Office Furniture

VI.

42,000
=

229,000

Current Assets
Property and Equipment
Less: Current Liabilities
Long Term Liabilities
Owners Equity

V.

Expenses
(40,000)

(3,000)
(15,000)

15,000
149,000

IV.

Revenue
122,000

(6,000)

#2
#3

III.

Capital

Assets
=
850,000 + 30,000
300,000
60,000
=
1,240,000
=

Liability

Owners Equity
1,150,000 + 30,000

60,000
60,000

1,180,000 - D

Raul Langbid Co.


truck

P18,000
12

= P1,500 x 3 = P4,500

building

P15,000
12

= P1,250 x 3 = 3,750
P 8,250 -A

Blas Sardido Co.


Sales (250,000 x P 15)
Cost of Sales:
Beg. Inventory
Purchases (400,000 x P11)
Available for Sale
Less: Ending Inventory (150,000 x P11)
Gross Profit

3,750,000
4,400,000
4,400,000
1,650,000

2,750,000
1,000,000

- none of the choices

VIII. Alfredo Yao Co.


ERRATUM: Available for Sale P26,000 instead of P6,000
Beg. Inventory
Purchases
Freight In
Available for Sale
Ending Inventory
Cost of Sales

15,000
10,000
1,000
26,000
5,000
21,000

-D

-D

Solution Manual in Partnership and Corporation 2014-2015

IX.

Rolando Ibaez Enterprises


Accounts Payable
P35,000 BB
25,000
20,000 On acct.
30,000 - A

Payment

X.

BB
Billing

Accounts Receivable
350,000
5,000 Write-off
100,000 145,000 - A
300,000

Vicente Chotangco, Jr.


BB

XI.

E. Detoya & Sons


BB

XII.

Accounts Receivable
50,000
36,000
60,000
4,000 - A
110,000
40,000
70,000

Accounts Receivable
100,000
2,000
67,000
100,000
69,000
31,000
80,000 Sales
49,000 Account Sales
90,000 Cash Sales
139,000 - B

L. Caminade Enterprises
Accounts Payable
20,000
70,000
50,000
80,000
130,000

BB
Account Purchases
Cash Purchases
Total Purchases - B

XIII. Laureano Cacho Trading


1,240,000 100,000 = 1,140,000 = 228,000
5 years
5
Cost of Machine
Less: Acc. Depn.
Net Book Value
Sold at
Loss on disposal

P1,240,000
228,000
P1,012,000
960,000
(P 52,000) - A

XIV. Santos Advertising Agency

Gomezano
SM Marketing
Yu and Sons

XV.

1 30 days
10,000
15,000
35,000
60,000
x 5%
3,000

31 60 days
20,000
30,000
45,000
95,000
x 8%
7,600

61 days and over


20,000
5,000
25,000
x 10%
2,500

= 13,100 8,000 = 5,100 - A

Leopoldo Medina Trading

250 units x P31 = P7,750


65
x 33 = 2,145
FIFO
P9,895 - C

P27,605 835 x 315 = P10,413.86 Average


9,895.00
P 518.86 bigger - B

XVI. Lucky Strike Co.


Beg. Inventory
Purchases
Freight In
Purchase Ret. & Allow.
Available for Sale
Cost of Goods Sold:
Sales
P4,500,000
Less: Gross Profit (40%)
1,800,000
Estimated Inventory, end
Less: Actual Inventory after fire
Damaged by fire

Solution Manual in Partnership and Corporation 2014-2015

P 3,450,000
2,740,000
20,000
(
25,000)
P 6,185,000

2,700,000
P3,485,000 - A
2,948,000
P 537,000 - C

XVII. Universal Financing Co.


Principal

P50,000 x 15% 90 days = P 1,875


360
50,000
P 51,875 MV -C

P 1,875 3 x 2 = P1,250 - A
Interest Expense
Accrued Interest Expense

1,250
1,250

** Quizzers **
Test III
Manufacturing
Dr.
Cr.

1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)

Finished Goods, Beg.


Finished Goods, End
Goods in Process, Beg.
Goods in Process, End
Raw Materials, Beg.
Raw Materials, End
Factory Supplies Inventory
Factory Supplies Used
Salaries - Office
Salaries - Factory
Repair - Office Equipment
Repairs - Factory Equipment
Light and Water - Office
Light and Water - Factory
Tools Used
Patents
Amortization of Patents
Purchases, Raw Materials
Freight In
Sales

Income Statement
Dr.
Cr.

Balance Sheet
Dr.
Cr.

Test IV Multiple Choice (Problem)


1.

2.

3.

4.

5.

Raw Materials, Beg.


Purchases, Raw Materials
Freight In
Available for Sale
Less: Raw Materials, End
Direct Materials

P 120,000
110,000
5,000
P 235,000
105,000
P 130,000

(B)

Direct Materials
Direct Labor
Prime Cost

P 130,000
308,000
P 438,000

(A)

Manufacturing Overhead:
Indirect Labor
Indirect Materials
Amortization of Trademark
Real Expense - Factory
Depreciation - Factory
Factory Overhead

P 45,000
65,000
50,000
25,000
40,000
P 225,000

(A)

Conversion Cost:
Direct Labor
Manufacturing Overhead

P 308,000
225,000

Factory Cost:
Direct Materials
Direct Labor
Manufacturing Overhead

Solution Manual in Partnership and Corporation 2014-2015

P 533,000

(A)

P 130,000
308,000
225,000
P 663,000

(C)

6.

7.

Cost of Goods Manufactured:


Direct Materials
Direct Labor
Manufacturing Overhead
Factory Cost
Add: Work in Process, Beg.
Total cost placed in process
Less: Work in Process, End
Cost of Goods Manufactured

P 130,000
308,000
225,000
P 663,000
250,000
P 913,000
275,000
P 638,000

(A)

Cost of Goods Manufactured


Finished Goods, Inventory
Goods Available for Sale
Less: Finished Goods, End
Cost of Goods Manufactured and sold

P 638,000
170,000
P 808,000
290,000
P 518,000

(A)

Chapter 2
Partnership Nature and Information
** Exercises/Problems **
2-1.

Sanada and Estrebilla

Requirement 1:

Cash
Merchandise Inventory
Saada, Capital

250,000
160,000

Cash
Delivery Car
Estrebilla, Capital

380,000
950,000

410,000

1,330,000

Requirement 2:
Current Assets:
Cash
Merchandise

Partners Equity
P 630,000
160,000

Non-Current Assets:
Delivery Equipment
Total Assets
2-2.

P 790,000

Saada, Capital
Estrebilla, Capital

P 410,000
1,330,000

950,000
P1,740,000

P1,740,000

Maula, Montecina and Maceda

Requirement 1a:

Cash
Furniture and Fixtures
Transportation Equipment
Accounts Payable
Maula, Capital
Montecina, Capital

P200,000
120,000
850,000
P 100,000
270,000
800,000

Jeremy Maceda was admitted in the partnership as an


industrial partner with a 15% share in profit.
Requirement 1b:

Cash
Furniture and Fixtures
Transportation Equipment
Maula, Capital
Montecina, Capital

P200,000
120,000
850,000
270,000
900,000

** (Same notation for Maceda)


Requirement 2:
Assets
Current Assets
Cash
Non-Current Assets
Furniture & Fixtures
120,000
Transportation Equipment
850,000

Total Assets

Solution Manual in Partnership and Corporation 2014-2015

Current Liabilities
Accounts Payable

100,000

200,000

970,00

1,170,000

Partners Equity
Maula, Capital
Montecina, Capital
Maceda, Capital
Total Partners Equity
Total Liability &
Partners Equity

270,000
800,000
1,070,000
1,170,000

2-3.

Malquisto and Rocabo

Requirement 1:

Debits:
Cash
Accounts Receivable
Merchandise
Equipment

P 375,000
90,000
420,000
250,000

Credits:
Estimated Uncollectible
Accumulated Depreciation
Accounts Payable
Account balance of Malquisto
Requirement 2:

P 1,000
50,000
75,000

a) Malquisto, Capital
Estimated Uncollectible Account

126,00
P1,009,000
4,000
4,000

b) Malquisto, Capital
Merchandise

30,000

c) Malquisto, Capital
Accumulated Depreciation

20,000

30,000

d) Malquisto, Capital
Accrued Utilities
Requirement 3:

P1,135,000

20,000
1,500
1,500

Est. Uncollectible Accounts


Accumulated Depreciation
Accounts Payable
Accrued Utilities Expense
Malquisto, Capital
Cash
Accounts Receivable
Merchandise
Equipment

5,000
70,000
75,000
1,500
953500
375,000
90,000
390,000
250,000

Requirement 4:
Malquisto and Rocabo
Statement of Financial Position
As of _________
Assets
Current Assets:
Cash
Accounts Receivable
Est. Uncollectible Account
Merchandise
Non-Current Assets:
Equipment (Net)
Total Assets

851,750
90,000
5,000

85,000
390,000
180,000
1,506,750

Liabilities
Accounts Payable
75,000
Accrued Utilities Expense
1,500

76,500

Partners Equity
953,500
476,750

1,430,750

Malquisto, capital
Rocabo, Capital

Total Liabilities & Owners Equity

1,506,750

(the account Accumulated Depreciation is no longer carried in the book of the partnership)

2-4.

Malquisto, Beringuel and Alemanza

Requirement 1:
Adjusting entries in their respective Sole Proprietorship Book
Malquisto
1) Malquisto, Capital
4,000
Est. Uncoll. Acct.
2) Malquisto, Capital
Merchandise

42,000

3) Malquisto, Capital
Acc. Depn.

5,000

4,000

Beringuel
Est. Uncoll. Acct.
500
Beringuel, Capital
Beringuel, Capital
Merchandise

60,000

42,000

Beringuel, Capital
Acc. Depn.

100,000

5,000

4) Cash
50,000
Malquisto, Capital
50,000

500

Alemanza, Capital
Merchandise

45,000

60,000

Alemanza, Capital
Acc. Depn.

5,000

100,000

Cash
150,000
Beringuel, Capital
150,000

Solution Manual in Partnership and Corporation 2014-2015

Alemanza
Alemanza, Capital
1,500
Est. Uncoll. Acct.

1,500

45,000

5,000

Cash
250,000
Alemanza, Capital
250,000

Requirement 2:

Closing Entries in their respective sole proprietorship book.

Malquisto
Est. Uncoll. Acct.
7,000
Acc. Depn.
185,000
Malquisto, Capital 1,556,000
Cash
A/R
Merchandise
Equipment

Requirement 3:

950,000
70,00
378,000
350,000

Beringuel
Est. Uncoll. Acct.
4,500
Acc. Depn.
330,000
Beringuel, Capital 1,625,500
Cash
A/R
Merchandise
Equipment

850,000
90,000
540,000
480,000

Alemanza
Est. Uncoll. Acct.
3,500
Acc. Depn.
180,000
Alemanza, Capital 1,246,500
Cash
A/R
Merchandise
Equipment

750,000
25,000
405,000
250,000

Compound Opening Journal Entry

Cash
Accounts Receivable
Merchandise
Equipment
Estimated Uncollectible Account
Malquisto, Capital
Beringuel, Capital
Alemanza, Capital

3,000,000
185,000
1,323,000
358,000
15,000
1,606,000
1,775,500
1,496,500

(Accumulated Depreciation-Equipment is no longer shown in the opening-entry)

2-5.

Laureto and Auditor Partnership

Assumption 1

Requirement 1: Journal Entries to close their Respective Sole Proprietorships Book


Laureto
Accounts Payable
Notes Payable
Interest Payable
Allow. for Doubtful Accounts
Accumulated Depreciation
Laureto, Capital
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment

Requirement 2:

50,000
20,000
500
10,000
15,000
275,500
125,000
80,000
50,000
1,000
75,000
40,000

Auditor
Accounts Payable
Allow. for Doubtful Accounts
Acc. Depn. Equipment
Auditor, Capital
Cash
Accounts Receivable
Merchandise
Equipment

75,000
12,000
40,000
389,000
186,000
120,000
150,000
60,000

Journal Entries to record investment in the Partnership Book

Laureto
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment
Allowance for Doubtful Accounts
Accounts Payable
Notes Payable
Interest Payable
Laureto, Capital

Auditor
Cash
186,000
Accounts Receivable
120,000
Merchandise
150,000
Equipment
20,000
Accounts Payable
Allowance for Doubtful Accounts
Auditor, Capital

75,000
12,000
389,000

6,000

Book of Auditor
Auditor, Capital
12,000
Allowance for Doubtful Acct.

12,000

Auditor, Capital
Merchandise

7,500

3,750

Auditor, Capital
Acc. Depn. Equipment

8,000

125,000
80,000
50,000
1,000
75,000
25,000
10,000
50,000
20,000
500
275,000

Assumption 2
Requirement 1:
Book of Laureto
Laureto, Capital
Allowance for Doubtful Acct.
Laureto, Capital
Merchandise
Laureto, Capital
Acc. Depn. Equipment

Adjusting Entries
6,000

3,750

17,000
17,000

Solution Manual in Partnership and Corporation 2014-2015

7,500

8,000

Closing Entries in their Respective Sole Proprietorship Book


Book of Laureto
Allowance for Doubtful Acct.
Acc. Depn. Equipment
Accounts Payable
Notes Payable
Interest Payable
Laureto, Capital
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment

Requirement 2:

186,000
120,000
142,500
60,000

125,000
80,000
50,000
1,000
71,250
8,000
16,000
50,000
20,000
500
248,750

Auditor
Cash
Accounts Receivable
Merchandise
Equipment
Allowance for Doubtful Accts.
Accounts Payable
Auditor, Capital

186,000
120,000
142,000
12,000
24,000
75,000
361,500

Mendez and Salazar


ERRATUM: P300,000 cost of building was Salazars investment

Requirement 1a:

Requirement 1b:

2-7.

125,000
80,000
50,000
1,000
71,250
40,000

Book of Auditor
Allowance for Doubtful Acct.
24,000
Acc. Depn. Equipment
48,000
Accounts Payable
75,000
Auditor, Capital
361,500
Cash
Accounts Receivable
Merchandise
Equipment

Journal Entries to record investment in the Partnership Book

Laureto
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Merchandise
Equipment
Allowance for Doubtful Accts.
Accounts Payable
Notes Payable
Interest Payable
Laureto, Capital

2-6.

16,000
32,000
50,000
20,000
500
248,750

Cash
Building
Furniture
Mendez, Capital
Salazar, Capital

300,000
300,000
70,000

Cash
Accounts Receivable
Building
Furniture
Accounts Payable
Mendez, Capital
Salazar, Capital

300,000
30,000
300,000
70,000

140,000
530,000

20,000
170,000
510,000

Dabucol and Miranda


Compound Journal Entry
Cash
220,000
Computer
550,000
Furniture & Fixtures
200,000
Prepaid Rental
6,000
Dabucol, Capital
Miranda, Capital

566,000
410,000

Computations:
Cash
Computer
Furniture & Fixtures
Prepaid Rental

Dabucol
100,000
300,000
160,000
6,000
566,000

Miranda
120,000
250,000
40,000
410,000

Solution Manual in Partnership and Corporation 2014-2015

Total
220,000
550,000
200,000
6,000
976,000

2-8.

Torralba and Rosada


Requirement 1:
Debits:
Cash
Accounts Receivable
Merchandise
Equipment

85,000
60,000
120,000
150,000

Credits:
Allow. For Doubtful Accounts
Acc. Depreciation
Accounts Payable
Torralba, Capital

4,000
30,000
80,000

415,000

114,000
301,000

Requirement 2:
Allow. for Doubtful Accounts
Torralba, Capital

3,000
3,000

Torralba, Capital
Merchandise

15,000

Torralba, Capital
Accumulated Depreciation

15,000

15,000
15,000

Accounts Payable
Torralba, Capital

4,000
4,000

Requirement 3:
Allow. for Doubtful Accounts
Accumulated Depreciation
Accounts Payable
Torralba, Capital
Cash
Accounts Receivable
Merchandise
Equipment

1,000
45,000
76,000
278,000
85,000
60,000
105,000
150,000

Requirement 4:
Cash (85,000+1/2 of P278,000)
Accounts Receivable
Merchandise
Equipment
Allow. for Doubtful Accounts
Accounts Payable
Torralba, Capital
Rosada, Capital (1/2 of P278,000)

224,000
60,000
105,000
105,000
1,000
76,000
278,000
139,000

Requirement 5:
Torralba and Rosada Partnership
Statement of Financial Position
As of _________
Assets
Cash
Accounts Receivable
Less: Allow. For Doubtful Accounts
Merchandise
Current Assets
Non-Current Assets:
Equipment
Total Assets
2-9.

Liabilities
60,000
1,000

224,000

Accounts Payable

59,000
105,000
338,000

Torralba, Capital
Rosada, Capital

105,000
493,00

76,000

Partners Equity
278,000
139,000

417,000

Total Liability & Partners Equity

493,000

Galbog and Torrequemada


Requirement 1:
Glabog, Capital
Estimated Uncollectible Account

15,000

Glabog, Capital
Merchandise

30,000

Glabog, Capital
Accumulated Depreciation

20,000

Solution Manual in Partnership and Corporation 2014-2015

15,000
30,000
20,000

Requirement 2:

Journal Entries to close the books of Glabog


Allow. for Doubtful Accounts
Accumulated Depreciation
Accounts Payable
Glabog, Capital
Cash
Accounts Receivable
Merchandise
Equipment

15,000
20,000
60,000
670,000
320,000
75,000
220,000
150,000

Requirement 3:
Assets
Current Assets:
Cash (P320,000 + P500,000)
Accounts Receivable
Allow. for Doubtful Accounts
Merchandise
Non-Current Asset:
Equipment
Total Assets

Liability

75,000
15,000

820,000

Accounts Payable

60,000
220,000

Partners Equity
Glabog, Capital
670,000
Torrequemada, Capital
500,000
Total Liability &
Partners Equity

130,000
1,230,000

60,000

1,170,000
1,230,000

2-10. Angie Aguilon Company


Requirement 1:

Capital Contribution of Zulueta


Unadjusted capital of Aguilon
Accounts Receivable to be derecognized
Recognized prepaid expenses
Revaluation of Equipment
Adjusted Aguilon Capital

267,000
( 25,000 )
13,000
25,000
280,000

Capital contribution of Zulueta is equal to P280,000,Matching the adjusted capital of Aguilon.


Requirement 2:
Angie Aguilon Company
Statement of Financial Position
As of June 30 __________
Assets
Cash
Merchandise
Prepaid Expense
Non-Current Asset:
Equipment
Acc. Depreciation
Total Assets

Liability
35,000
185,000
13,000
120,000
10,000

Accounts Payable
Accrued Expenses
Total Liabilities

45,000
18,000
63,000

233,000

110,000
343,000

Partners Equity
A. Aguilon, Capital
280,000
Total Liability & Partners Equity 343,000

2-11. Misamis Construction Supply


Requirement A:

Hingcos Capital Balance


Debits:
Cash in Bank
Accounts Receivable
Merchandise Inventory
Equipment
Total Debit

420,000
82,000
100,000
130,000
732,000

Credits:
Allow. for Doubtful Accounts
Acc. Depreciation
Total Credit
Hingco's Capital Balance

8,500
15,000
23,500
708,500

Barillo's Capital Balance


Debits:
Cash in Bank
Accounts Receivable
Merchandise Inventory
Total Debit

450,000
60,000
250,000
760,000

Credits:
Allow. for Doubtful Accounts
Barillo's Capital Balance

7,500
752,500

Solution Manual in Partnership and Corporation 2014-2015

Requirement B:

Requirement C:

a) Allow. for Doubtful Accounts


Hingco, Capital
Accounts Receivable

8,500
73,500

Allow. for Doubtful Accounts


Barillo, Capital
Accounts Receivable

7,500
52,500

82,000

60,000

b) Hingco, Capital
Merchandidse

10,000

Barillo, Capital
Merchandidse

20,000

c) Acc. Depreciation
Hingco, Capital

5,000

10,000
20,000
5,000

Cash in Bank
Merchandise Inventory
Equipment
Hingco, Capital

420,000
90,000
120,000

Cash in Bank
Merchandise Inventory
Barillo, Capital

450,000
230,000

Requirement D:

630,000

680,000
Hingco and Barillo
Statement of Financial Position
As of July 31 20__

Assets
Cash in Bank
Merchandise Inventory
Equipment
Total

Partners Equity
Hingco, Capital
630,000
Barillo, Capital
680,000

870,000
320,000
120,000
1,310,000

Total

1,310,000

2-12. Janulgue and Rota


Requirement 1:
Janulque's Book:
Janulgue, Capital
Allow. for Doubtful Accounts

30,000

Janulgue, Capital
Acc. Depreciation

10,000

30,000
10,000

Rota's Book:
Rota, Capital
Merchandise

30,000

Accounts Payable
Rota, Capital

25,000

Requirement 2:
To record the contribution of Janulgue
Cash
Accounts Receivable
Merchandise
Prepaid Insurance
Equipment
Allow. for Doubtful Accounts
Janulgue, Capital
To record the contribution of Rota
Cash
Accounts Receivable
Merchandise
Allow. for Doubtful Accounts
Rota, Capital

Solution Manual in Partnership and Corporation 2014-2015

30,000
25,000

180,000
200,000
500,000
6,000
70,000
50,000
906,000

150,000
100,000
620,000
2,000
868,000

10

2-13. Medina and Loqueloque


Adjusting Entries in the books of Medina
Requirement 1:

Requirement 2:

a) Medina, Capital
Allow. for Doubtful Accounts

4,750
4,750

b) Medina, Capital
Merchandise

25,000

c) Acc. Depreciation
Medina, Capital

90,000

d) Medina, Capital
Accrued Rental Expense

60,000

e) Prepaid Expenses
Medina, Capital

25,000

25,000
90,000
60,000
25,000

Loqueloque should contribute cash of P3,795,250 equal to the capital balance of Medina
computed as follows:

Capital balance of Medina before adjustment


Add: Adjustment

3,770,000
25,250
3,795,250

Journal Entries to open the book of the Partnership:


Requirement 3:

Cash
Accounts Receivable
Merchandise
Prepaid Expenses
Store Equipment
Allow. for Doubtful Accounts
Accounts Payable
Accrued Rental Expense
Medina, Capital
Loqueloque, Capital

4,845,250
65,000
2,325,000
25,000
850,000
9,750
450,000
60,000
3,795,250
3,795,250

2-14. Pamulagan and Salec-Amer


Requirement 1:

a) Amer, Capital
Allow. for Doubtful Accounts
b) Amer, Capital
Accrued Expense Payable
c) Amer, Capital
Merchandise

Requirement 2:

10,000
10,000
2,000
2,000
10,000
P10,000

Cash in Bank
Pamulagan, Capital

543,000

Cash in Bank
Accounts Receivable
Merchandise Inventory
Furniture and Fixtures
Allow. for Doubtful Accounts
Accrued Expense
Accounts Payable
Amer, Capital

250,000
100,000
95,000
130,000

543,000

10,000
2,000
20,000
543,000

Requirement 3:
Assets
Cash in Bank
Accounts Receivable
Allow. for Doubtful Account
Merchandise Inventory
Furniture and Fixtures
Total Assets

Liabilities
793,000
100,000
10,000

Solution Manual in Partnership and Corporation 2014-2015

90,000
95,000
130,000
1,108,000

Accounts Payable
Accrued Expense
Total Liabilities
Partners Equity
Amer, Capital
Pamulagan, Capital
Total Partners Equity
Total Liabilities and
Partners Equity

2,000
20,000
22,000

543,000
543,000
1,086,000
1,108,000

11

2-15. Degracia and Mascarias


Mascarias offered Investment:
Cash
Equipment
Total

200,000
80,000
280,000

Degracia's Adjusted Capital Balance:


Cash
Merchandise
Total

80,000
175,000
255,000

1/2 of P280,000
Degracia's adjusted investment
Reduction from Degracia's Investment

140,000
255,000
115,000

Composed of:
Cash
Merchandise

Requirement 1:

80,000
35,000
115,000
1/2 of Mascarias offered Investment of P280,000
Degracia's Investment
Reduction from Degracia's Investment
Cash
Merchandise

Requirement 2:

80,000
35,000
115,000

Estimated Uncollectible Accounts


Degracia, Capital
Accounts Receivable

15,000
85,000

Accounts Payable
Degracia, Capital

60,000

100,000
60,000

Degracia, Capital
Cash
Merchandise
Requirement 3:

140,000
255,000
115,000

115,000
80,000
35,000

Just to comply
with the
requirements,
these adjusting
entries were
prepared. The
receivable and
payable accounts
remain in the sole
proprietors
records.

To record contribution of Degracia:


Merchandise (175,000-35,000)
Degracia, Capital

140,000
140,000

To record contribution of Mascarias:


Cash
Equipment
Mascarias, Capital

200,000
80,000
280,000

2-16. Estalilla, Fortuna and Sonsona


Requirement A:
Capital balance prior to formation of the partnership:
Cash
Accounts Receivable
Allow. of Accounts Receivable
Merchandise
Transportation Equipment
Acc. Depreciation
Building
Acc. Depreciation
Land
Accounts Payable
Capital balances prior to formation

Solution Manual in Partnership and Corporation 2014-2015

Estalilla
30,000
105,000
(6,000)
150,000

Fortuna
70,000
90,000
(4,000)
280,000

Sonsona
40,000
70,000
(15,000)
120,000
350,000
(80,000)

650,000
(100,000)
(40,000)
789,000

800,000
(50,000)
1,186,000

(45,000)
440,000

12

Requirement B:
The new Capital balance after the revaluation of non-cash assets:
Estalilla
30,000
105,000
(10,000)
130,000

Cash
Accounts Receivable
Allow. of Accounts Receivable
Merchandise
Transportation Equipment
Acc. Depreciation
Building
Acc. Depreciation
Land
Accounts Payable
Capital balances prior to formation

Requirement C:

a)

b)

c)

d)
e)

Requirement D:

Fortuna
70,000
90,000
(9,000)
220,000

650,000
(50,000)
(40,000)
815,000

850,000
(50,000)
1,171,000

Estalilla, Capital
Allow. for Doubtful Accounts

4,000

Fortuna, Capital
Allow. for Doubtful Accounts

5,000

Allow. for Doubtful Accounts


Sonsona, Capital

4,500

(45,000)
404,500

4,000
5,000
4,500

Estalilla, Capital
Merchandise

20,000

Fortuna, Capital
Merchandise

60,000

Sonsona, Capital
Merchandise

20,000

Sonsona, Capital
Acc. Depn.-Transportation Equipment

20,000

Acc. Depreciation.- Building


Estalilla, Capital

50,000

Land
Fortuna, Capital

50,000

20,000
60,000
20,000

Cash
Accounts Receivable
Merchandise
Transportation Equipment
Building
Land
Allow. for Doubtful Accounts
Acc. Depn. Transportation Equipment
Acc. Depreciation. Building
Accounts Payable
Estalilla, Capital
Fortuna, Capital
Sonsona, Capital

Requirement E:

Sonsona
40,000
70,000
(10,500)
100,000
350,000
(100,000)

20,000

50,000
50,000

140,000
265,000
450,000
350,000
650,000
850,000
29,500
100,000
50,000
135,000
815,000
1,171,000
404,500

Estalilla, Fortuna, Sonsona


Statement of Financial Position
As of 31 March 20A
Assets
Cash
Accounts Receivable
Allow. for Doubtful Accounts
Merchandise
Transportation Equipment
Acc. Depreciation - Transportation Equip.
Building
Acc. Depreciation - Building
Land
Total

Solution Manual in Partnership and Corporation 2014-2015

140,000
265,000
29,500
350,000
100,000
650,000
50,000

235,500
450,000
250,000
600,000
850,000
2,252,000

13

Liabilities and Partners Equity


Liabilities
Accounts Payable

135,000
Partners Equity

Estalilla, Capital
Fortuna, Capital
Sonsona, Capital
Total Liabilities & Partners Equity

815,000
1,171,000
404,500

2,390,500
2,252,000

** Multiple Choice (Problem) **


2-I.

JJ Pawnshop

Q1

Q2

A
Solution:
Assets
Liabilities
Owner's Equity

2-II.

100%
40%
60%

800,000
320,000
480,000

P480,000 60%
P800,000 - P480,000

=
=

P800,000
P320,000

(B)
(A)

Edulan, Tabarranza and Labasan

Q3

Q4

C
Solution:
75,000 1/5

2-III.

375,000
- 75,000
300,000
2
150,000

(C) - equal to total capitalization of the partnership


- contribution of Tabaranza

(C) - each contribution of Labasan and Edulan

Santos and Bombeo

Q5 C

350,000

- the cost of land when sold in that date is considered the fair market value
of the land

Q6

2-IV.

200,000
120,000
320,000

cash
fair market value of equipment
(C)

Kudemus and Rendon

Q7
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Merchandise
Building
Accounts Payable
Total
Q8
Rendon, Capital
Add: Liability

2-V.

Rendon
1,410,000
120000
1,710,000

Kudemus
400,000
120,000
(1,200)
50,000

558,000

Rendon
600,000

60,000
1,050,000
( 300,000)
1,410,000 =

1,968,000

(A)

(B)

Dolor and Aleman

Q9

The land should be valued in the partnership book at P200,000 (C)

Q 10

Alemans capital account should be credited in the amount of P187,500 (B)

Q 11

The capital account balances of Dolors capital account during the partnership formation would be P250,000 (D)

2-VI.

Awayan and Nadua

Q 12
Accounts Receivable
Allowance

Awayan
80,000
8,000
72,000

Solution Manual in Partnership and Corporation 2014-2015

Nadua
95,000
14,250
80,750

(A)

14

Q 13

Awayan
150,000
72,000
125,000
15,000
362,000

Cash
Accounts Receivable
Merchandise
Prepaid Expense

Q 14

(A)

Nadua
120,000
80,750
170,000
(10,000)
360,750

Cash
Accounts Receivable
Accrued Expense
Prepaid Expense

(A)

2-VII. Beceira and Obeso


Q 15

Capital contribution of Obeso:


2 units Altis taxi
Less: Liability assumed by partnership
Obeso, capital
required additional contribution of Beceira

1,950,000
200,000
1,750,000
x 20%

additional cash that Beceira should contribute


Q 16

Q 17

Cost of 2 units Altis


Less: Liability assumed by the partnership
Capital contribution of Obeso

350,000

(C)

1,950,000
200,000
1,750,000

(B)

Partners Capital Balances:


Cash (P350,000 + P350,000
2 units Corolla
2 units Altis
Accounts Payable (P250,000 + P200,000)
Beceira, Capital
Obeso, Capital
Beceira, Capital
Obeso, Capital

1,790,000
1,750,000
3,540,000

700,000
1,340,000
1,950,000
450,000
1,790,000
1,750,000

(D)

2-VIII. Rada and Besinan


Q 18

Accounts Receivable
x Probability of Collection
Estimated Realizable Value

40,000
70%
28,000

Original balance of Allowance


Increased by
New balance of Allowance

3,000
9,000 (A)
12,000

Q 19

At fair market value of P100,000 (B)

Q 20

Cash
Accounts Receivable
Laundry Equipment
Accounts Payable
Net Assets

2-IX.

65,000
28,000
100,000
(15,000)
178,000

(A) The amount of cash to be contributed by Besinan

Basa and Alfeche

Q 21

429,000 (C)

Q 22

390,000 (B)

Cash
Accounts Receivable
Merchandise
Prepaid Expense
Accrued Expense
(C)

Basa

Alfeche

145,000
64,000
200,000
20,000

160,000
45,000
190,000

429,000
390,000
(39,000)

Solution Manual in Partnership and Corporation 2014-2015

(5,000)
390,000

(B)

Amount of cash to be deducted from Basa

15

Q 23
Cash Balance of Basa
Excess Capital Contribution of Alfeche
Cash Balance of Basa

145,000
-39,000
106,000

Cash Balance of Alfeche

160,000

(D)

Chapter 3
Partnership Operations
** Exercises and Problems **
3-1

Cebu Grocers
Requirement 1
Agreed Ratio
Matero
30%
x
120,000 =
Bernacer
20%
x
120,000 =
Selisana
50%
x
120,000 =
Profit distributed
Requirement 2
Proportional Ratio
Matero
60/160 x
120,000
Bernacer
80/160 x
120,000
Selisana
20/160 x
120,000

Requirement 3
Income and Expense Summary
Matero, Drawing
Bernacer, Drawing
Selisana, Drawing
3-2

=
=
=

45,000
60,000
15,000
120,000

120,000
36,000
24,000
60,000

Cotabato Micro-Appliance Center


P/L Ratio ( in proportion to capital)
Profit P80,000
Share of Pedrosa (80,000 x 8%)
Share of Cogollo (80,000 6,400 x 62.5%)
Share of Eruela (80,000 6,400 x 37.5%)
Profit distributed

3-3

36,000
24,000
60,000
120,000

Cogollo
62.5%

Eruela
37.5%
(2)

6,400

(1)

6,400

46,000
46,000

27,600
27,600

80,000 (3)

Steve and Raymund


Income & Expense Summary
Steve, Drawing
Raymund, Drawing

P450,000
P229,500
220,500

Steve
Bonus to Raymund
Balance:
Steve
(P450,000 - 67,500 x 3/5)
Raymund (P450,000 67,500 x 2/5)
Total
3-4

Pedrosa

Raymund
P67,500

= P229,500
=
P229,500

153,000
P220,000

Musuan Supermarket
Requirement 1a
800,000
1,500

279,500

149,066.67

700,000
1,500

279,500

130,433.33
279,500.00
Journal Entry

Income & Expense Summary


Japad, Drawing
Ayuban, Drawing
Solution Manual in Partnership and Corporation 2014-2015

279,500
149,066.67
130,433.33

16

Requirement 1b:
810,000
1,515
705,000
1,515

279,500

149,435.64

279,500

130,064.36
279,500.00
Journal Entry

Income & Expense Summary


Japad, Drawing
Ayuban, Drawing

P279,000
149,435.64
130,064.36

Requirement 1c:
Debit
Jan. 1
Apr.1
Oct.1

Credit

No. of Months
Unchanged
x
3
x
6
x
3
12

Balances
800,000
820,000
810,000

10,000

Peso Unit
2,400,000
4,920,000
2,430,000
9,750,000
12
812,500

Average Capital of Japad

Debit
Jan. 1
Apr.1
Nov.1

Credit

Balances
700,000
680,000
705,000

20,000
25,000

No. of Months
Unchanged
x
3
x
7
x
2
12

Peso Unit
2,100,000
4,760,000
1,410,000
8,270,000
12
689,166.67

Average Capital of Ayuban


P 812,500
1,501.6667

P279,500

151,227.80

P689,166.67
1,501.6667

P279,500

128,272.20
279,500.00

Journal Entry
Income & Expense Summary
Japad, Drawing
Ayuban, Drawing
Requirement 1d:
Japad
Ayuban

P279,500
P279,500

x
x

3/5
2/5

=
=

279,500
151,227.80
128,272.20

167,700
111,800
279,500
Journal Entry

Income & Expense Summary


Japad, Drawing
Ayuban, Drawing
Requirement 1e:
Japad
Ayuban

P279,500
P279,500

x
x

279,500
167,700
111,800

= 139,750
= 139,750
279,500
Journal Entry

Income & Expense Summary


Japad, Drawing
Ayuban, Drawing
3-5

279,500
139,750
139,750

Mallari and Asuncion

Requirement 1a
Beg. Capital Ratio:
Mallari
Asuncion

P 85,000
120,000
P205,000

Solution Manual in Partnership and Corporation 2014-2015

85,000/205,000
120,000/205,000

x
x

P20,000
P20,000

=
=

P 8,292.68
11,707.32
P20,000.00

17

Journal Entry
Income & Expense Summary
Mallari, Drawing
Asuncion, Drawing

20,000
8,292.68
11,707.32

Requirement 1b
Ending Capital Ratio:
Mallari
Asuncion

P100,000
95,000
P195,000

100,000/195,000 x P20,000
95,000/195,000 x P20,000

=
=

P10,256.41
9,743.59
P20,000.00

Journal Entry
Income & Expense Summary
Mallari, Drawing
Asuncion, Drawing

P20,000
P10,256.41
9,743.59

Requirement 2a:
Mallari
Debit

Credit

Jan.1
Mar.1

No. of Months
Unchanged
x
2
x
10
12

Balances
85,000
100,000

P15,000

Peso Unit
170,000
1,000,000
1,170,000
12
97,500

Asuncion
Debit
Jan.1
Oct.1

Credit

P25,000

Mallari
Asuncion

No. of Months
Unchanged
x
9
x
3
12

Balances
120,000
95,000

P 97,500
113,750
P211,250

97,500/211,250 x P30,000
113,750/211,250 x P30,000
Loss

=
=

Peso Unit
1,080,000
285,000
1,365,000
12
113,750
P(13,846.15)
(16,153.85)
P(30,000.00)

Journal Entry
Mallari, Drawing
Asuncion, Drawing
Income & Expense Summary
To distribute loss.
Requirement 2b:
Mallari
Asuncion

- P30,000 x 4/5
- P30,000 x 1/5

=
=

P13,846.15
16,153.85
P30,000

P(24,000)
(6,000)
P(30,000)
Journal Entry

Mallari, Drawing
Asuncion, Drawing
Income & Expense Summary
To distribute loss.
3-6

P24,000
6,000
P30,000

Esmeralda and Besino

Requirement 1
Salaries
Interest on Beg. Capital
Remainder (60%-40%)

Total

Esmeralda

Besino

60,000
82,500
142,500
65,500
208,000

36,000
30,000

24,000
52,500

39,300
105,300

26,200
102,700

Solution Manual in Partnership and Corporation 2014-2015

18

Requirement 2
Journal Entry
Income & Expense Summary
Esmeralda, Drawing
Besino, Drawing
3-7

P208,000
P 105,300
102,700

Gabayan and Domingo

Requirement 1:
Gabayan Palatino -

P150,000/P330,000 x P110,000 =
P180,000/P330,000 x P110,000 =

50,000
60,000
110,000

Requirement 2:
Total
Salaries
Remainder: 3/5 2/5

Gabayan

P 39,000
71,000
P110,000

Palatino

P 24,000
42,600
P 66,600

P 15,000
28,400
P 43,400

Requirement 3:
Total
10% interest
Remainder, Equally

3-8

Gabayan

P33,000
77,000
P110,000

Palatino

P 15,000
38,500
P 53,500

P 18,000
38,500
P 56,500

Cebu Vintage Car

Requirement A:
Total

Deriquito
P 45,000
60,160
130,220
P235,380

Searez

Annual Salaries
Interest on Beg. Capital
Remainder, Equally

P 75,000
114,560
260,440
P450,000

P 30,000
54,400
130,220
P214,620

Total

Deriquito

Searez

Interest based on Ending Capital


Annual Salaries
Remainder, Equally

P288,400
70,000
91,600
P450,000

P146,400
50,000
45,800
P242,200

P142,000
20,000
45,800
P207,800

Total

Deriquito

Annual Salaries
Bonus to Deriquito
Remainder, Average Capital

P220,000
112,500
117,500
P450,000

P120,000.00
112,500.00
58,368.08
P242,200.00

Requirement B:

Requirement C:

Debit
Jan.1
Oct.1
Dec.1

P70,000

Searez
P100,000.00
59,131.92
P159,131.92

Average Capital - DERIQUITO


No. of Months
Credit
Balances
Unchanged
P752,000 x
9
682,000 x
2
P50,000
732,000 x
1
12

Peso Unit
P 6,768,000
1,364,000
732,000
P8,864,000
12
P738,666.67

Average Capital - SEAREZ


Debit
Jan.1
Mar.1
Nov.1
Dec.1

Credit
P80,000

P10,000
40,000

Balances
P680,000
760,000
750,000
790,000

x
x
x
x

No. of Months
Unchanged
2
8
1
1
12
.

Average Capital
Deriquito
Searez

- P738,666.67
- P748,333.33

P738,666.67/1,487,000 x P117,500 =
P748,333.33/1,487,000 x P117,500 =

Solution Manual in Partnership and Corporation 2014-2015

Peso Unit
P 1,360,000
6,080,000
750,000
790,000
P 8,980,000
12
P 748,333.33

P 58,368.08
59,131.92
P117,500.00

19

3-9

Universal Dry Cleaning Services


Requirements:
Case A:

Total

Salaries Allowed
15% Interest
Remainder, Equally

P110,000
45,000
5,000
P160,000

Case B:

Total
Salaries Allowed
15% Interest
Remainder, Equally

P110,000
45,000
(25,000)
P130,000

Salaries Allowed
15% Interest
Remainder, Equally

P110,000
45,000
(185,000)
P(30,000)

Case C:

Total

Espaol

Rosada

P60,000
30,000
2,500
P92,500

P50,000
15,000
2,500
P67,500

Espaol

Rosada

P60,000
30,000
(12,500)
P77,500

P50,000
15,000
(12,500)
P52,500

Espaol

Rosada

P60,000
30,000
(92,500)
P(2,500)

P50,000
15,000
(92,500)
P(27,500)

Case A:
Journal Entry
Income & Expense Summary
Espaol, Drawing
Rosada, Drawing

P160,000
P92,500
67,500
Journal Entry

Income & Expense Summary


Espaol, Drawing
Rosada, Drawing

P130,000
P77,500
52,500
Journal Entry

Espaol, Drawing
Rosada, Drawing
Income & Expense Summary
3-10

P30,000

Aana, Beltran and Ventic


Total
P 75,000
20,000
45,000
P140,000

Annual Salaries
20% Interest
Remainder

3-11

P 2,500
27,500

Aana
P 30,000

Beltran
P 25,000

18,000
P 48,000

18,000
P 43,000

Ventic
P 20,000
20,000
9,000
P 49,000

Matuguinas and Rovelero


Annual Salaries
10% Bonus after Salaries
18% Interest based on Average
Remainder, Equally

Total
P 80,000
10,000
101,250
(11,250)
P180,000

Matuguinas
P 30,000
17,250
(5,625)
P 41,625

Rovelero
P 50,000
10,000
84,000
(5,625)
P138,375

Matuguinas
Debit
Jan.1
June 1
Oct.1

Credit

P20,000
P30,000

Balances
P100,000
80,000
110,000

No. of Months
Unchanged
x
5
x
4
x
3
12
.

Peso Unit
500,000
320,000
330,000
1,150,000
12
95,833.33

Rovelero
Debit
Jan.1
May 1
Nov.1

Credit
P50,000

P10,000

Solution Manual in Partnership and Corporation 2014-2015

Balances
P150,000
200,000
190,000

No. of Months
Unchanged
x
4
x
6
x
2 .
12

Peso Unit
600,000
1,020,000
3,800,000
5,600,000
12
466,666.67

20

Matuguinas
Rovelero

3-12

17,250
84,000
101,250

Robles, Saromines and Tiempo


Bonus (20% of P250,000)
Interest:
10% x P100,000
10% x P300,000
10% x P200,000
Salary Allowed
Remainder: (2:3:5)
As distributed

3-13

- P 95,833.33 x 18% =
- P466,666.67 x 18% =

Total
50,000

Robles
50,000

10,000
30,000
20,000
38,000
148,000
102,000
250,000

10,000

Saromines

Tiempo

30,000
20,000
38,000
98,000
20,400
118,400

30,000
30,600
60,600

20,000
51,000
71,000

Gadiano and Alisuag

Requirement A:
Salary to Gadiano
10% bonus to Alisuag (10% x P60,000)
Interest:
10% x P 85,000
10% x P150,000
Remainder:
Equally (Less than P30,000)
As distributed

Total
P20,000
6,000

Gadiano
P20,000

8,500
15,000
P49,500
10,500
P60,000

8,500

Alisuag
6,000

15,000
P21,000
5,250
P26,250

P28,500
5,250
P33,750

Requirement B:
Total
Salary, Bonus and Interest
(same as in Req. A)
Remainders:
P30,000 (equally)
in excess of P30,000 (30%-70%)
As distributed
3-14

Gadiano

Alisuag

P49,500

P28,500

P21,000

30,000
500
P80,000

15,000
150
P43,650

15,000
350
P36,350

Comval Supermarket
Case 1:
Separis
P 50,000.00
21,428.00
45,000.00
97,428.80
P213,856.80

Salary Allowance
Bonus (5% of profit after bonus)
Interest Allowed on Beg. Capital
Remainder: (2:3)
As distributed

Barroga
P 30,000.00
60,000.00
146,143.20
P236,143.20

Total
P 80,000
21,428
105,000
243,572
P450,000

Bonus Computation:
Profit before Bonus
Profit after Bonus
Bonus

P450,000 105%
P428,572 = 100%
P 21,428

OR

B=
=
B + .05B =
1.05B =
B=

5% (P - B)
P22,500 - .05B
P22,500
P22,500
P22,500
1.2

P21,428

Interest on Beginning Capital Balances


Separis =
Barroga =

Case 2:
Bonus (20% Profit P140,000-Bonus)
Salaries
Interest Allowed (10% of Ending
Capital Balance
Remainder: (4:3)
As distributed
Solution Manual in Partnership and Corporation 2014-2015

15% x P300,000 =
15% x P400,000 =

P 45,000
60,000
P105,000

Separis

Barroga

Total

P 81,666.00
60,000.00

P 30,000.00

P 80,000
21,428

28,000.00
194,476.57
P364,142.57

60,000.00
145,857.43
P265,587.43

105,000
340,334
P630,000

21

Profit before Bonus


Less: Salaries (60,000 + 80,000)
Profit after Bonus

Bonus Computation:
P 630,000
140,000
P 490,000 120%
OR

Bonus

408,334
P 81,666

B=
=
=

.20 (630,000 - 140,000B)


.20 (490,000 - B)
P98,000 - .20B

P98,000
1.2
P81,666

B=
Interest on Beginning Capital Balances
Separis =
10% x P280,000 =
P 28,000
Barroga =
10% x P400,000 =
40,000
P 68,000

Case 3:
Interest Allowed on Average Capital @ 10%
Salaries Allowed
Bonus
Remainder: 50%-50%
As distributed

Separis

Barroga

Total

P 30,667
80,000
33,636
132,432
P276,735

P 40,833
70,000

P 71,500
150,000
33,636
264,864
P520,000

132,432
P243,265

Separis
Jan.1
May 1
Sept. 1

Barroga

P300,000 x 12 = P3,600,000
40,000 x 8 =
320,000
60,000 x 4 = (240,000)
P3,680,000
12
P 306,667
x 10%
P 30,667

Jan.1
Sept. 1
Nov. 1

P400,000 x 12 = P4,800,000
50,000 x 8 =
200,000
50,000 x 2 = (100,000)
P4,900,000
12
P 408,333
x 10%
P 40,833

Bonus Computation:
Profit before Salaries & Bonus
Less: Salaries (80,000 + 70,000)
Profit after Salaries & Bonus

P 520,000
150,000
P 370,000 110%

Bonus

336,364 = 100%
P 33,636

OR

B=
=
=
=

B=

10% (P S B)
.10 (P520,000 P150,000 - B)
.10 (P370,000 B)
P370,000 - B
P370,000 1.1

P33,636

Case 4:
Separis
Bonus (20% of Profit)
Salaries Allowed
Interest Allowed on Beg. Capital at 10%
Remainder: (2:8)
As distributed
3-15

P 80,000
50,000
30,000
48,000
P208,000

Barroga

Total

P192,000
P192,000

P 80,000
50,000
30,000
240,000
P400,000

Ceniza, Barredo and Labata


Requirement 1:
As 30% share is given to Labata, what is left is 70% which will be shared between Ceniza
and Barredo based on their old P/L Ratios. Therefore:
Old P/L Ratio

New P/L
Ratio

Ceniza (3/5) = 60% x 70%


Barredo (2/5)= 40% x 70%
Labata
Total

42%
28%
30%
100%

Requirement 2:
Reported Profit
Overstatement of Inventory End, overstates Profit
Understatement of Prepaid Expense (asset) results to
overstatement of Expenses (P10,000 - 1,000)
Understatement of Accrued Expense (liability) results to
understatement of Expenses (P8,000 - 5,000)
Corrected Profit

Solution Manual in Partnership and Corporation 2014-2015

P300,000
(30,000)
9,000
(3,000)
P276,000

22

Ceniza =
Barredo =

3-16

Schedule of Profit Distribution:


3/5 or 60% of P276,000 =
P165,600
2/5 or 40% of P276,000 =
110,400
P276,000

Sorima and Magalso


Requirement 1:
Reported Profit

P150,000

1) Understatement of Inventory at the end results to Profit understatement


2) Non-recognition of Accrued Expense understates Expense and overstates Profit
3) Non-recognition of Supplies Expense overstates Profit
Corrected Profit

20,000
(5,000)
(8,000)
P157,000

Requirement 2:
Partners Equity Jan. 1, 2009
Add: Net Interest in Equity
Share in Profit
Less: Permanent Withdrawal
Partners Equity Dec. 31, 2009
3-17

Total

Sorima

Magalso

P450,000

P250,000

P200,000

157,000
P607,000
(50,000)
P557,000

(40%)

62,800
P312,800
(20,000)
P292,800

(60%)

94,200
P294,200
(30,000)
P264,200

Dipolog Grocers
Requirement 1:
Closing Entries
Merchandise Inventory, End
Sales
Purchase Return & Allowances
Merchandise Inventory, Beg.
Sales Discount
Purchases
Freight In
Income & Expense Summary

480,000
960,000
6,000

Income & Expense Summary


Salaries Expense
Freight Out
Taxes & Licenses
Supplies Expense
Depreciation

108,000

Income & Expense Summary


Pugoy, Drawing
Gargar, Drawing
Anguit, Drawing

121,000

510,000
4,000
700,000
3,000
229,000
50,000
1,000
7,000
10,000
40,000
49,880
41,950
29,170

Requirement 2:
Salaries to Partners
10% Bonus (P121,000 - P50,000)
Remainder:
Pugoy - 20% x P63,900
Gargar - 50% x P63,900
Anguit - 30% x P63,900
As distributed

Total
P 50,000
7,100

Pugoy
P 30,000
7,100

12,780
31,950
19,170
P121,000

12,780

Gargar
P 10,000

Anguit
P 10,000

31,950
P 49,880

P 41,950

19,170
P 29,170

Requirement 3:
Statement of Changes in Partners Equity
Partners Equity July 1, 2009
Add: Net Increase in Equity
Remainder:
Share in Profit
Less: Drawing
Partners Equity June 30, 2010
Operating Expenses
Income & Expense Summary
Solution Manual in Partnership and Corporation 2014-2015

Total
P215,000

Pugoy
P 75,000

Gargar
P 80,000

Anguit
P 60,000

121,000
(30,000)
P 91,000
P306,000

49,880
(15,000)
P 38,880
P109,880

42,950
(5,000)
P 36,950
P116,950

29,170
(10,000)
P 19,170
P 79,170

211,000
284,000

23

** Multiple Choice Problems **


3-I

Q-1. B

32,000/80,000 = 40%

3-II

Q-2. A

3/P = 75000
P = 75,000 x 5/3= 125,000
125,000 75,000 = P50,000

Q-3. A

125,000

Q-4. A

Kenneth Peras 120,000 x 33/3 = 40,000

Q-5. A

Mark Peras 60,000 + 40,000 = 100,000

Q-6. B

Jean Pila 120,000 x 20% (40/200) = 24,000

3-IV

Q-7. A

Zamora - 150,000/450,000 = 33 1/3

3-V

Q-8 & 9

3-III

Torres
Profit 100,000 x 10%
100,000 10,000 x 35%
100,000 10,000 x 65%

3-VI

Q-10. C

8-B

58,500

5,000 x 12 months = 60,000

Bonus (200,000 128,430 x 10%)


Remainder

3-IV

Ardina
10,000

31,500

Q-11 to Q-13
Salaries
Interest

3-VII

Un
9-B

Q-14. C

98,000 + 3,000 5,000 = P96,000

Q-15. B

15/35 x 96,000 = P41,143

Total
120,000
8,400
128,400
7,160
135,560
64,440
200,000

Diane
60,000
5,250
65,250
7,160
72,410
38,664
111,074

Ysabelle
60,000
3,150 (11 - A)
63,150
(12 A)
63,150
25,776
88,926 (13 - A)

Q-16. A
Partners
Gregorio
Jumawan
Totals

Salaries
P15,000
20,000
P35,000

Interest
P20,000
45,000
P65,000

Balance
P 6,000
14,000
P20,000

Total
P 41,000
79,000
P120,000

Salaries
P15,000
20,000
P35,000

Interest
P20,000
45,000
P65,000

Balance
( 3,000)
( 7,000)
(10,000)

Total
P 32,000
58,000
P 90,000

Salaries
P15,000
20,000
P35,000

Interest
P20,000
45,000
P65,000

Balance
( 31,500)
( 73,500)
(105,000)

Total
P 3,500
( 8,500)
( 5,000)

Q-17. D
Partners
Gregorio
Jumawan
Totals
Q-18. A
Partners
Gregorio
Jumawan
Totals
3-V

Q-19. B
P20,000 + 30% (86,000 60,000)

3-VI

Q-20. A
Sales
Inventory
Cost of Sales
Operating Expenses
Profit

P1,250,000
100,000

P1,350,000
( 685,000)
( 450,000)
P 215,000

Q-21. A
Partners
Bidad
2/10 x 215,000
Mondejar 5/10 x 215,000
Sarceno
3/10 x 215,000

=
=
=

43,000
107,500
64,500
215,000

Solution Manual in Partnership and Corporation 2014-2015

24

Q-22. D
Partners
Bidad
Mondejar
Sarceno
Totals
3-VII

Salaries
P 60,000
60,000
60,000
P180,000

Balance
( 4,000)
( 2,000)
( 4,000)
( 10,000)

Total
P101,000
( 58,000
56,000
P 215,000

Q-23. C
B
B
B
B
B
B

=
=
=
=
=
=

Q-24. C
Partners
Carpeso
Cabreros
Totals
3-VIII

Interest
P45,000
P65,000

20%
20% (240,000 b)
48,000 - .28
.2B = P48,000
P48,000/1.2
P40,000

Bonus
P 40,000
P 40,000

Balance
P100,000
100,000
P200,000

Total
P140,000
100,000
P240,000

Q-25. B
Partners
Zabalo
Perez
Delmonte

P/L Before
.60
.18
.40
.12

New P/L
.42
.28
.30

Q-26. B
Understated inventories
Accrued Expense
Prepaid Expense
Increase in Net Income

15,000
( 5,000)
4,000
P14,000

Q-27. C
Reported Net Income
Increase in Net Income
Corrected Net Income

P 450,000
14,000
P464,000

Q-28. C
Partners
Zabalo
Perez
Delmonte

3-IX

=
=
=
=
=

Q-30. A
Salaries
P 60,000
40,000
P100,000

Balance
( 70,000)
( 70,000)
( 70,000)
(210,000)

Total
P14,000
( 58,000)
( 22,000)
( 66,000)

Q-31. C
B
B
B
B
B

3-XII

Share in Net Income


P194,880
129,920
139,200
P464,000

25% (NI B)
25% (240,000 B)
60,000 - .25B
60,000 / 1.25
P48,000

Partners Average Capital


Linobo
P24,000
Manansala
12,000
Aguillon
8,000
Totals
P44,000
3-XI

Net Income
P464,000
464,000
464,000

Q-29. B
B
B
B
B
B

3-IX

P/L Ratio
.42
.28
.30

=
=
=
=
=

20% (NI B)
20% (240,000 B)
48,000 - .2B
48,000 / 1.2
P40,000

Q-32. C
Reported Net Income
Understatement of Inventory End
Unrecorded Expense
Corrected Net Income

Solution Manual in Partnership and Corporation 2014-2015

P105,000
50,000
( 5,000)
P150,000

25

3-XIII

Q-33. A
Partners
Old P/L
New P/L
Go
.50
.10
.40
Adia
.50
.10
.40
Pactana
.20
Q-34. C
40% x P150,000 = P60,000

Chapter 4
Partnership Dissolution Change in Ownership structure
** Exercises and Problems **
4-1

4-2

Tan and Esparaguera


Esparaguera, Capital
Carreon, Capital

200,000
200,000

CSCV
Caete, Capital
Saletrero, Capital
Cajegas, Capital
Villaplaza, Capital

4-3

4-4

62,500
87,500
112,500
262,500

Abuzo and Edulan


1. P187,500
2. Abuzo-Selling Partners
3. P12,500 personal gain
4. P187,500
5. P17,500 personal loss
Book Value of Interest Sold
Selling Price of Interest Sold
Loss on Sale of Interest

P187,500
170,000
P 17,500

Total Partnership Interest


Portion of Interest Sold
Book Value of Interest Sold
Selling Price of Interest Sold
Gain on Sale of Interest Sold

P 300,000
25%
P 75,000
85,000
P 10,000

Badoy and Yee

1.
2.

Badoy, Capital
Yee, Capital
Gatmaitan, Capital
4-5

3.

4-6

75,000

Hernandez and Gementiza

1. Hernandez, Capital
Santos, Capital
2.

25,000
50,000

75,000
75,000

Gementiza, Capital
Santos, Capital

112,500
112,500

Hernandez, Capital
150,000
Gementiza, Capital
150,000
Santos, Capital
300,000
(converted into a sole-proprietorship)
JAR Partnership
Contributed Capital:
J
A
R
Orbita

P 250,000
250,000
500,000
20,000
P1,200,000 x 20% = P240,000 capital credit of Orbita
Contribution of Orbita 200,000
Bonus to New partner P 40,000
Cash
J
A
R
Orbita, Capital

Solution Manual in Partnership and Corporation 2014-2015

P200,000
10,000
10,000
20,000
P246,000

26

4-7

Ursua and Halangdon


Requirement 1:

Ursua
Halangdon
Gondales
Contributed Capital

P 80,000
100,000
70,000
P 250,000

Requirement 2:
P250,000 x 40% = P100,000 P70,000 = P30,000 bonus to new partner
(Her capital credit is bigger than her capital contribution, so bonus is given to the new partner)
Requirement 3:
Journal Entry
Cash
Ursua, Capital
Halangdon, Capital
Gondales, Capital
Requirement 4:

70,000
9,000
21,000
100,000

Ursua
Halangdon
Gondales
Contributed Capital

P 80,000
100,000
150,000
P 330,000

P330,000 x 35% = P115,500 P150,000 = P34,500 bonus to old partners


(His capital credit is smaller than his capital contribution, so bonus is given to the old partners)
Requirement 5:
Journal Entry
Cash
150,000
Ursua, Capital
Halangdon, Capital
Gondales, Capital
4-8

10,350
24,150
115,500

Beceira and Ytac


Requirement 1:
Casulla, Capital
Ytac, Capital
Sarno, Capital

120,000
130,000
250,000

Requirement 2:
Casulla, Capital
Ytac , Capital
Sarno, Capital

180,000
195,000
375,000

Requirement 3:
Casulla, Capital
Ytac, Capital
Sarno, Capital

48,000
52,000
100,000

Requirement 4:
Casulla, Capital
Sarno, Capital

60,000
60,000

Requirement 5:
Casulla, Capital
Sarno, Capital

80,000
80,000

Requirement 6:
Casulla, Capital
Sarno, Capital
Requirement 7:

120,000
120,000
Casulla, Capital
Ytac, Capital
Sarno, Capital
Contributed Capital

240,000
260,000
300,000
800,000

800,000 x 1/3 = 266,667 300,000 = 33,333 bonus to old partners


(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)
Solution Manual in Partnership and Corporation 2014-2015

27

Cash
Casulla, Capital
Ytac, Capital
Sarno, Capital
Requirement 8:

300,000
12,500
20,833
266,667

Contributed Capital - 800,000

800,000 x 1/4 = 200,000 300,000 = 100,000 bonus to old partners


(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)
Cash
Casulla, Capital (3/8 x 100,000)
Ytac, Capital (5/8 x 100,000)
Sarno, Capital
Requirement 9:

300,000
37,500
62,500
200,000

Contributed Capital - 800,000

800,000 x 40% = 320,000 300,000 = 20,000 bonus to new partners


(Her capital credit is bigger than her capital contribution, so bonus is given to the new partner)
Cash
Casulla, Capital
Ytac, Capital
Sarno, Capital
Requirement 10:

300,000
7,500
12,500
320,000
Casulla, Capital
Ytac, Capital
Sarno, Capital
Contributed Capital

240,000
260,000
350,000
850,000

850,000 x 30% = 255,000 350,000 = 95,000 bonus to old partners


(Her capital credit is lesser than her capital contribution, so bonus is given to the old partners)
Cash
Casulla, Capital
Ytac, Capital
Sarno, Capital
4-9

350,000
35,625
59,375
255,000

San Carlos Industries

Case 1:

Nemenzo
Kwan
Gimena
Total Contributed Capital

200,000
100,000
100,000
400,000

400,000 x 1/4 = 100,000 100,000 = No bonus


(His capital credit is equal to his capital contribution, so theres no bonus to both)
Cash
Gimena, Capital
Case 2:

100,000
100,000

Nemenzo
Kwan
Gimena
Total Contributed Capital

200,000
100,000
120,000
420,000

420,000 x 1/4 = 105,000 120,000 = 15,000 bonus to old partners


(His capital credit is less than his capital contribution, so bonus is given to the old partners)
Cash
Nemenzo, Capital
Kwan, Capital
Gimena, Capital
Case 3:

120,000

Nemenzo
Kwan
Gimena
Total Contributed Capital

9,000
6,000
105,000
200,000
100,000
100,000
400,000

400,000 x 30% = 120,000 100,000 = 20,000 bonus to new partner


Solution Manual in Partnership and Corporation 2014-2015

28

(His capital credit of P120,000 is greater than his capital contribution of P100,000, so, bonus is
given to the new partner)
Cash
Nemenzo, Capital
Kwan, Capital
Gimena, Capital
Case 4:

Nemenzo
Kwan

100,000
12,000
8,000
120,000
200,000 x 25% = 50,000
100,000 x 25% = 25,000

Nemenzo, Capital
Kwan, Capital
Gimena, Capital

50,000
25,000

Nemenzo, Capital
Kwan, Capital
Gimena, Capital

100,000
50,000

75,000

Case 5:

4-10

150,000

Carcar Ampao Factory

Assumption 1:

Lapu-lapu

180,000 x 1/3 = 60,000

Lapu-lapu, Capital
Besario, Capital
Assumption 2:

Lim

60,000
60,000
140,000 x 1/8 = 17,500

Lim, Capital
Besario, Capital
Assumption 3:

17,500
17,500

Lapu-lapu
Lim
Besario
Total Contributed Capital

180,000
140,000
160,000
480,000

480,000 x 25% = 120,000 160,000 = 40,000 bonus to old partners


(Her capital credit is lesser than her capital contribution of P100,000, so, bonus is given to the
old partners)
Cash
Lapu-lapu, Capital
Lim, Capital
Besario, Capital
Assumption 4:

160,000
24,000
16,000
120,000

Lapu-lapu, Capital
Lim, Capital
Besario, Capital
Total Contributed Capital

180,000
140,000
72,000
392,000

392,000 x 25% = 98,000 72,000 = 26,000 bonus to new partner


(Her capital credit is greater than her capital contribution of P100,000, so, bonus is given to
the new partner)
Cash
Lapu-lapu, Capital
Lim, Capital
Besario, Capital
4-11

72,000
15,600
10,400
98,000

Cacdac, Lopez and Cruz

Requirement A:
1.

2.

3.

Capital Adjustments
Allow. for Doubtful Accounts

6,000

Capital Adjustments
Merchandise Inventory

7,000

Capital Adjustments
Accumulated Depreciation

4,000

6,000

7,000

Solution Manual in Partnership and Corporation 2014-2015

4,000

29

4.

Cacdac, Capital
Lopez, Capital
Capital Adjustments

6,800
10,200
17,000

(1)
(2)
(3)

Capital Adjustments
6,000
17,000
7,000
4,000
17,000
17,000

(4)

Requirement B:
Post-Closing Trial Balances
Cash in Bank
Accounts Receivable
Allow. for Doubtful Accounts
Merchandise
Store Equipment
Acc. Depreciation
Accounts Payable
Cacdac, Capital
Lopez, Capital
Total

Debit
40,000
50,000

Credit

10,000
63,000
80,000

233,000

20,000
40,000
93,200
69,800
233,000

Requirement C:
a) Cruz is going to pay 40,750
Computed as follows:
Refugio, Capital (P93,200 x 25%)
Berhay, Capital (P69,800 x 25%)

b)

4-12

Cacdac, Capital
Lopez, Capital
Cruz, Capital

23,300
17,450
40,750

23,300
17,450
40,750

Jadulco, Mabad and Anghag

Instruction No. 1:
a.
b.
c.
d.
e.

Capital Adjustments
20,000
Allowance for Doubtful Accounts

20,000

Capital Adjustments
Merchandise

20,000
20,000

Capital Adjustments
Accumulated Depreciation

50,000

Capital Adjustments
Accrued Expenses

10,000

Jadulco, Capital (30%)


Mabad, Capital (20%)
Anghag, Capital (50%)
Capital Adjustments

30,000
20,000
50,000

50,000
10,000

100,000

Instruction No.2:
New Capital of the Partnership
Jadulco, Capital
Mabad, Capital
Anghag, Capital

(P400,000 30,000) = 370,000


(P280,000 20,000) = 260,000
(P150,000 50,000) = 100,000
730,000

a) P730,000 x 1/3 = P243,333


Jadulco, Capital
Mabad, Capital
Anghag, Capital
Caete, Capital

123,333

Solution Manual in Partnership and Corporation 2014-2015

86,667
33,333
243,333

30

b)

Cash
Jadulco, Capital
Mabad, Capital
Anghag, capital
Caete, Capital

200,000
9,250
6,500
16,250
232,500

Jadulco, Capital
Mabad, Capital
Anghag, Capital
Caete, Capital
Total Contribution

370,000
260,000
100,000
200,000
930,000
x 25%
232,500
200,000
32,500

Capital Credit of New Partner


Capital Contribution of New Partner
Bonus to New Partner
c)

Cash
Jadulco, Capital
Mabad, capital
Anghag, Capital
Caete, Capital

200,000
4,200
2,800
7,000
186,000

Jadulco, Capital
Mabad, Capital
Anghag, Capital
Caete, Capital
Total Contribution

370,000
260,000
100,000
200,000
930,000
20%
186,000
200,000
14,000

Capital of New Partner


Capital Contribution of New Partner
Bonus to Old Partners
4-13

Bartolome, tan and de los Santos

Instruction No.1:
1.

Capital Adjustments
Inventory

2.
3.
4.

10,000
10,000

Prepaid Insurance
Capital Adjustments

7,000

Accumulated Depreciation
Capital Adjustments

2,000

Bartolome, Capital (50%)


Tan, Capital (40%)
Delos Santos, Capital (10%)
Capital Adjustments

500
400
100

(1)

7,000

Capital Adjustment
10,000
7,000
2,000
1,000
10,000
10,000

2,000

1,000

(2)
(3)
(4)

Instruction No.2:
2a)

Adjusted Capital Account of the old partners


Bartolome
(200,000 500) =
199,500
Tan
(180,000 400) =
179,600
de los Santos
( 60,000 100) =
59,900
439,000
Bartolome, Capital
Chua, Capital

49,875
49,875

(P199,500 x = P49,875 - Interest Purchased)


2b)

Bartolome
Tan
de los Santos
Chua

199,500
179,600
59,900
80,000
519,000

519,000 x 30% = 155,700 80,000 = 75,700 bonus to new partner


Solution Manual in Partnership and Corporation 2014-2015

31

(Her capital credit is bigger than her capital contribution so, bonus is given to the new partner)
Journal Entry;
Cash
Bartolome, Capital
Tan, Capital
Delos Santos, Capital
Chua, Capital
4-14

80,000
37,850
30,280
7,570
155,700

Davao Commodity Sales

Requirement 1:
a)
b)
c)
d)
e)
f)
g)

Allowance for Doubtful Accounts


Capital Adjustments

2,000

Capital Adjustments
Merchandise

8,000

Capital Adjustments
Accumulated Depreciation

2,000

Accounts Payable
Cash

7,000

Unused Supplies
Capital Adjustments

5,000

2,000
8,000
2,000
7,000
5,000

Capital Adjustments
Unearned Interest Income

100
100

Saburnido, Capital
Cervantes, Capital
Capital Adjustments

(b)
(c)
(f)

1,550
1,550
3,100

Capital Adjustments
8,000
2,000
2,000
5,000
100
3,100
10,100
10,100

(a)
(e)
(g)

Requirement 2:
Statement of Financial Position
Assets
Current Assets:
Cash in Bank
Accounts Receivable
Allow. for Doubtful Accounts
Notes Receivable
Merchandise Inventory
Unused Supplies

Liabilities and Partners' Equity


233,000

30,000
3,000

Property And Equipment


Furniture and Fixture
Accu. Depreciation
Total Assets

27,000
10,000
72,000
5,000

50,000
20,000

Liabilities
Current Liabilities:
Accounts Payable
33,000
Unearned Int. Income
100

33,100

347,000

30,000
377,000

Partners' Equity
Calimpusan, Capital
178,450
Sala, Capital
165,450
Total Liabilities and
Partners' Equity

343,900
377,000

Requirement 3:
Cash in Bank
Banta, Capital
Computed as follows:
Saburnido, Capital (178,450 x 50%)
Cervantes, Capital
(165,450 x 50%)

4-15

171,950
171,950
89,225
82,725
171,950

Ruben, Lacierda and Ordoez


Requirement 1:

V. Ruben, Capital
O. Lacierda, Capital
B. Ordoez, Capital
Total Contributed Capital

80,000
40,000
30,000
150,000

150,000 x 30% = 50,000 30,000 = 20,000 bonus to new partner, Ordoez

Solution Manual in Partnership and Corporation 2014-2015

32

Requirement 2:
The capital accounts of Ruben and Lacierda were decreased by P12,000 and 8,000 respectively
because of the bonus they gave to Ordoez.
Requirement 3:
Ruben
80,000
( 12,000)
68,000

Capital
Bonus to Ordoez
Balance

Lacierda
40,000
( 8,000)
32,000

Ordoez
30,000
20,000
50,000

Requirement 4:
Cash
Ruben, Capital
Lacierda, Capital
Ordoez, Capital
4-16

30,000
12,000
8,000
50,000

Mendez, Tirol and Lupot


Requirement 1:

Mendez
Tirol
Lupot
Total Contributed Capital

200,000
100,000
125,000
425,000

425,000 x 20% = 85,000 125,000 = 40,000 bonus to old partners


Mendez
P 40,000 x .75 = 30,000
Tirol
40,000 x .25 = 10,000
Bonus as distributed
40,000
Requirement 2:
Capital
Mendez
200,000
Tirol
100,000
Capital Account balance after the bonus
Requirement 3:
Mendez
Tirol
Lupot

200,000
100,000
125,000

+
+
-

30,000 =
10,000 =
(40,000) =

Requirement 4:
Cash
Mendez, Capital
Tirol, Capital
Lupot, Capital
4-17

+
+

Bonus
30,000
10,000

=
=

Total
230,000
110,000
340,000

230,000
110,000
85,000
425,000

125,000
30,000
10,000
85,000

Jay, Mamaril and Chung


Requirement 1:

Total Contributed Capital


Jay
Mamaril
Chung
Total Contributed Capital

120,000
100,000
80,000
300,000

300,000 x 1/3 = 100,000 80,000 = 20,000 bonus to Chung


Requirement 2:
Capital
Bonus to Chung
Balance

Jay
120,000
(12,000)
108,000

Mamaril
100,000
(8,000)
92,000

Chung
80,000
20,000
100,000

= 300,000

Requirement 3:
Cash
Jay, Capital
Mamaril, Capital
Chung, Capital

80,000
12,000
8,000

Solution Manual in Partnership and Corporation 2014-2015

100,000

33

4-18

Butuan Internet Cafe


Case 1:

Basarte, Capital
Silverio, Capital
Jostol, Capital
Total (3/4 capital after admission)
New capitalization after admission
(610,000/.75)
Required contribution of Balibay

265,000
185,000
160,000
610,000

Basarte, Capital
Silverio, Capital
Jostol, Capital
Bonus
Total

Required contribution of Balibay

265,000
185,000
160,000
24,000
634,000
75%
845,333
610,000
235,333

Case 3:

Basarte, Capital
Silverio, Capital
Jostol, Capital
Bonus to new partner
Total
New capital after admission
Share of new partner after bonus
Less: Bonus to new partner
Required contribution of Balibay

265,000
185,000
160,000
10,000
600,000
800,000
200,000
10,000
190,000

Case 4:

Basarte, Capital
Silverio, Capital
Jostol, Capital
Asset Revaluation
Total
New capital after admission
Share of new partner after bonus

265,000
185,000
160,000
80,000
690,000
920,000
230,000

Case 5:

Basarte, Capital
Silverio, Capital
Jostol, Capital
Assets write down
Bonus to new partner
Total
New capital after admission
Share of the new partner after bonus
Less: Bonus to new partner
Contribution of new partner

265,000
185,000
160,000
(50,000)
(40,000)
520,000
693,333
173,333
(40,000)
133,333

Case 2:

Share of New Partner after admission

4-19

813,333
203,333

Independents Cases

Case 1
Lopez
Baya
Maguid
Total Contributed Capital

800,000
1,200,000
500,000
2,500,000

2,500,000 x 20% = 500,000 = 0 (No Bonus)

Cash
Maguid, Capital

Journal Entry
500,000
500,000

Case 2
Solis
Orbita
Tangaro
Total Contributed Capital

40,000
50,000
25,000
115,000

115,000 x 1/5 = 23,000 25,000 = 2,000 bonus to old partners

Solution Manual in Partnership and Corporation 2014-2015

34

Journal Entry
Cash
Solis, Capital
Orbita, Capital
Tangaro, Capital

25,000
23,000
1,000
1,000

Case 3
Sison
Laranjo
Morales
Total Contributed Capital

45,000
40000
35,000
120,000

120,000 x 30% = 36,000 35,000 = 1,000 bonus to new partners


Journal Entry
Cash P
Laranjo, Capital
Sison, Capital
Morales, Capital

35,000
600
400
36,000

*** Multiple Choice Problems ***


Admission of a Partner in an Existing Partnership
4-I

City Travel and Tours


Q-1

P800,000 x 1/4 = P200,000 (A)

Q-2

to be distributed to the selling partners (D)

Q-3

Gevera
Tropico
Canque
Aguilar

Q-4

210,000 x 25% = 52,500 - 210,000 = 157,500 (A)

4 - II

1/5 x 75%
2/5 x 75%
2/5 x 75%
1/4

= 15%
= 30% (B)
= 30%
= 25%
= 100%

Panganiban, Salisana and Berhay


Q-5

414,375 (C)

Q-6

Panganiban and Salisana (C)

Q-7

1,835,000 (B)

Solutions
a)
b)
c)
d)

Capital Adjustments
Allow. for Doubtful Accounts

5,000
5,000

Capital Adjustments
Merchandise

15,000

Accumulated Depreciation
Capital Adjustments

15,000

15,000
15,000

Panganiban, Capital
Salisana, Capital
Capital Adjustments

2,500
2,500
5,000

Panganiban, Capital 950,000 2,500 = 947,500 x .25 = 236,875


Salisana, Capital 890,000 2,500 = 887,500 x .20 = 177,500
1,835,000
414,375 (C)

Capital after adjustments


Acquired by Berhay

Panganiban
947,500
(236,875)
710,625

Salisana
887,500
(177,500)
P710,000

Berhay
414,375
414,375

= 1,835,000 (B)

4 - III Southwxpressway Merchandising


Q-8

450,000 x 1/2 = 225,000 (B)

Solution Manual in Partnership and Corporation 2014-2015

35

Q-9

Book Value of Igaos interest sold to Estroso


Cash proceeds from the sale
Personal loss to Igao

225,000
220,000
5,000 (C)

Q-10

Estroso should be credited by P225,000 equal to the book value of interest she acquired. (B)

4 - IV Southwxpressway Merchandising
Q-11

Espero
Aduana
Gelacio
Total Contributed Capital

Q-12

95,000 x 1/5 = 19,000 20,000 = 1,000 bonus to old partners (B)

Q-13

Espero
Aduana

4-V

30,000
45,000
20,000
95,000 (B)

1,000 x 40% = 400


1,000 x 60% = 600 (A)
1,000

Ligsay, Emperado and Balagot

Q-14

Ligsay
150,000
4,000
(2,400)
151,600

Capital Balances
Understatement of Inventory
Understatement of depreciation
Adjusted Balance
Q-15

Q-16

Selling Price of share sold


Book Value of interest purchased
Gain on sale of share sold

35,000
30,200
4,800

Emperado
100,000
4,000
(2,400)
101,600

Balagot
120,000
2,000
(1,200)
120,800

(A)

Balagot will share a capital credit of P30,200 (B)

4 - VI Galos and Villarido


Q-17

Galos
Villarido
Villanueva

200,000
160,000
110,000
470,000

470,000 x 1/4 = 117,500 110,000 = 7,500 bonus to new partner (C)


Q-18

Galos
Villarido

7,500 x 60%
7,500 x 40%

= 4,500
= 3,000 (A)
7,500

** Exercise and Problems **


Retirement or Withdrawal/Death, Bankruptcy or Incapacity of a Partner
4-1

Lacson, Joe and Ajoc

Requirement 1:
a)
b)

c)

Joel Jo, Capital


Alex Ajoc, Capital

85,000

Joel Jo, Capital


Heginio Lacson, Capital
Alex Ajoc, Capital

85,000

Joel Jo, Capital


Marco Ocenar, Capital

85,000

85,000
63,750
21,250
85,000

Requirement 2:
Heginio Lacson
Alex Ajoc

60,000
140,000
200,000

Heginio Lacson
Alex Ajoc

123,750
76,250
200,000

Heginio Lacson
Alex Ajoc
Marco Ocenar

60,000
55,000
85,000
200,000

Solution Manual in Partnership and Corporation 2014-2015

36

4-2

Esparaguera, Supapo and Ceniza


1.

2.

4-3

Ceniza, Capital
Cash
Esparaguera, Capital (2/6 x P 50,000)
Supapo, Capital (4/6 x P 50,000)

650,000

Ceniza, Capital
Esparaguera, Capital
Supapo, Capital
Cash

650,000
16,667
33,333

600,000
16,667
33,333

700,000

Tea for Snack House

Requirement 1:
Orcullos Withdrawal
Orcullo, Capital
Reyes, Capital
Lopez, Capital
Cash

80,000
7,500
7,500
95,000
Capital Balances

Reyes, Capital
Lopez, Capital

92,500
82,500
175,000

Requirement 2:
Orcullo, Capital
Cash
Reyes, Capital
Lopez, Capital

4-4

80,000
75,000
2,500
2,500

Long Live Enterprises

Requirement 1:
Mr. Dimamatays interest, Dec. 31, 2009
Add: Share in Net Income from Jan. 1-Feb.29 (20,000 x )

50,000
10,000
60,000

Requirement 2:
Dimamatay, Capital
Cash

60,000
60,000

Requirement 3:
Dimamatay, Capital
Buhay, Capital
4-5

60,000
60,000

Walangbuhay and Maylangit

Requirement 1:
Capital Adjustment
Allow. for Doubtful Account

5,000
5,000

Inventories
Capital Adjustment

15,000

Accumulated Depreciation
Capital Adjustment

50,000

Capital Adjustment
Accrued Expense

10,000

Capital Adjustment
Walangbuhay, Capital (60%)
Maylangit, Capital (40%)

50,000

15,000
50,000
10,000

Solution Manual in Partnership and Corporation 2014-2015

30,000
20,000

37

Requirement 2:
Effects of Adjustments:
Decrease in Account Receivable
Increase in Inventory
Increase in Equipment
Increase in Expense
Total
P/L Ratio of Walangbuhay
Share of Walangbuhay on the adjustments
Add: Feb. 14 balance of Walangbuhay
Walangbuhays adjusted capital balance

(5,000)
15,000
50,000
(10,000)
50,000
x 60%
30,000
950,000
980,000

Requirement 3:
Walangbuhay, Capital
Cash

980,000
980,000

Requirement 4:
Walangbuhay, Capital
Maylangit, Capital
Cash

4-6

980,000
20,000
1,000,000

Sianosa, Rosete and Facturan

Requirement 1:
Non-Cash Assets
Gatmaitan, Capital (25%)
Barroga, Capital (25%)
Dorado, Capital
(50%)

56,000
14,000
14,000
28,000

Requirement 2:
Gatmaitan, Capital
Gatmaitan, Loan
Cash
Barroga, Capital
Dorado, Capital

4-7

56,000
9,000
16,200
16,267
32,533

Lopez, Albios and Aguhob


ERRATUM: Accounts Payable should be 90,000

Requirement 1:
a)

b)

c)

Inventory
Lopez, Capital
Albios, capital
Aguhob, Capital

30,000

Equipment
Lopez, Capital
Albios, capital
Aguhob, Capital

20,000

Lopez, Capital
Albios, capital
Aguhob, Capital
Accrued Salaries

9,000
5,000
6,000

13,500
7,500
9,000
9,000
5,000
6,000

20,000

Requirement 2:
Lopez, Capital
Cash in Bank
Albios, Capital (25/55)
Aguhob, Capital (30/55)

114,500
50,000
29,318
35,182

(Note: Since this only a retirement of a partner, a partners deficiency will be considered as
his own loss and become the advantage of the remaining partners.)

Solution Manual in Partnership and Corporation 2014-2015

38

Requirement 3:
Statement of Financial Position
Assets
Inventory
Equipment
Total Assets

Liabilities & Partners Equity


Accounts Payable
90,000
Accrued Salaries
20,000
Albios, Capital
116,818
Aguhob, Capital
154,182
Total Liabilities & Partners
Equity
380,000

180,000
200,000
380,000

Chapter 5
Dissolution with Liquidation
Test I True or False
1.
2.
3.
4.
5.
6.
7.
8.

True
False
True
True
True
True
True
True

9.
10.
11.
12.
13.
14.
15.
16.

True
False
False
True
True
True
True
True

17.
18.
19.
20.
21.
22.
23.
24.
25.

False
True
True
True
False
True
True
True
True

Test II Multiple Choice


1.
2.
3.
4.
5.

C
B
B
A
A

6.
7.
8.
9.
10.

B
C
C
A
A

** Exercises and Problems **


5-1

Centerpoint Commercial
Requirement A:
Centerpoint Commercial
Statement of Partnership Liquidation

Balance before realization


Realization and Gain
Balances
Payment of Liabilities
Balance
Payment to Partners Loan
Balances
Payment to Partners Capital

Cash
30,000
350,000
380,000
(49,000)
331,000
(20,000)
311,000
(311,000)

NonCash
340,000
(340,000)

Liabilities
49,000
49,000
(49,000)

Dizon,
Loan
20,000
20,000
20,000
(20,000)

40%
Dizon,
Capital
95,000
4,000
99,000
99,000
99,000
(99,000)

20%
Tamala,
Capital
100,000
2,000
102,000
102,000
102,000
(102,000)

40%
Dimalanta,
Capital
106,000
4,000
110,000
110,000
110,000
(110,000)

Journal Entries
a)

b)
c)
d)

Cash
Non-Cash Assets
Dizon, Capital
Tamala, Capital
Dimalanta, Capital

350,000
340,000
4,000
2,000
4,000

Liabilities
Cash

49,000

Dizon, Loan
Cash

20,000

Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Cash

Solution Manual in Partnership and Corporation 2014-2015

49,000
20,000
99,000
102,000
110,000
311,000

39

Requirement B:
Centerpoint Commercial
Statement of Partnership Liquidation

Balance before realization


Realization and Loss
Balances
Payment of Liabilities
Balance
Payment to Partners Loan
Balances
Payment to Partners Capital

Cash
30,000
200,000
230,000
(49,000)
181,000
(20,000)
161,000
(161,000)

NonCash
340,000
(340,000)

Liabilities
49,000
49,000
(49,000)

Dizon,
Loan
20,000
20,000
20,000
(20,000)

40%
Dizon,
Capital
95,000
(56,000)
39,000
39,000
39,000
(39,000)

20%
Tamala,
Capital
100,000
(28,000)
72,000
72,000
72,000
(72,000)

40%
Dimalanta,
Capital
106,000
(56,000)
50,000
50,000
50,000
(50,000)

20%
Tamala,
Capital
100,000
(50,000)
50,000
50,000
50,000
50,000
(50,000)

40%
Dimalanta,
Capital
106,000
(100,000)
6,000
6,000
6,000
6,000
(6,000)

Journal Entries
a)

b)
c)
d)

Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets

200,000
56,000
28,000
56,000
340,000

Liabilities
Cash

49,000

Dizon, Loan
Cash

20,000

Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Cash

39,000
72,000
50,000

49,000
20,000

161,000

Requirement C:
Centerpoint Commercial
Statement of Partnership Liquidation

Balance before realization


Realization and Loss
Balances
Payment of Liabilities
Balance
Right of Offset
Balance
Payment to Partners Loan
Balances
Payment to Partners Capital

Cash
30,000
90,000
120,000
(49,000)
71,000
71,000
(15,000)
56,000
(56,000)

NonCash
340,000
(340,000)

Liabilities
49,000
49,000
(49,000)

Dizon,
Loan
20,000
20,000
20,000
(5,000)
15,000
(15,000)

40%
Dizon,
Capital
95,000
(100,000)
(5,000)
(5,000)
5,000

Journal Entries
a)

b)
c)
d)
e)

Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets
Liabilities
Cash
Dizon, Loan
Dizon, Capital

90,000
100,000
50,000
100,000
340,000
49,000
49,000
5,000
5,000

Dizon, Loan
Cash

15,000

Tamala, Capital
Dimalanta, Capital
Cash

50,000
6,000

Solution Manual in Partnership and Corporation 2014-2015

15,000

56,000

40

Requirement D:

Balance before realization


Realization and Loss
Balances
Payment of Liabilities
Balance
Right of Offset
Balance
Payment to Partners Loan
Balances
Deficiency of Dimalanta
absorbed by Tamala
Balances
Payment to Partners Capital

Cash
30,000
60,000
90,000
(49,000)
41,000
41,000
(3,000)
38,000

NonCash
340,000
(340,000)

Liabilities
49,000
49,000
(49,000)

Dizon,
Loan
20,000
20,000
20,000
(17,000)
3,000
(3,000)

40%
Dizon,
Capital
95,000
(112,000)
(17,000)
(17,000)
17,000

38,000
(38,000)

20%
Tamala,
Capital
100,000
(56,000)
44,000
44,000
44,000
44,000
(6,000)
38,000
(38,000)

40%
Dimalanta,
Capital
106,000
(112,000)
(6,000)
(6,000)
(6,000)
(6,000)
6,000

Journal Entries
a)

b)
c)
d)
e)
f)

Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets

60,000
112,000
56,000
112,000
340,000

Liabilities
Cash

49,000

Dizon, Loan
Dizon, Capital

17,000

49,000
17,000

Dizon, Loan
Cash

3,000

Tamala, Capital
Dimalanta, Capital

6,000

3,000

Tamala, Capital
Cash

6,000
38,000
38,000

Requirement E:

Balance before realization


Realization and Loss
Balances
Payment of Liabilities
Balance
Right of Offset
Balance
Deficiency of Dizon & Tamala
absorbed by Dimalanta
Balances
Payment to Partners Capital

Cash
30,000
40,000
70,000
(49,000)
21,000
21,000

NonCash
340,000
(340,000)

Liabilities
49,000
49,000
(49,000)

Dizon,
Loan
20,000
20,000
20,000
(20,000)

21,000
(21,000)

40%
Dizon,
Capital
95,000
(120,000)
(25,000)
(25,000)
20,000
(5,000)

20%
Tamala,
Capital
100,000
(60,000)
40,000
40,000
40,000

5,000

(19,000)
21,000
(21,000)

40%
Dimalanta,
Capital
106,000
(120,000)
(14,000)
(14,000)
(14,000)
14,000

Journal Entries
a)

b)
c)
d)

e)

Cash
Dizon, Capital
Tamala, Capital
Dimalanta, Capital
Non-Cash Assets

40,000
120,000
60,000
120,000
340,000

Liabilities
Cash

49,000

Dizon, Loan
Dizon, Capital

20,000

Tamala, Capital
Dimalanta, Capital
Dizon, Capital

19,000

Tamala, Capital
Cash

21,000

Solution Manual in Partnership and Corporation 2014-2015

49,000
20,000
14,000
5,000
21,000

41

5-2

Watin Veloso Partnership


Requirement A1:
(SOVENT)
Watin Veloso Partnership
Statement of Partnership Liquidation

Balance before realization


Realization and Loss
Balances
Payment of Liabilities
Balance
Right of Offset
Balances
Additional Cash - Watin
Balances
Payment to Veloso

NonCash
180,000
(180,000)

Cash
20,000
85,000
105,000
(60,000)
45,000
45,000
7,000
52,000
(52,000)

Liabilities
60,000
60,000
(60,000)

Watin,
Loan
10,000
10,000
10,000
(10,000)

60%
Watin,
Capital
40,000
(57,000)
(17,000)
(17,000)
10,000
(7,000)
7,000

40%
Veloso,
Capital
90,000
(38,000)
52,000
52,000
52,000
52,000
(52,000)

60%
Watin,
Capital
40,000
(57,000)
(17,000)
(17,000)
10,000
(7,000)

40%
Veloso,
Capital
90,000
(38,000)
52,000
52,000
52,000

7,000

(7,000)
45,000
(45,000)

Requirement A2:
(INSOVENT)

Balance before realization


Realization and Loss
Balances
Payment of Liabilities
Balance
Right of Offset
Balances
Deficiency of Watin
Absorbed by Veloso
Balances
Payment to Veloso

NonCash
180,000
(180,000)

Cash
20,000
85,000
105,000
(60,000)
45,000
45,000

Liabilities
60,000
60,000
(60,000)

Watin,
Loan
10,000
10,000
10,000
(10,000)

45,000
(45,000)

Requirement B1: SOLVENT

Journal Entries
a)

b)
c)
d)
e)

Cash
Watin, Capital
Veloso, Capital
Non-Cash Assets

85,000
57,000
38,000

Accounts payable
Cash

60,000

Watin, Loan
Watin, Capital

10,000

Cash
Watin, Capital

7,000

Veloso, Capital
Cash

180,000
60,000
10,000
7,000
52,000
52,000

Requirement B2: INSOLVENT

Journal Entries
a)

b)
c)
d)
e)

Cash
Watin, Capital
Veloso, Capital
Non-Cash Assets

85,000
57,000
38,000

Accounts payable
Cash

60,000

Watin, Loan
Watin, Capital

10,000

Veloso, Capital
Watin, Capital

7,000

Veloso, Capital
Cash

Solution Manual in Partnership and Corporation 2014-2015

180,000
60,000
10,000
7,000
45,000
45,000

42

5-3

Sanciangko Commercial
Requirement 1:

Sanciangko Commercial
Statement of Partnership Liquidation

Balance before realization


Customers Collection
Balances
Sale of Mdse. at a Loss
Balances
Payment of Liabilities
Balances
Payment to Loan
Balance
Payment to Partners

Cash
45,000
50,000
95,000
59,500
154,500
(62,000)
92,500
(5,000)
87,500
(87,500)

NonCash
127,000
(57,000)
70,000
(70,000)

Accounts
Payable
62,000
62,000
62,000
(62,000)

Pozon,
Loan
5,000
5,000
5,000
5,000
(5,000)

30%
Pozon,
Capital
35,000
(2,100)
32,900
(3,150)
29,750
29,750
29,750
(29,750)

30%
Selisana,
Capital
35,000
(2,100)
32,900
(3,150)
29,750
29,750
29,750
(29,750)

40%
Teque,
Capital
35,000
(2,800)
32,200
(4,200)
28,000
28,000
28,000
(28,000)

Requirement 2:

1)

2)

3)
4)
5)

5-4

Cash
Allowance for doubtful Accounts
Pozon, Capital
Selisana, Capital
Teque, Capital
Accounts Receivable
To record collection from customers
account and charged off the balance.

50,000
3,000
2,100
2,100
2,800

Cash
Pozon, Capital
Selisana, Capital
Teque, Capital
Merchandise

59,000
3,150
3,150
4,200

Accounts Payable
Cash

62,000

60,000

70,000
62,000

Pozon, Loan
Cash

5,000
5,000

Pozon, Capital
Selisana, Capital
Teque, Capital
Cash

29,750
29,750
28,000
87,500

RNJ Trading
Requirement 1:

RNJ Trading
Statement of Partnership Liquidation

Balance before realization


Realization on Loss
Balances
Payment of Liabilities
Balances
Right of Offset
Balances
Deficiency of Suico is
absorbed by Cabral and Lledo
on the ratio of 2/5 3/5
Balance
Payment to Partners

Cash
5,000
60,000
65,000
(50,000)
15,000
15,000

15,000
(15,000)

Solution Manual in Partnership and Corporation 2014-2015

NonCash
80,000
(80,000)

Accounts
Payable
50,000
50,000
(50,000)

Suico,
Loan
4,000
4,000
4,000
(4,000)

50%
Suico,
Capital
5,000
(10,000)
(5,000)
(5,000)
4,000
(1,000)

20%
Cabral,
Capital
17,000
(4,000)
13,000
13,000
13,000

1,000

(400)
12,600
(12,600)

30%
Lledo,
Capital
9,000
(6,000)
3,000
3,000
3,000

(600)
2,400
(2,400)

43

Requirement 2:

1)

2)
3)
4)

5)

5-5

Cash
Suico, Capital
Cabral, Capital
Lledo, Capital
Non-Cash Assets

60,000
10,000
4,000
6,000

Accounts Payable
Cash

50,000

Suico, Loan
Suico, Capital

4,000

Cabral, Capital
Lledo, Capital
Suico, Capital

400,
600

80,000
50,000
4,000

1,000

Cabral, Capital
Lledo, Capital
Cash

12,600
2,400
15,000

Capreso Tao Partnership


Case 1:
Carpeso Tao Partnership
Statement of Liquidation

Cash
130,000
130,000
(40,000)
90,000
(90,000)

Balance before realization


Realization and Gain
Balances
Payment of Liabilities
Balances
Payment to Capital

NonCash
120,000
(120,000)

Liabilities
40,000
40,000
(40,000)

40%
Carpeso,
Capital
60,000
4,000
64,000
64,000
(64,000)

60%
Tao,
Capital
20,000
6,000
26,000
26,000
(26,000)

Journal Entries
1)

2)
3)

Cash
Non-Cash
Carpeso, Capital
Tao, Capital

130,000
120,000
4,000
6,000

Accounts Payable
Cash

40,000

Carpeso, Capital
Tao, Capital
Cash

64,000
26,000

40,000

90,000

Case 2:
Carpeso Tao Partnership
Statement of Partnership Liquidation

Cash
70,000
70,000
(40,000)
30,000
10,000
40,000
(40,000)

Balance before realization


Realization on Loss
Balances
Payment of Liabilities
Balances
Contribution of Tao
Balances
Payment to Capital

NonCash
120,000
(120,000)

Liabilities
40,000
40,000
(40,000)

40%
Carpeso,
Capital
60,000
(20,000)
40,000
40,000
40,000
(40,000)

60%
Tao,
Capital
20,000
(30,000)
(10,000)
(10,000)
10,000

Journal Entries
1)

2)

Cash
Carpeso, Capital
Tao, Capital
Non-Cash

70,000
20,000
30,000

Accounts Payable
Cash

40,000

Solution Manual in Partnership and Corporation 2014-2015

120,000
40,000

44

3)
4)

5-6

Cash
Tao, Capital

10,000

Carpeso, Capital
Cash

40,000

10,000
40,000

Sambag Refrigeration Services


Requirement 1:

Sambag Refrigeration Services


Statement of Partnership Liquidation

Balance before realization


Sale of non-cash assets and
Distribution of loss
Balances
Payment of Liabilities
Balance
Right of Offset
Balance
Deficiency of Delantar
Absorbed by Gabriel and
Padul (5/8 3/8)
Balances
Payment to Gabriel
Payment to Padul

Cash
20,000
200,000
220,000
(156,000)
64,000
64,000

NonCash
250,000

Accounts
Payable
156,000

Delantar,
Loan
4,000

(250,000)

156,000
(156,000)

4,000
4,000
(4,000)

64,000
(33,125)
(30,875)

20%
Delantar,
Capital
(5,000)

50%
Gabriel,
Capital
65,000

30%
Padul,
Capital
50,000

(10,000)
(15,000)
(15,000)
4,000
(11,000)

(25,000)
40,000
40,000
40,000

(15,000)
35,000
35,000
35,000

11,000

(6,875)
33,125
(33,125)

(4,125)
30,875
(30,875)

Requirement 2:
Journal Entries
1)

2)
3)
4)

5)

5-7

Cash
Delantar, Capital
Gabriel, Capital
Padul, Capital
Non-Cash Assets

200,000
10,000
25,000
15,000

Accounts Payable
Cash

156,000

250,000
156,000

Delantar, Loan
Delantar, Capital

4,000
4,000

Gabriel, Capital
6,875
Padul, Capital
4,125
Delantar, Capital
To record capital deficiency of
Delantar absorbed by Gabriel
and Padul.
Gabriel, Capital
Padul, Capital
Cash
To finally distribute cash to
partners.

11,000

33,125
30,875
64,000

Saberon and Lopez


Requirement 1:
Statement of Partnership Liquidation

Balance before realization


a) Realization and Loss
Balances
b) Payment of Liabilities
Balances
c) Right of Offset
Balances
d) Payment to Loan
Balances
e) Payment to Capital

Cash
3,000
40,000
43,000
(20,000)
23,000
23,000
(1,000)
22,000
(22,000)

NonCash
55,000
(55,000)

Accounts
Payable
20,000
20,000
(20,000)

Saberon,
Loan
5,000
5,000
5,000
(4,000)
1,000
(1,000)

80%
Saberon,
Capital
8,000
(12,00)
(4,000)
(4,000)
4,000

20%
Lopez,
Capital
25,000
(3,000)
22,000
22,000
22,000
22,000
(22,000)

(Note: The balancing amount of P55,000 is non-cash assets)


Solution Manual in Partnership and Corporation 2014-2015

45

Requirement 2:
Journal Entries
a)

b)
c)
d)
e)

5-8

Cash
Saberon, Capital
Lopez, Capital
Non-Cash Assets

40,000
12,000
3,000

Accounts Payable
Cash

20,000

55,000
20,000

Saberon, Loan
Saberon, Capital

4,000

Saberon, Loan
Cash

1,000

Lopez, Capital
Cash

22,000

4,000
1,000
22,000

Badoy, Licayan and Bargayo


Requirement 1:

Badoy, Licayan and Bargayo


Statement of Partnership Liquidation

Balance before realization


Realization and Loss
Balance
Payment of Liability
Balance
Right of Off-set
Balance after the rights of offset
Deficiency of Gulane
Absorbed by Badoy & Licayan
Balance
Payment to Badoy and Licayan

Cash
20,000
10,000
30,000
(5,000)
25,000
25,000

NonCash
122,000
(122,000)

Accounts
Payable
5,000
5,000
(5,000)

25,000
(25,000)

Badoy,
Loan
20,000
20,000
20,000
(4,800)
15,200

40%
Badoy,
Capital
24,000
24,000
24,000
(6,400)
17,600

(5,200)
10,000
(10,000)

(2,600)
15,000
(15,000)

20%
Licayan,
Capital
16,000
(22,400)
(6,400)
(6,400)
6,400

40%
Bargayo,
Capital
37,000
(44,800)
(7,800)
(7,800)
(7,800)
7,800

Requirement 2a:
Journal Entries
a)

b)

c)

d)

e)

f)

Cash
Allowance for Doubtful Accounts
Accumulated Depreciation
Gain or Loss on Realization
Accounts Receivable
Merchandise Inventory
Equipment
Sale on non-cash assets.
Badoy, capital
Licayan, Capital
Bargayo, Capital
Gain or Loss on Realization
To distribute loss on realization.

10,000
40,000
5,000
112,000
42,000
30,000
95,000
44,800
22,400
44,800
112,000

Accounts Payable
Cash
Payment of liability.

5,000

Badoy, Loan
Badoy, Capital
Right of Off-set.

4,800

Licayan, Loan
Licayan, Capital
Right of Off-set.

6,400

Badoy, Loan
Licayan, Loan
Bargayo, Capital

5,200
2,600

Solution Manual in Partnership and Corporation 2014-2015

5,000

4,800

6,400

7,800

46

Requirement 2b: (Bargayo is solvent and pays deficiency, same entry from a to f)
g)

h)

Cash
Bargayo, Capital
Cash payment of deficiency.
Badoy, Loan
Licayan, Loan
Cash
To distribute cash to partners.

7,800
7,800
10,000
15,000
25,000

To distribute cash to partners


Badoy,
Loan
15,200
(15,200)

Balance after right of Offset


Cash payment to Bargayo
Cash payment to partners

5-9

Licayan,
Loan
17,600
(17,600)

Bargayo,
Capital
(7,800)
7,800
-0-

LJ Enterprises
Assumption 1:
LJ Enterprises
Statement of Partnership Liquidation

Balance before Liquidation


Sale of Non-cash assets and distribution of Loss
Balance
Payment of Liabilities
Balance
Absorption of Tormis deficiency
Balance
Payment to Laguna, loan

Cash
110,000
110,000
(91,000)
19,000
19,000
(19,000)

Non-Cash
200,000
(200,000)

Caminade,
Loan
19,000
19,000
19,000
19,000
(19,000)

Liabilities
91,000
91,000
(91,000)

65%
Caminade,
Capital
59,000
(58,500)
500
500
(500)

35%
Tormis,
Capital
31,000
(31,500)
(500)
(500)
500

80%
Caminade,
Capital
59,000
(72,000)
(13,000)
(13,000)
13,000

20%
Tormis,
Capital
31,000
(18,000)
13,000
13,000
13,000
(13,000)

Journal Entries
a)

b)
c)
d)

Cash
Caminade, Capital
Tormis, Capital
Non-Cash Assets

110,000
58,500
31,500
200,000

Liabilities
Cash

91,000
91,000

Caminade, Capital
Tormis, Capital

500
500

Caminade, Loan
Cash

19,000
19,000

Assumption 2:
LJ Enterprises
Statement of Partnership Liquidation

Balance before Liquidation


Sale of Non-cash assets and distribution of Loss
Balance
Payment of Liabilities
Balance
Right of Off-set - Caminade
Balances
Payment to Loan Caminade
Payment to Capital - Tormis

Cash
110,000
110,000
(91,000)
19,000
19,000
(6,000)
(13,000)

Non-Cash
200,000
(200,000)

Liabilities
91,000
91,000
(91,000)

Caminade,
Loan
19,000
19,000
19,000
(13,000)
6,000
(6,000)

Journal Entries
a)

b)

Cash
Caminade, Capital
Tormis, Capital
Non-Cash Assets
Liabilities
Cash

Solution Manual in Partnership and Corporation 2014-2015

110,000
72,000
18,000
200,000
91,000
91,000

47

c)
d)

Caminade, Loan
Caminade, Capital

13,000

Caminade, Loan
Tormis, Capital
Cash

6,000
13,000

13,000

19,000

Payment of Loan to Caminade and capital to Tormis.


5 - 10 Digos Trading
Requirement 1:
Digos Trading
Statement of Partnership Liquidation
June 30, 20A

Balances before liquidation


1st Installment:
a) Realization and Loss
Balances
b) Payment of Liabilities
Balances
c) Right of Off-set
Balances
d) Cash Payment (Sch.1)
Balances
2nd Installment:
e) Realization and Loss
Balances
f) Right of Off-set
Balances
g) Cash Payment (Sch.2)
Balances
3rd Installment:
h) Realization and Loss
Balances
i) Right of Off-set
Balances
j) Payment to Loan
Balances
k) Payment to Capital

NonCash
70,000

Cash
13,000

Liabilities
20,000

10,000
23,000
(20,000)
3,000
3,000
(3,000)

(30,000)
40,000
40,000
40,000
40,000

4,000
4,000
4,000
(4,000)

(6,000)
34,000
34,000
34,000

30,000
30,000
30,000
(7,200)
22,800
(22,800)

(34,000)

Requirement 2:

20,000
(20,000)

Apolinar,
Loan
10,000
10,000
10,000
(1,000)
9,000
9,000

(600)
8,400
8,400
8,400
(1,200)
7,200
(7,200)

30%
Apolinar,
Capital
5,000

30%
Guiamad,
Capital
25,000

40%
Paclijan,
Capital
23,000

(6,000)
(1,000)
(1,000)
1,000

(6,000)
19,000
19,000
19,000
(3,000)
16,000

(8,000)
15,000
15,000
15,000
15,000

(600)
(600)
600

(6,00)
15,400
15,400
(4,000)
11,400

(800)
14,200
14,200
14,200

(1,200)
(1,200)
1,200

(1,200)
10,200
10,200
10,200
(10,200)

(1,600)
12,600
12,600
12,600
(12,600)

(1)
Schedule of Cash Payment
Total

30%
Apolinar

30%
Guiamad

40%
Paclijan

43,000
(40,000)
3,000

9,000
(12,000)
(3,000)

19,000
(12,000)
7,000

15,000
(16,500)
(1,000)

3,000

(4,000)
3,000

1,000

st

Balance after 1 Installment


Capital and Loan
Less: Theoretical Loss
Cash for Distribution
Deficiency of Apolinar and Paclijan
absorbed by Guiamad
Cash payment to Guiamad

(2)
Schedule of Cash Payment
Total

30%
Apolinar

30%
Guiamad

40%
Paclijan

38,000
(34,000)
4,000

8,400
(10,200)
(1,800)

15,400
(10,200)
5,200

14,200
(13,600)
600

1,800

(771.43)
4,428.57
4,000.00

(1,028.57)
428.57
428.57

nd

Balance after 2 Installment


Capital and Loan
Less: Theoretical Loss
Cash for Distribution
Deficiency of Apolinar absorbed by
Guiamad and Paclijan (3/7 4/7)
Balance
Deficiency of Paclijan absorbed by Guiamad

Solution Manual in Partnership and Corporation 2014-2015

48

Requirement 3:
Journal Entries
a)

b)
c)
d)
e)

f)
g)
h)

i)
j)
k)

Cash
Apolinar, Capital
Guiamad, Capital
Paclijan, Capital
Non-Cash Assets

10,000
6,000
6,000
8,000

Accounts Payable
Cash

20,000

30,000
20,000

Apolinar, Loan
Apolinar, Capital

3,000

Guiamad, Loan
Cash

3,000

Cash
Apolinar, Capital
Guiamad, Capital
Paclijan, Capital
Non-Cash Assets

4,000
600
600
800

Apolinar, Loan
Apolinar, Capital

1,200

Guiamad, Capital
Cash

4,000

3,000
3,000

6,000
1,200
4,000

Cash
Apolinar, Capital
Guiamad, Capital
Paclijan, Capital
Non-Cash Assets

30,000
1,200
1,200
1,600

Apolinar, Loan
Apolinar, Capital

1,200

Apolinar, Loan
Cash

7,200

34,000
1,200
7,200

Guiamad, Capital
Paclijan, Capital
Cash

10,200
12,600
22,800

Requirement 4:
Digos Trading
Cash Priority Program
Loss Absorption Balance
Apolinar
Guiamad
Paclijan
Capital and Loan Balances
before realization
Profit and Loss ratio
Loss absorption ability
Excess of Guiamad over Paclijan
Balances
Excess of Guiamad and
Paclijan over Apolinar
Balances

15,000
30%
50,000

23,000
40%
57,500

50,000

25,000
30%
83,333
(25,833)
57,500

50,000

(7,500)
50,000

(7,500)
50,000

Cash Payment
Apolinar
Guiamad

Total

Paclijan

7,750

7,750

5,250
13,000

2,250
10,000

3,000
3,000

30%

40%

57,500

Cash available in excess of 13,000(P/L Ratio)

30%

5 - 11 Paramount Company
Paramount Company

Case 1:

Balance before Liquidation


Realization and Loss
Balances
Payment of Liability
Balances
Right of Off-set - Clarin
Balances
Payment to Loan-Clarin & Namoc
Balances
Payment to Capital-Namoc &
Martinez

Cash
8,000
74,000
82,000
(44,800)
37,200
37,200
(4,400)
32,800

NonCash
136,000
(136,000)

(32,800)

Solution Manual in Partnership and Corporation 2014-2015

Accounts
Payable
44,800
44,800
(44,800)

Clarin,
Loan
2,000
2,000
2,000
(800)
1,200
(1,200)

Namoc,
Loan
3,200
3,200
3,200
3,200
(3,200)

40%
Clarin,
Capital
24,000
(24,800)
(800)
(800)
800

40%
Namoc,
Capital
32,000
(24,800)
7,200
7,200
7,200
7,200

20%
Martinez,
Capital
38,000
(12,400)
25,600
25,600
25,600
25,600

(7,200)

(25,600)

49

40%
Clarin,
Capital
24,000
(27,200)
(3,200)
(3,200)
2,000
(1,200)

Case 2:
Cash
Balance before Liquidation
8,000
Realization and Loss
68,000
Balances
76,000
Payment of Liability
(44,800)
Balances
31,200
Right of Off-set
Balances
31,200
Cash contribution by Clarin to pay off
deficiency
1,200
Balances
32,400
Payment to Loan - Namoc
(3,200)
Payment to Capital-Namoc &
Martinez
(29,200)

NonCash
136,000
(136,000)

Accounts
Payable
44,800
44,800
(44,800)

Clarin,
Loan
2,000
2,000
2,000
(2,000)

Namoc,
Loan
3,200
3,200
3,200
3,200
3,200
(3,200)

Balance before Liquidation


Realization and Loss
Balances
Payment of Liability
Balances
Right of Off-set
Balances
Deficiency of Clarin absorbed by
Namoc & Martinez on a 4/6 and
2/6 basis
Balances
Payment to Loan - Namoc
Payment to Capital-Namoc &
Martinez

Cash
8,000
68,000
76,000
(44,800)
31,200
31,200

Accounts
Payable
44,800
44,800
(44,800)

Clarin,
Loan
2,000
2,000
2,000
(2,000)

40%
Clarin,
Capital
24,000
(27,200)
(3,200)
(3,200)
2,000
(1,200)

Namoc,
Loan
3,200
3,200
3,200
3,200

31,200
(3,200)

20%
Martinez,
Capital
38,000
(13,600)
24,400
24,400
24,400

4,800

24,400

(4,800)

(24,400)

40%
Namoc,
Capital
32,000
(27,200)
4,800
4,800
4,800

20%
Martinez,
Capital
38,000
(13,600)
24,400
24,400
24,400

(800)
4,000

(400)
24,000

(4,000)

(24,000)

1,200

Case 3:
NonCash
136,000
(136,000)

40%
Namoc,
Capital
32,000
(27,200)
4,800
4,800
4,800

3,200
(3,200)

1,200

(28,000)

5 - 12 Star Hardware
Requirement 1:
Star Hardware
Cash Priority Program
Loss Absorption Balance
Corpuz
Cuidadano
Luntao
Capital and Loan Balances
before realization
Profit and Loss ratio
Loss absorption ability
Extinguishment: Excess of
Luntao over Corpuz
Balances
Excess of Luntao and Corpuz
over Cuidadano
Balances

Total

Cash Payment
Corpuz
Cuidadano

Luntao

65,000
30%
216,667

80,000
40%
200,000

70,000
30%
233,333

216,667

200,000

(16,666)
216,667

5,000

5,000

(16,667)
200,000

200,000

(16,667)
200,000

10,000
15,000

5,000
5,000

5,000
10,000

Cash available in excess of 15,000 (P/L Ratio)

30%

40%

30%

Requirement 2:
Computations:

30%
Corpuz

Cash available for distribution P8,000:


st
1 cash available of P5,000 is given to Lunato
Remainder of P3,000 (P/L Ratio) 3/6 or to Corpuz
3/6 or to Luntao

Computations:
A per program
Excess (P/L ratio)
Cash available for distribution
Solution Manual in Partnership and Corporation 2014-2015

Total
15,000
5,000
20,000

40%
Cuidadano

30%
Luntao
5,000

1,500
1,500

-0-

1,500
6,500

30%
Corpuz
5,000
1,500
6,500

40%
Cuidadano
2,000
2,000

30%
Luntao
10,000
1,500
11,500

50

*** Multiple Choice Problems ***


5I

Ibaez, Langbid and Pedroo


Q1

Ibaez
Agreed share
Capital balance before realization
Share of realization gain of P50,000
Balance after effecting the gain

Q2

40%
80,000
20,000
100,000
Ibaez

Agreed share
x Loss on realization
Share of the realization loss
5 II

40%
30,000
12,000

Langbid

Pedronio

35%
70,000
17,500
87,500

25%
50,000
12,500
62,500

Langbid

(A)

Pedronio

35%
30,000
10,500

25%
30,000
7,500

(A)

S&R trading
Q3

Q4

Partners Equity
Gabuya
Cadelea
Total
Less: Write-off
New Partners Equity

P 105,000
120,000
P 225,000
4,000
P221,000

(B)

Cash
Add: 90% collection
Total
Less: Payment of Liabilities
Cash Balance

P 60,000
36,000
P 96,000
80,000
P 16,000

(A)

Total Partners Equity


Add: Liabilities
Total Assets

P105,000
145,000
P250,000

(B)

Book Value of Non-Cash Assets


Proceeds from Sale
Loss on Realization
P/L Ratio
Share of Torralba on the Realization Loss

P 250,000
180,000
P 70,000
x 70%
P 49,000

(C)

Rosada, Capital
Share of the Realization Loss
of P70,000 (P70,000 x 30%)
Share of cash distribution

P 50,000

5 III Manila and Torralba


Q5

Q6

Q7

21,000
P 29,000

(A)

P 490,000
( 340,000)
P150,000

(A)

5 IV Ambrosio, Rada and Pateo


Q 8

Q9

Non-Cash Assets
Less: Realization Loss
Realization of non-cash assets
All accounts with credit balances:
Liabilities
Ambrosio, Capital
Rada, Capital
Pateo, Capital
Less: Non-Cash Assets
Cash balance before realization

P 105,000
180,000
150,000
120,000
P555,000
490,000
P 65,000

(B)

Q 10

Ans. C - P3,000 capital contribution is equal to her capital deficiency.

Q 11

Ans. A - Ambrosio, P2,000 and Rada P1,000.

5 V Southexpressway Hardware
Q 12

Total partnership interest


Less: Allow. for Doubtful Accounts
Merchandise
Store Furniture and Equipment
Less: Accumulated Depreciation
Book Value of non-cash assets

Solution Manual in Partnership and Corporation 2014-2015

P 60,000
5,000
90,000
60,000

P 55,000
80,000
30,000
P165,000

(C)

51

Q 13

Ans. A
Cash
Allowance for Doubtful Accounts
Accumulated Depreciation
Accounts Receivable
Merchandise
Store Furniture and Equipment
Gain or Loss on Realization

P 186,000
5,000
60,000
P 60,000
80,000
90,000
21,000

Q 14

Realization
Value
P 56,000
85,000
45,000
P 186,000

Accounts Receivable
Merchandise
Store Furniture and Equipment
Q 15

Ans. A - P7,000 for Tao and P14,000 for Alegado

Q 16

Ans. B
Gain or Loss on Realization
Arib, Capital
Zaragoza, Capital

Q 17

Book
Value
P 55,000
80,000
30,000
P 165,000

Gain
(loss)
P 1,000
5,000
15,000
P21,000

(B)

P 21,000
P

Ans. B
Accounts Payable
Cash

7,000
14,000

P 15,000
P 15,000

5 VI Miranda and Leon


Q 18

Q 19

Q 20

Q 21

Q 22

5 VII

Proceeds from sale of non-cash assets


Non-cash assets
Loss on Realization

P 140,000
( 200,000)
(P 60,000)

Loss on Realization
x P/L ratio of Leon
Share of Leon on the realization loss

Miranda, Capital
Leon, Capital
Gain on Realization

36,000
24,000
60,000

(B)

Miranda, Capital
Share of Miranda on realization loss
Capital debit of Miranda

P 30,000
( 36,000)
(P 6,000)

(B)

(B)

Ans. C - The amount of Miranda, loan that is off-set against capital deficiency is P6,000.

Sabado, Gregori and Gadia

Capital balances
Loan balances
Combined Capital & loan balances
Less: Theoretical Loss Q 23 (A)
Q 24 (A)
Total
Deficiency of Sabado and Deriquito
Absorbed by Gregori
Q 25 (B)

5 VIII

60,000
x 40%
P 24,000

(C)

Total
65,000
5,000
70,000
(20,000)
50,000

40%
Sabado
(4,000)
5,000
1,000

20%
Gregori
63,000

40%
Dequito
6,000

63,000

6,000

(8,000)
(7,000)

(4,000)
59,000

(8,000)
(2,000)

7,000

(9,000)
50,000

2,000

Espocia and Malquisto

Q 26
Balances before realization
Realization and Loss
Balances
Payment of Liabilities
Balance
Payment of Capital

Cash
450,000
450,000
(120,000)
330,000
(330,000)

Solution Manual in Partnership and Corporation 2014-2015

Non-cash
510,000
(510,000)

Liabilities
120,000
120,000
(120,000)

Espocia
240,000
(240,000)
216,000
216,000
(216,000)

Malquito
150,000
136,000
114,000
114,000
(114,000)

(A)

52

5 IX

Java and Constantino

Q 27

Q 28

5X

Total Assets
Less: Cash
Non-cash assets

P 55,000
10,000
(P 45,000)

(C)

Realization Loss
Add: Non-Cash
Cash Proceeds from Sale

(P 15,000)
45,000
(P 30,000)

(A)

Patosa, Juinio and dela Cruz


Q 29
Balances before realization
Realization and Loss
Balances
Payment of Liabilities
Balances
Absorption Loss of dela Cruz

5 XI

Cash
60,000
400,000
460,000
(140,000)
320,000

Other
Assets
540,000
(540,000)

50%
Patosa
280,000
(70,000)
210,000
210,000
(5,000)
205,000

30%
Juinio
160,000
(42,000)
118,000
118,000
(3,000)
115,000

50%
Villacampa
95,000
(40,000)
55,000
55,000

25%
Kudemus
80,000
(20,000)
60,000
60,000

Liabilities
140,000
140,000
(140,000)

20%
dela Cruz
20,000
(28,000)
(8,000)
(8,000)
8,000
(D)

Villacampa, Kudemus and Puno

Q 30
Balances before realization
1st Installment
Realization and Loss
Balances
Payment of Liabilities
Balances

Cash
28,000
70,000
98,000
(48,000)
50,000

Other
Assets
265,000
(150,000)
115,000
115,000

SCHEDULE 1:
Balances before realization
Less: Theoretical Loss
Cash Distribution
Deficiency of Villacampa absorbed
by Trinidad and Puno
Cash Payment to Trinidad and Puno

Liabilities
48,000
48,000
(48,000)

50%
Villacampa
55,000
(57,500)
(2,500)

Total
165,000
(115,000)
50,000

25%
Kudemus
60,000
(28,750)
31,250

25%
Puno
50,000
(28,750)
21,250

(1,250)
30,000

(1,250)
20,000

2,500

25%
Puno
70,000
(20,000)
50,000
50,000

Chapter 6
Corporation
(Definition, Nature and Formation)
Test I True or False
1.
2.
3.
4.
5.
6.
7.

true
true
true
false
false
true
true

8.
9.
10.
11.
12.
13.
14.

false
true
false
true
false
true
true

15.
16.
17.
18.
19.
20.
21.

true
false
true
true
true
true
true

22.
23.
24.
25.
26.
27.
28.

False
true
true
false
true
true
true

4.
5.
6.

A
D
A

7.
8.
9.

A
C
B

10. A
11. B
12. A

29. true

Test I Multiple Choice


1. D
2. C
3. B

Chapter 7
Accounting for Share Capital Transactions
Test I True or False
1.
2.
3.
4.
5.
6.

false
false
false
true
false
true

7.
8.
9.
10.
11.
12.

true
true
true
true
true
true

Solution Manual in Partnership and Corporation 2014-2015

13.
14.
15.
16.
17.
18.

true
false
false
true
true
true

19.
20.
21.
22.
23.
24.

true
true
true
false
false
true

25. true
26. false

53

Test I Multiple Choice


1. A
2. A
3. D

4. A
5. A
6. C

7.
8.
9.

A
A
D

10. A
11. C

*** EXERCISES and PROBLEMS ***


71

Sarangani Marketing Corporation


Journal Entry

Memorandum Entry

July 2
Unissued Ordinary Share
Authorized Ordinary Share

P1,000,000

Subscription Receivable
Subscribed Ordinary Share

P 250,000

Cash
Subscription Receivable

P1,000,000

Ordinary Share Capital


Authorized
shares at

to issue 10,000
P100 par value

P 250,000

Subscription Receivable
Subscribed Ordinary Share
Cash
Subscription Receivable

P 62,500

Organization Cost

P 15,000

62,500
62,500

P250,000
P250,000

P 62,500

July 15
Organization Cost

15,000

Cash

P 15,000

Cash

P 15,000

July 16
Subscription Receivable
Subscribed Ordinary Share
Share Premium

Cash
Subscription Receivable

10,500

Subscription Receivable
Subscribed Ordinary Share
Share Premium

P 10,500

Cash
Subscription Receivable

Subscription Receivable
Subscribed Ordinary Share
Share Premium

P 11,000

10,000
1,000

15,000

Cash
Ordinary Share

P 15,000

15,000

Cash
Subscription Receivable

P 15,000

20,000

Subscribed Ordinary Share


Ordinary Share

P 20,000

Land
Ordinary Share
Share Premium

P 40,000

30,000
10,000

Share Premium (Organization Cost)


Ordinary Share
Share Premium

P 35,000

30,000
5,000

10,000
500

4,500

4,500

P 10,000
500
4,500
P

4,500

July 18
Subscription Receivable
Subscribed Ordinary Share
Share Premium

11,000

P 10,000
1,000

July 20
Cash
Unissued Ordinary Share

15,000

P 15,000

July 25
Cash
Subscription Receivable

Subscribed Ordinary Share


Unissued Ordinary Share

15,000

20,000

P 15,000

P 20,000

July 27
Land
P 40,000
Unissued Ordinary Share
P
Share Premium
(fair market value of land is given)
July 29
Organization Expense

35,000

Unissued Ordinary Share


Share Premium
(par value is used)

P 30,000
10,000

P 30,000
5,000

July 30
Cash
Subscription Receivable

P 35,000

P 35,000

Solution Manual in Partnership and Corporation 2014-2015

Cash
Subscription Receivable

P 35,000
P 35,000

54

July 31
Cash
Subscription Receivable

Cash
Subscription Receivable

P 6,000

6,000

Subscribed Ordinary Share


Ordinary Share

P10,000

P 10,000

Subscribed Ordinary Share


Unissued Ordinary Share
72

6,0000

10,000

P 6,000

P 10,000

Dadiangas canning Corporation

Requirement 1:
Memorandum Entry

Journal Entry

Sept. 1
Ordinary Share
.
Authorized to issue 30,000 Ordinary shares
at P100 par value share
Subscription Receivable
Subscribed Ordinary Share

Unissued Ordinary Share


Authorized Ordinary Share

P3,000,000

Subscription Receivable
Subscribed Ordinary Share

P 750,000

P 750,000

Cash
Subscription Receivable

P 187,500

P 187,500

P 750,000

P3,000,000

P 750,000

Sept. 2
Cash
Subscription Receivable

P 187,500

P 187,500

Sept. 5
Organization Expense
Cash

20,000

Subscription Receivable
Subscribed Ordinary Share
Share Premium

22,000

Cash
Subscription Receivable

20,000

Subscription Receivable
Subscribed Ordinary Share
Share Premium

22,000

Cash
Subscription Receivable

4,400

Cash
Subscription Receivable

P 148,500

P 148,500

Subscribed Ordinary Share


Unissued Ordinary Share

P 198,000

P 198,000

20,000

20,000
2,000

Organization Expense
Cash

20,000

20,000
2,000

4,400

Sept. 10

4,400

4,400

Sept. 14
Cash
Subscription Receivable
1,980 x 100 per share
Partial Payment
Balance Collected
Subscribed Ordinary Share
Share Capital

P 148,500

P 148,500

P198,000
49,500
P148,500
P 198,000

P 198,000

Sept. 19
Cash in Bank
Ordinary Share

50,000

Cash in Bank
Unissued Ordinary Share

50,000

50,000

94,000
1,000

Land
Unissued Ordinary Share
Share Premium

17,600

Cash
Subscription Receivable

20,000

Subscribed Ordinary Share


Unissued Ordinary Share

P 20, 000

50,000

94,000
1,000

17,600

20,000

Sept. 24
Land
Ordinary Share
Share Premium

95,000

95,000

Sept. 30
Cash
Subscription Receivable

17,600

Subscribed Ordinary Share


Ordinary Share

P 20, 000

Solution Manual in Partnership and Corporation 2014-2015

17,600

55

Requirement 2-1:
Shareholders Equity (Memorandum Entry)
Contributed Capital:
Share Capital
Ordinary Share, P100 par value, 3,620 shares issued
Subscribed Ordinary Share
Less: Subscription Receivable
Share Premium
Issued and Subscribed Ordinary Shares

362,000
552,000
414,000

138,000
3,000
503,000

Shareholders Equity (Journal Entry)


Contributed Capital:
Share Capital
Ordinary Shares authorized, 30,000 shares at P100
Less: Unissued ordinary shares
Issued Ordinary Shares
Subscribed Ordinary Shares
Less: Subscription Receivable
Share Premium
Issued and Subscribed Ordinary Shares

3,000,000
2,638,000
362,000
552,000
414,000

138,000
3,000
503,000

Requirement 2-2:
Aug. 5

Unissued Preference Share


Unissued Ordinary Share
Authorized Preference Share
Authorized Ordinary Share

P 1,500,000
10,000,000

Subscription Receivable Preference (14,000 x 30)


Subscription Receivable Ordinary (27,000 x 100)
Subscribed Preference Share
Subscribed Ordinary Share

Cash

P 3,120,000

P 1,500,000
10,000,000
420,000
2,700,000

Subscription Receivable Preference


Subscription Receivable Ordinary

Aug. 10

Aug. 15

Organization Expense
Unissued Ordinary Share
Share Premium Ordinary

Subscribed Preference Share


Subscribed Ordinary Share
Unissued Preference Share
Unissued Ordinary Share

Subscription Receivable Preference


Subscription Receivable Ordinary
Subscribed Preference Share
Subscribed Ordinary Share
Share Premium Preference
Share Premium Ordinary

Cash

Land

Subscription Receivable Preference


Subscribed Preference Share
Share Premium Preference

Cash

Solution Manual in Partnership and Corporation 2014-2015

420,000
2,700,000

20,000
5,000

420,000
2,700,000

6,000
100,000
1,000
5,000

1,400
21,000

300,000
15,000

60,000
4,000

64,000

60,000

7,000
105,000

22,400

315,000

64,000

64,000

Subscription Receivable
Subscribed Preference Share
Unissued Preference Share

420,000
2,700,000

Unissued Ordinary Share


Share Premium Ordinary
Aug. 28

420,000
2,700,000

25,000

Subscription Receivable Preference


Subscription Receivable Ordinary
Aug. 20

60,000

56

Aug. 29

Cash (105,000 21,000)


Subscription Receivable Ordinary

Subscribed Ordinary Share


Unissued Ordinary Share

Share Premium-Preference
15)
1,000
28)
4,000
5,000

84,000
P

84,000

100,000

100,000

Share Premium-Ordinary
15)
5,000
20) 15,000
20,000

Share Premium:
Share Premium Preference
Total Shareholders Equity

P
5,000
P 3,705,400
Details

Unissued Preference
1,500,000
420,000
60,000
1,020,000

Unissued - Ordinary
10,000,000
20,000
2,700,000
300,000
6,980,000

Authorized - Preference
1,500,000

Authorized - Ordinary
10,000,000

Subscribed Share - Preference


420,000
420,000
60,000
6,000
60,000
6,000

Subscribed Share - Ordinary


2,700,000
2,700,000
100,000
100,000

Subscription Receivable Preference


420,000
420,000
7,000
6,000
64,000
60,000
5,600

Subscription Receivable - Ordinary


2,700,000
2,700,000
105,000
21,000
84,000

Share Premium - Preference


1,000
4,000
5,000

73

Share Premium - Ordinary


5,000
15,000
20,000

Cebu Centennial Hotel

Requirement 1 and 2:
Aug. 5

Aug. 10

Unissued preference Share


Unissued Ordinary Share
Authorized preference Share
Authorized Ordinary Share

P 1,500,000
10,000,000

Subscription Receivable Preference (14,000 x P300)


Subscription Receivable Ordinary (27,000 x P100)
Subscribed Share Capital Preference
Subscribed Share Capital Ordinary

Cash
Subscription Receivable Preference
Subscription Receivable Ordinary

P 3,120,000

Organization Expense
Unissued Ordinary Share
Share Premium Ordinary

Subscribed Share Capital Preference


Subscribed Share Capital Ordinary
Unissued Preference Share
Unissued Ordinary Share

Solution Manual in Partnership and Corporation 2014-2015

P 1,500,000
10,000,000
420,000
2,700,000
P

420,000
2,700,000

420,000
2,700,000

20,000
5,000

420,000
2,700,000

25,000

420,000
2,700,000

57

Aug. 15

Aug. 20

Aug. 28

Aug. 29

Subscription Receivable Preference


Subscription Receivable Ordinary
Subscribed Share Capital Preference
Subscribed Share Capital Ordinary
Share Premium Preference
Share Premium Ordinary

Cash
Subscription Receivable Preference
Subscription Receivable Ordinary

Land
Unissued Ordinary Share
Share Premium Ordinary

Subscription Receivable Preference


Subscribed Share Capital Preference
Share Premium Preference

Cash
Subscription Receivable Preference

Subscribed Share Capital Preference


Unissued Preference Share

Cash (105,000 21,000)


Subscription Receivable Ordinary

Subscribed Share Capital Ordinary


Unissued Ordinary Share

7,000
105,000
P

6,000
100,000
1,000
5,000

1,400
21,000

300,000
15,000

60,000
4,000

64,000

60,000

84,000

100,000

22,400

315,000

64,000

64,000

60,000

84,000

100,000

Requirement 3:
Shareholders Equity (Memo Entry)
Contributed Capital:
Share Capital
10% Preference Share, P30 par, 50,000 shares authorized,
16,000 shares were issued
Subscribed Share Capital Preference
Less: Subscription Receivable Preference
Issued and Subscribed Preference
Ordinary Share, P100 par, 100,000 shares authorized
30,200 shares were issued
Subscribed Share Capital Ordinary
Issued and Subscribed Ordinary
Total Issued and Subscribed Preference and Ordinary
Share Premium Preference
Share Premium Ordinary
Total Shareholders Equity

480,000

400
480,400

P 6,000
5,600

P 3,020,000
100,000
P 3,120,000
P 3,600,400
P 5,000
20,000

25,000
P 3,625,400

Shareholders Equity (Journal Entry)


Contributed Capital:
Share Capital
10% Preference Share, 50,000 shares at 30 par value
Less: Unissued Preference share, 34,000 shares
Issued Share Capital Preference
Less: Subscription Receivable Preference
Issued and Subscribed Preference
Ordinary Share Authorized 100,000 shares at P100 par value
Less: Unissued Ordinary Shares, 69,800 shares
Issued Share Capital, 30,200 shares
Subscribed Share capital Ordinary
Issued and Subscribed Ordinary
Total Issued and Subscribed Ordinary
Share Premium Preference
Share Premium Ordinary
Total Shareholders Equity

Solution Manual in Partnership and Corporation 2014-2015

P 1,500,000
1,020,000
P 6,000
5,600
P

400
480,400

P10,000,000
6,980,000
P 3,020,000
100,000
P 3,120,000
P 3,600,400
P 5,000
20,000

25,000
P 3,625,400

58

75

Color Quick Corporation


Error: 500 shares issued instead of 50 shares
Requirement 1:

Requirement 2:

Land
Discount on Ordinary Share
Ordinary Share

P 45,000
5,000

Cash
Discount on Ordinary Share

P 50,000
5,000
P

5,000

76
Shareholders Equity (Memorandum Entry)
Contributed Capital:
Share Capital
10% Preference Share at P100 par value, 10,000 shares
authorized and 3,600 shares issued
Subscribed Preference Share
Issued and Subscribed Preference
Ordinary Shares at P100 par value, 30,000 shares
authorized and 8,500 shares issued
Subscribed Ordinary Shares
Issued and Subscribed Ordinary
Total Issued and Subscribed Preference and Ordinary
Share Premium:
Share Premium Preference
Share Premium Ordinary
Accumulated Profits (Losses)
Total Shareholders Equity

77

Assumption 2

Assumption 3

850,000
100,000
P 950,000
P 1,810,000
P 58,000
5,000

63,000
85,000
P 1,958,000

Organization Cost
Ordinary Share
Share Premium Ordinary
250,000 shares x P200 =
P 60,000 P 50,000
=
Organization Cost
Ordinary Share
Share Premium Ordinary
250 shares x P250
=
250 shares x P200
=
250 shares x P50
=
Organization Cost
Ordinary Share

60,000
P

50,000
10,000

50,000
12,500

50,000

500,000
50,000

500,000
50,000

500,000

45,000
5,000

28,000
2,000

50,000
10,000
P

62,500

62,500
50,000
12,500
P

50,000

Monte Alegre Development Corporation


Assumption 1

Assumption 2

Assumption 3

79

360,000
500,000
860,000

Farmingstone, Inc.
Assumption 1

78

Land
P
Preference Share (5,000 x P100)
Share Premium Preference (P550,000 P500,000)

550,000

Land (5,000 x P110)


Preference Share
Share Premium Preference

550,000

Land
Preference Share

Land
Ordinary Share
Share Premium Ordinary

Organization Expense
Ordinary Share
Share premium Ordinary

500,000

Mandarin Corporation
Instruction 1

Solution Manual in Partnership and Corporation 2014-2015

50,000

30,000

59

Cash
Discount on Ordinary Share
Ordinary Share
Instruction 2

Ordinary Share
par value

P 97,000 =
P100

20,000
4,000
P

24,000

10,000
5,000

10,000

10,000

15,000

8,000

10,000

500,000

200,000

300,000

21,000

321,000

500,000

321,000

500,000

500,000

125,000

970 shares

7 10
Assumption A
1)

2)

3)

Cash
Ordinary Share
Capital in Excess of Stated Value Ordinary

Cash
Discount on Ordinary Share
Ordinary Share

Cash
Ordinary Share

Cash
Ordinary Share

Cash
Ordinary Share

Cash
Ordinary Share

15,000

8,000
2,000
10,000

Assumption B
1)
2)
3)

15,000
8,000
10,000

7 11 Diamond Corporation
Requirement 1 -

Froilan Ampil

Requirement 2 -

100,000 shares

Requirement 3 -

Subscription Receivable
Subscribed Ordinary Share

Cash
Subscription Receivable

Receivable from Highest Bidder


Subscription Receivable

Receivable from Highest Bidder


Cash

Cash
Receivable from Highest Bidder

Subscribed Ordinary Share


Ordinary Share

500,000
200,000
300,000
21,000
321,000
500,000

40,000 shares for Ampil


60,000 shares for Lopez
100,000 shares
======
Requirement 4 -

Treasury Shares
Receivable from Highest Bidder

Subscribed Ordinary Share


Ordinary Share (for 100,000 shares)

321,000
500,000

7 12 Raja Buayan Marketing Corporation


Requirement 1
Ordinary Share
Authorized to issue
2,000 shares at par value of P1,000.
.

March 20A
3

Subscription Receivable
Subscribed Ordinary Share

Cash
Subscription Receivable
(500 x P1,000)

Solution Manual in Partnership and Corporation 2014-2015

500,000
125,000

60

Cash
Subscription Receivable

Tano 200 x 1,000


Santos 100 x 1,000

August
15
16
20
21

Requirement 2 -

Subscription
= P 200,000
=
100,000
P 300,000

Payment
50,000
25,000
75,000

=
=
=

225,000
P

225,000

300,000

30,000

6,000

24,000

5,000

29,000

30,000

29,000

30,000

10,000

3,000

7,000

500

7,500

10,000

7,000

500

7,500

10,000

Balance
P150,000
75,000
P 225,000

Subscribed Ordinary Share


Ordinary Share

Subscription Receivable
Subscribed Ordinary Share

Cash
Subscription Receivable

Receivable from Highest Bidder


Subscription Receivable

Receivable from Highest Bidder


Cash

Cash
Receivable from Highest Bidder

Subscribed Ordinary Share


Ordinary Share
Baugbog 25
Yao
5
30 shares

Treasury Shares
Receivable from Highest Bidder

Subscribed Ordinary Share


Ordinary Share

Subscription Receivable
Subscribed Ordinary Share

Cash
Subscription Receivable

Receivable from Highest Bidder


Subscription Receivable

Receivable from Highest Bidder


Cash

Cash
Receivable from Highest Bidder

Subscribed Ordinary Share


Ordinary Share

300,000
30,000
6,000

24,000
5,000
29,000
30,000

29,000
30,000

7 13 Duhat Corporation
Requirement 1
a)
b)
c)
d)
e)
f)

Sabado
Esparaguera

10,000
3,000
7,000
500
7,500
10,000

- 120 shares
- 80 shares (balance)
200 shares

Requirement 2
Receivable from Highest Bidder
Subscription Receivable

Receivable from Highest Bidder


Cash

500

Treasury Shares
Receivable from Highest Bidder

7,500

Subscribed Ordinary Share


Ordinary Share
(100 shares are issued to the corporation)

Solution Manual in Partnership and Corporation 2014-2015

7,000

10,000

61

7 14 Yummy Cakes and Pastries


a)

Accumulated Depreciation
Accounts Payable
Receivable from Corporation
Cash
Merchandise
Furniture and Equipment
To transfer the net assets of the
Partnership to the corporation.

P 20,000
40,000
150,000
P 40,000
70,000
100,000

No entry

b)
No entry

c)
No entry

Unissued Share Capital


Authorized Share Capital
To record authorization
5,000 shares at P50 par
Value per share.

P250,000

Subscription Receivable
Subscribed Share Capital
To record subscription
at par value of the
following
incorporators.

P175,000

Share Subscribed
Casulla
Landicho
Supapo
Beltran
Eno

d)
d)

Casulla, Capital
Landicho, Cpital
Supapo, Capital
Receivable from Corporation
To finally close the partnership
book.

P 50,000
60,000
40,000
P150,000

Cash
Merchandise
Furniture and Equipment
Accounts Payable
Subscription Receivable
To record receipts of
assets and assumption
Of liabilities of the
partnership.
Casulla
Landicho
Supapo

e)

f)

1,000
1,200
800
250
250
3,500

Amount
P 50,000
60,000
40,000
12,500
12,500
P 175,000

P 40,000
70,000
80,000
P 40,000
150,000

P 25,000
P 25,000

P 12,500
12,500
P 25,000

Subscribed Ordinary Share


Unissued Ordinary Share
To record issuance of
Certificate
to
the
following
incorporators/
shareholders.
Shares
Casulla
1,000
Landicho
1,200
Supapo
800
Beltran
250
Eno
250

Solution Manual in Partnership and Corporation 2014-2015

P175,000

P 50,000
60,000
40,000
P150,000

Cash
Subscription Receivable
To record collection
from subscription of
the ff:
Beltran
Eno

P250,000

P175,000
P175,000

Paid-up
Amount
P 50,000
60,000
40,000
12,500
12,500
P 3,500

62

7 15 Kalahi Store
Book of Partnership
a)

b)

c)

d)

Corpuz, Capital
Ciudadano, Capital
Salazar, Capital
Income and Expense Summary.

P21,000
21,000
21,000

Salazar, Capital
Corpuz, Capital
Ciudadano, Capital
Allowance for Doubtful Accounts
Merchandise
Accumulated Depreciation

P48,467
48,467
48,466

P63,000

P30,000
95,400
20,000

Receivable from Corporation


Allowance for Doubtful Accounts
Accumulated Depreciation
Accounts Payable
Corpuz, Loan
Cash
Accounts Receivable
Merchandise
Furniture and Fixtures

P521,600
60,000
40,000
400,000
30,000

Share of Stock-Corporation
Receivable from Corporation

P521,600

P170,000
300,000
381,000
200,000
P521,600

Book of the Corporation


a)
b)

c)

Subscription Receivable
Subscribed Ordinary Share

P521,600

Cash
Accounts Receivable
Merchandise
Furniture and Fixtures
Allowance for Doubtful Accounts
Accounts Payable
Corpuz, Loan
Subscription Receivable

P170,000
300,000
381,600
160,000

Subscribed Ordinary Share


Ordinary Share

P521,600

P521,600

P60,000
400,000
30,000
521,600
P521,600

*** Multiple Choice ***


7 I Negros Sugar planters, Inc.
Q-1

Q-2

8% Preference Share
Subscribed Preference Share
Less: Subscription Receivable-Preference
Ordinary Share
Subscribed Ordinary Share
Subscription Receivable-Ordinary
Legal Capital
Contributed Capital:
Share Capital
8% Preference Share
Subscribed Preference Share
Less: Subscription Receivable-Preference
Ordinary Share
Subscribed Ordinary Share
Less: Subscription Receivable-Ordinary
Share Premium
Discount on Preference Share
Share Premium-Ordinary
Accumulated Profits and Losses
Other Components of Equity
Revaluation Increment of Property
Total Shareholders Equity

Q-3

P400,000
P300,000
75,000
P100,000
50,000

225,000
700,000
50,000
P1,375,000

(A)

P400,000
P300,000
75,000

225,000
700,000

P100,000
50,000
( 2,000)
40,000

50,000

38,000
1,835,000
15,000
P3,263,000

(A)

Same as in Q-1, P1,375,000 (A)

Solution Manual in Partnership and Corporation 2014-2015

63

7 II Davao Metro Stars Corporation


Q-4

Answer (A)
Preference, 2,000 shares x P100 = P200,000

Q-5

Ordinary Share, 5,000 x P150 = P750,000

Answer (A)
Preference,2,000 x 25% = 500 shares

Q-6

Ordinary Share, 5,000 x 25% = 1,250 shares

Answer (A)
Preference P2,000 x 25% x 25% = P12,500 Ordinary Share, P750,000 x 25% x 25% = P46,875

7 III Madraza Corporation


Q-7 to Q-8
Debit
Credits
Cash Land
Discount on Ordinary
Organization Expense
Share Capital
Share Capital Share Premium
1)
P11,040
P 960
P12,000
2)
50,000
38,000
P12,000
3)
25,000
20,000
5,000
Q 7 (B) P70,000
P17,000
Q 8 (A)

7 IV Dumaguete Jewelry Corporation


Q-9 20,000 Shares x P100 par value = P2,000,000 (B)
Q-10

P300,000 (B)

Q-11

P1,200,000 x P100 = 12,000 shares (C)

7 V Davao Metro Sales Corporation


Q-12

Number of shares authorized to issue


x par value per share
Authorized Share Capital

400
P
100
P400,000 (C)

Q-13

Authorized Ordinary Share


x Subscription Requirement

Q-14

100,000 x 25% = 25,000 (A)

Q-15

Equivalent to the subscribed Share Capital of P100,000 par value of P100 = 1,000 shares (A)

Q-16

1,000 shares were issued


- 970 shares outstanding
30 shares in the treasury (A)

P 400,000
25%
P 100,000 (A)

7 VI Dadiangas Farmingtown Corporation


Q-17 10% Preference Share authorized to issue
par value of
No. of preference share authorized to issue

P1,000,000
P
100
10,000 shares (A)

Q-18 Authorized Ordinary Share


x par value
Authorized Share Capital - Ordinary

15,000
100
P1,500,000

Q-19 Preference 10,000 shares x 25% = 2,500 shares


Ordinary - 15,000 shares x 2 5% = 3,750 shares

(A)

Q-20 Preference 2,500 shares x P100 par value = P62,500


Ordinary 3,750 shares x P100 par value = 93,750

(A)

Q-21 Share Subscribed - 100 shares x P105


P10,500
Share Subscribed at par -100 shares x P100 10,000
Credited to share premium
P 500

(A)

Q-22 Shares Subscribed 100 shares x P105


Less: Share Premium
Credited to share capital

(B)

Solution Manual in Partnership and Corporation 2014-2015

P10,500
500
P10,000

shares
(B)

64

7 VII Valencia Fruit Processing Corporation


Q-23 300 shares were declared delinquent (C)
Q-24 Dagohoy (C)
Q-25 Subscription of Monta (300 x P150)
= P45,000
Subscription balance (unpaid)
= 27,000
Payment made by Monta on her subscribed shares P18,000

(A)

Q-26 Due from Highest Bidder


Subscription Receivable

(A)

P27,000
P27,000

Q-27 130 for Monta and 170 for Dagohoy (A)


Q-28 Treasury Shares
Due from Highest Bidder

P27,560
P27,560

(A)

7 VIII Davao Grains, Inc.


Q-29

March 10 (25,000 x P20)


March 25 (1,000 x P40)
Sept. 17 5,000 x P60)
Share Premium at Dec. 31, 20A

P500,000
40,000
300,000
P840,000

7 IX
Q-30 Land
Ordinary Shares
Share Premium

P350,000
P300,000
50,000

(B)

7X
Q-31

Since the cost of the service is not known, the fair value of the share is used, P130,000 (1,000 x P130)

(B)

7 XI
Q-32

7 XII
Q-33

Q-34

Authorized Ordinary Share


Less: Unissued Ordinary Share
Issued
Subscribed Ordinary Share
Less: Subscription Receivable
Share Premium
Accumulated Profits and Losses-Unappropriated
Accumulated Profits and Losses-Appropriated
Total
Less: Treasury Shares
Total Shareholders Equity

Preference Share, P100 par


Ordinary Share P10 par
Subscribed Ordinary Share
Legal Capital

P5,000,000
2,000,000
P3,000,000
P1,000,000
400,000
P 600,000
300,000

600,000
500,000
900,000
P5,000,000
( 100,000 )
P4,900,000 (A)

P 2,300,000
5,250,000
50,000
P7,600,000 (B)

Answer A
Preference Share, P2,550,000 P15 par
Ordinary Share
3,000 P50 par

= 170,000 shares
= 60,000 shares

Chapter 8
Accumulated Profits (Losses) Dividends
and
Treasury Shares
Test I True or False
1.
2.
3.
4.
5.

True
False
True
True
True

6.
7.
8.
9.
10.

True
False
True
True
True

11. False
12. False
13. True
14. False
15. True

16.
17.
18.
19.
20.

True
False
True
True
False

5. B
6. B

7. A
8. D

21.
22.
23.
24.
25.

True
False
True
True
True

26. False
27. True
28. True
29. False
30. True

Test II Multiple Choice


1. D
2. C

3. D
4. C

Solution Manual in Partnership and Corporation 2014-2015

9. B
10. D

11. B
12. D

65

*** EXERCISES/PROBLEMS ***


81
Requirement 1:
Accumulated Profits and Losses balance Jan. 1, 20B
a) accrued salaries not recorded, understate expenses and
overstates Profit
b) understatement of ending inventory, understates profit
c) overstatement of depreciation, understates profit
d) expense portion of prepaid insurance not recorded,
understates expense and overstates profit
Corrected Acc. Profits and Loss-Jan. 1, 20B

165,000
(15,000)
4,000
2,000
(5,000)
151,000

Requirement 2:
a) Accumulated Profits and Losses
Accrued Salaries

P 15,000

b) Merchandise Inventory
Accumulated Profits and Losses

P 4,000

c) Accumulated Depreciation
Accumulated Profits and Losses

P 2,000

d) Accumulated Profits and Losses


Prepaid Insurance

P 5,000

82

P 15,000
P

4,000

2,000

5,000

Bacolod Sugarland Corporation

Requirement 1:
Income and Expense Summary
Accumulated Profits and Losses

170,000
P

170,000

260,000
90,000

100,000

100,000

Requirement 2:
Accumulated Profits and Losses
Acc. Profits and Losses Appropriated for Plant Expenses
Acc. Profits and Losses Appropriated for Treasury Shares

350,000

Requirement 3:
Declaration:
Accumulated Profits and Losses
Cash Dividends Payable

Payment:
Cash Dividend Payable
Cash

100,000

100,000

Requirement 4:
Bacolod Sugarland Corporation
Statement of Accumulated Profits and Losses
For the year ended 31 December 20A
Accumulated Profits and Losses
Add: Profit for the year
Total
Less: Cash Dividends Declared and Paid
Current years appropriation:
For Plant Expansion
For Treasury Shares
Acc. Profits and Losses Unappropriated or Free, Dec. 31
Acc. Profits and Losses Appropriated:
For Plant Expansion
For Treasury Shares
Accumulated Profits and Losses, Dec. 31, 20A

P 950,000
170,000
P1,010,000
P 100,000
P 260,000
90,000

350,000

P 260,000
290,000

450,000
P 670,000

350,000
P1,020,000

Requirement 5:
Acc. Profits and Losses Appropriated for Plant Expansion
Accumulated Profits and Losses

Solution Manual in Partnership and Corporation 2014-2015

260,000
P

260,000

66

83

Marco Polo Corporation


a)

b)

c)

d)

84

5,000
200
P 4,800
200
P 960,000

Accumulated Profits and Losses


Cash Dividends Payable

Cash Dividends Payable


Cash

Issued and Outstanding


Less: Treasury Shares
Issued and Outstanding after treasury shares
x cash dividend per share
Amount of Dividends Declared

960,000
P

960,000

960,000

960,000

5,000 shares
200
4,800 shares
P 25.00
P 120,000

Accumulated Profits and Losses


Cash Dividends Payable

Cash Dividends Payable


Cash

Issued and Outstanding


Less: Treasury Shares
Issued and Outstanding after Treasury Shares
10% x P1,200
Amount of Dividends Declared

120,000
P

120,000

120,000

120,000

5,000 shares
200
4,800
P
120
P 576,000

Accumulated Profits and Losses


Share Dividends Distributable

Share Dividends Distributable


Share Capital

Issued and Outstanding


Less: Treasury Shares
Issued and Outstanding after Treasury Shares
20% x P1,000
Amount of Dividends Declared

576,000
P

576,000

576,000

576,000

5,000 shares
200
4,800
P
200
P 960,000

Accumulated Profits and Losses


Share Dividends Distributable

Share Dividends Distributable


Share Capital

960,000
P

960,000

960,000

18,000

18,000

19,500

19,500

960,000

Casablaca, Inc.
Aug. 1

Sept. 1

Dec. 1

85

Issued and Outstanding Shares


Less: Treasury Shares
Issued and Outstanding after treasury shares
P1,000 x 20%
Amount of Dividends Declared

Acc. Profits and Losses


Cash Dividends Payable

Cash Dividend Payable


Cash
(1,500 x P12)

Acc. Profits and Losses


Share Dividend Distributable

Share Dividends Distributable


Share Capital
(P130 x 10% x 1,500 shares)

18,000

18,000

19,500
19,500

Negros Grains, Incorporated

Requirement 1:
Upon Declaration:
Acc. Profits and Losses
Cash Dividends Payable-Preference
Cash Dividends Payable-Ordinary

Solution Manual in Partnership and Corporation 2014-2015

Pxx
Pxx
xx

67

Upon Payment:
Cash Dividends Payable-Preference
Cash Dividends Payable-Ordinary
Cash

Pxx
xx
Pxx

Requirement 2:
a) Preference Shares are Non-Cumulative and Non-Participating
Total
Preference Dividends:
Current year: P100,000 x 7% x 1year
Ordinary Dividends:
Balance, all to ordinary
Dividends as distributed
Shares issued
Dividends per share

7,000
73,000
80,000

Preference

Ordinary

7,000

7,000
2,000
3.50

73,000
73,000
3,000
24.33

b) Preference Shares are Cumulative and Non-Participating


Total
Preference Dividends:
Arrears: P100,000 x 7% x 2
Current: P100,000 x 7% x 1
Ordinary Dividends:
Balance, all to ordinary
Dividends as distributed
Shares issued
Dividends per share

14,000
7,000
59,000
80,000

Preference

Ordinary

14,000
7,000

21.000
2.000
10.50

59,000
59,000
3,000
19.67

c) Preference Shares are Non-Cumulative and Fully-Participating


Total
Preference Dividends:
Current year: P100,000 x 7% x 1
Ordinary Dividends:
Current year: P300,000 x 7% x1
Balance for Participating, P52,000
Preference P100,000/P400,000 x P52,000
Ordinary P300,000/P400,000 x P52,000
Dividends as distributed
Shares issued
Dividends per share

7,000

Preference
7,000

21,000
13,000
39,000
80,000

Ordinary

21,000
13,000
20,000
2,000
10,000

39,000
60,000
3,000
20,000

d) Preference Shares are Cumulative and Fully-Participating


Total
Preference Dividends:
Arrears: P100,000 x 7% x 2
Current: P100,000 x 7% x 1
Ordinary Dividends:
Current year: P300,000 x 7% x1
Balance for Participating, P52,000
Preference P100,000/P400,000 x P38,000
Ordinary P300,000/P400,000 x P38,000
Dividends as distributed
Shares issued
Dividends per share

86

14,000
7,000

Preference
14,000
7,000

21,000
9,500
28,500
80,000

Ordinary

21,000
9,500
30,500
2,000
15.25

28,500
49,500
3,000
16.50

Cagayan de Oro Motorama, Incorporated


Requirement A Preference Share is Non-Cumulative and Non-Participating
Total
Preference Share Dividends:
Current: P90,000 x 10% x 1 yr.
Ordinary Dividends:
Balance, all to ordinary
As distributed

Solution Manual in Partnership and Corporation 2014-2015

Preference

9,000

9,000

61,000
70,000

9,000

Ordinary

61,000
61,000

68

Requirement B Preference Share is Cumulative and Non-Participating


Total
Preference Share Dividends:
Arrears: P90,000 x 10% x 1 yr.
Current: P90,000 x 10% x 1
Ordinary Dividends:
Balance all to Ordinary Share (70,000-P18,00)
As distributed

Preference

9,000
9,000

9,000
9,000

52,000
70,000

18,000

Ordinary

52,000
52,000

Requirement C Preference Share is Non-Cumulative and Fully -Participating


Total
Preference Share Dividends:
Current: P90,000 x 10% x 1
Ordinary Dividends:
Current Year: P100,000 x 10% x 1
Balance all to Ordinary Share, P51,000
Preference P90,000/190,000 x P51,000
Ordinary 100,000/190,000 x P51,000
As distributed

Preference

9,000

Ordinary

9,000

10,000

10,000

24,158
26,842
70,000

24,158
33,158

26,842
36,842

Requirement D Preference Share is Cumulative and Fully-Participating


Total
Preference Share Dividends:
Arrears: P90,000 x 10% x 1 yr.
Current: P90,000 x 10% x 1yr.
Ordinary Dividends:
Current Year: P100,000 x 10% x 1yr.
Balance for Participation, P42,000
Preference P90,000/190,000 x P42,000
Ordinary 100,000/190,000 x P42,000
As distributed

87

Preference

9,000
9,000

Ordinary

9,000
9,000

10,000

10,000

19,895
22,105
70,000

19,895
37,895

22,105
32,105

Musuan Agro-Industrial Corporation


Requirement 1:
No. of Shares issued and outstanding
x Par Value per share
Par Value of issued and outstanding shares
x Rate of Dividends declared
Dividends Declared
Par Value
Equivalent Share to be issued

8,000 shares
P
100
P 800,000
10%
P 80,000
P
100
800 shares

Requirement 2:
Dividends
No. of shares issued and outstanding
Dividends per share

P 80,000
8,000
P
10

Requirement 3:
Upon Declaration:
Acc. Profits and Losses
Share Dividends Distributable

80,000
P

80,000

80,000

5,500

5,500

5,500
500

Upon Distribution:
Share Dividends Distributable
Ordinary Share
88

80,000

Valencia Frutti Corporation


Requirement 1:
Treasury Share
Cash

Cash
Treasury Share

Cash
Treasury Share
Share Premium-Treasury Share

5,500

Requirement 2:
a)
b)

Solution Manual in Partnership and Corporation 2014-2015

5,500
6,000

69

c)

89

Cash
Share Premium-Treasury Share
Treasury Shares

5,000
500
P

5,500

36,000

21,600
5,400

Macopa Corporation
Requirement 1:
Treasury Share (1,500 x P24)
Cash

Cash (900 x P30)


Treasury Shares (900 x P24)
Share Premium-Treasury Shares

36,000
27,000

*** MULTIPLE CHOICE PROBLEM ***


8I

Cabana Corporation

Q1

Income and Expense Summary, credit


Income and Expense Summary, debit
Profit

Q2

Income and Expense Summary


Acc. Profits and Losses

Q3

8 II

P 1,800,000
1,050,000
P 750,000 (B)
P 750,000
P 750,000

Acc. Profits and Losses Balance, Jan. 1, 20A


Add: Profit of 20A
Acc. Profits and Losses Balance, Dec. 31, 20A

P
P

(B)
100,000
750,000
850,000 (C)

Misamis Oriental Ferries, Incorporated

Q4

5,000 shares x P100


Dividends to be declared
Amount of dividends declared

Q5

Acc. Profits and Losses


Cash Dividends Payable

P 500,000 (Share Capital)


10%
P 50,000 (C)
P 50,000

Q6

Prepare a list of shareholders on record (A)

Q7

Cash Dividends Payable


Cash

P 50,000

(C)

P 50,000

(B)

P 50,000

Q8

Current Liability (B)

Q9

Cash Dividend
Share Outstanding
Cash Dividend per share

Q 10

1,000 shares x P10,000 dividend per share = P 10,000 (A)

P 50,000
5,000
P 10.00 (B)

8 III Metro Cebu Central, Incorporated


Q 11

Authorized Share
- Issued Share
Unissued Share

3,000 shares
1,000
2,000 (C)

Q 12

Issued Share
Less: Treasury Share
Outstanding Share

1,000 shares
200
800 (A)

Q 13

The free or Unappropriated portion of Accumulated Profits and Losses P60,000 (B)

Q 14

1,000 issued shares less 200 treasury = 800 shares outstanding x 10% = 80 shares (A)

Q 15

Shares to be issued as share dividends


x Par Value (par value is to be used
because the market value is not given)
Amount of Acc. Profits and Losses to be capitalized

Q 16

Total Shareholders Equity before share dividends


Less: Decrease in Acc. Profits and Losses
upon declaration of Share Dividends
Total
Add: Increase in capital upon distribution of
share dividends
Total Shareholders Equity after share dividends
(No effect on Shareholders Equity)

Solution Manual in Partnership and Corporation 2014-2015

80
P 100
P8,000

(A)

P 160,000
8,000
P 152,000
8,000
P 160,000 (B)

70

Q 17

8 IV

P 21,000
20,000
P 1,000

Dapitan Motors Corporation

Q 18

8V

Proceeds from the sale of Treasury Share (200 x P105)


Cost of Treasury Share acquired
Gains to be credited

Revenue
Expense
Profit

P 4,500,000
3,800,000
P 700,000

Acc. Profits & Losses


Profit
Total
Dividends Declared and Paid
Acc. Profits and Losses

650,000
700,000
P 1,350,000
( 500,000)
P 850,000 (A)

Visayan Corporation

Q 19

Under Cost Method of Accounting for treasury share, the re issuances would result in a credit to:
Cash

P190,000
Treasury Share
Share Premium-Treasury Share

8 VI

P120,000
70,000 (D)

Gazebo Corporation

Q 20

Market Value (8,000 x 6% x P500) = 240,000 (C)

8 VII Dreamboy Corporation


Q 21

4,000 shares/20,000 = 20% share dividends


Acc. Profits and Losses before share dividends
Less: Share Dividends (4,000 x 100)
Acc. Profits and Losses after share dividends

P1,500,000
400,000
P1,100,000 (A)

To record the declaration of share dividend:


Accumulated Profits and Losses
Share Dividends Distributable

P400,000

To record the issuance of share dividend:


Share Dividends Distributable
Ordinary Share

P400,000

P400,000

P400,000

8 VIII Dreamboy Corporation


Q 22

30,000 x 15% = 4,500 x P120,000 = 540,000 (B)


(When a corporation declaring stock dividend is with listed share, we used the market value when
the declaration is less than 20%, and if the declaration is more than 20%, we used the par value.)

Q 23

30,000 x 25% = P7,500 x P100 = P750,000 (A)

Chapter 9
Corporate Financial Statements
91

Beleleng Corporation
Requirement 1:
Beleleng Corporation
Shareholders Equity
December 31, 20A
Contributed Capital:
Share Capital
Preference Share, 3,000 shares issued at par, P50
Ordinary Share, 7,000 shares at par, P100
Share Premium
Share premium Preference
Share premium Ordinary
Accumulated Profits and Losses
Other Components of Equity
Revaluation Increment on Property
Total Shareholders Equity

Solution Manual in Partnership and Corporation 2014-2015

150,000
700,000
2,000
5,000
400,000

10,000
P 1,267,000

71

Requirement 2:
Beleleng Corporation
Statement of Changes in Shareholders Equity
For the year ended 31 December 20A
Share Capital
Preference
Ordinary
P 150,000
P 700,000

Jan. 1 Balance
Add: Profit
for the year
Dec. 31 - Balance

92

P 150,000

Share Premium
Preference
Ordinary
2,000
5,000

P 700,000

2,000

5,000

Accu.
P&L
150,000

Revaluation
Increment
10,000

250,000
400,000

10,000

Total
P1,017,000
250,000
10,000

New Era Corporation


New Era Corporation
Shareholders Equity
December 31, 20A
Contributed Capital:
Share Capital
10% Preference Share, P50 par value, 6,000 shares issued
Subscribed Share Capital Preference
Less: Subscription Receivable Preference

P 100,000
60,000

Ordinary Shares, P75 par value, 4,000 shares issued


Subscribed Share Capital Ordinary
Less: Subscription Receivable Ordinary

P 37,500
10,000

27, 500

4,000
8,000

12,000

40,000
300,000

Share Premium:
Share Premium Preference
Share Premium Ordinary
Accumulated Profits and Losses
Revaluation Increment on Property
Total Contributed Capital and Retained Earnings
Less: Treasury Shares at Cost
Total Shareholders Equity

95

300,000

520,000
30,000
P 1,229,500
8,000
P 1,221,500

Iligan Water Spring Resort Corporation


Requirement 1
Ordinary Shares at par value, P100, 4,000 shares are
issued
Share Premium
Accumulated Profits and Losses
Less: Treasury Shares at cost
Total Shareholders Equity
Shares Outstanding
Book Value per Share

P 400,000
10,000
180,000
(10,000)
P 580,000
3,900 shares
P 148.72

Requirement 2
Profit
Shares Outstanding
Earnings per Share
96

P100,000
3,900 shares
P 25.64

Surigao Bus Line Corporation


Requirement 1:
Ordinary Shares, par value of P100, issued share 6,000:
Subscribed Share Capital
Less: Subscription Receivable
Share Premium
Accumulated Profits and Losses
Total Shareholders Equity
Shares Outstanding
Book Value per Share

P600,000
P100,000
50,000

50,000
4,000
250,000
P904,000
6,000
P 150.67

Requirement 2:
Profit (P250,000 P150,000) = P100,000
Shares Outstanding
6,000
= P16.67
Solution Manual in Partnership and Corporation 2014-2015

72

97

Metropolitan Corporation
Requirement 1:
Preference Shares Equity:
Liquidation Value, P200 x 2,400 shares
Dividends in Arrears, 6% x P360,000 x 3
Current year dividends, 6% x P360,000 x 1
Preference Shareholders Equity

P480,000
64,800
21,600
P566,400

Requirement 2:
Ordinary Shares Equity:
Total Shareholders Equity
Less: Preference Shares Equity
Ordinary Shareholders Equity

P883,000
566,400
P316,600

Requirement 3:
Book Value per Preference Share
Preference Share: P566,400 2,400 = P236.00
Ordinary Share: P316,600 2,350 = 134.72

9 8

Metro Cebu Corporation


Requirement 1:
Preference Shares:
Liquidation Value, P180 x 5,000 shares
Current year dividend, 10% x P500,000
Preference Shareholders Equity
Shares Outstanding
= Book Value per Preference Share

P900,000
50,000
P950,000
5,000
P190.00

Ordinary Shares:
Total Shareholders Equity
Less: Preference Shareholders Equity
Ordinary Shareholders Equity
Shares Outstanding
= Book Value per Ordinary Share

P1,330,000
950,000
P 380,000
5,000
P76.00

Requirement 2:
Preference Shares:
Liquidation Value, P100 x 5,000 shares
Current year dividend, 10% x P500,000
Preference Shareholders Equity
Shares Outstanding
= Book Value per Preference Share

P 500,000
50,000
P 550,000
5,000
P 110.00

Ordinary Shares Equity:


Total Shareholders Equity
Less: Preference Shares Equity
Ordinary Shareholders Equity
Shares Outstanding
= Book Value per Preference Share

P1,300,000
550,000
P 780,000
3,000
P 260.00

Chapter 10
Presentation and Analysis of Financial Statements
10 1

RFM Corporation

Requirement 1a:
Current Assets
Less: Current Liabilities
Working Capital

507,000
130,000
377,000

Requirement 1b:
Current Assets
Current Liabilities

507,000
130,000

Current or Bankers Ratio

3.9:1

Solution Manual in Partnership and Corporation 2014-2015

73

Requirement 1c:
Quick Assets
Current Liabilities

265,000
130,000

Acid-Test Ratio

2.04:1

(Mdse. Inventory is excluded because it takes time to sell and collect account sales. Prepaid expense is also
excluded because when it expires it becomes expense.)
Requirement 2:
For every one peso of obligation, it has P3.90 of current asset to pay. The same interpretation as in acid-test ratio.

10 2

R. Kudemus Co. and Baligala Co.

Requirement 1:
Kudamus Co.
Working Capital
Current Assets
Less: Current Liabilities
Working Capital

Baligala Co.

320,000
50,000
270,000

Requirement 2:
Bankers Ratio
Current Assets
Current Liabilities
Bankers Ratio

=
=

Requirement 3:
Acid Test Ratio
Quick Assets
Current Liabilities
Acid Test Ratio

=
=

320,000
50,000
6.4:1

185,000
50,000
3.7:1

234,000
40,000
194,000

=
=

=
=

234,000
40,000
5.8:1

160,000
40,000
4:1

(Merchandise Inventory is excluded because it takes time to sell and collect the receivable. Prepaid expense is
also excluded because when it expires it becomes expense.)

10 3

Reyes Corporation
Reyes Corporation
Common-Size Statement of Comprehensive Income
For the year ended December 31, 20A
Sales
Less: Sales Returns and Allowances
Net Sales
Less: Cost of Sales
Gross Profit
Less: Operation Expense
Profit

10 4

105%
5%
100%
75%
25%
20%
5%

Vismin Jewelry Store, Inc.


Vismin Jewelry Store
Comparative Statement of Comprehensive Income
For the months ended 30 November and 31 December

Sales
Sales Return & allowances
Sales Discounts
Net Sales
Cost of Sales
Gross Profit
Operating Expenses
Profit

Solution Manual in Partnership and Corporation 2014-2015

December

November

Amount of
Increase
(Decrease)

100,000
1,000
500
1,500
98,500
45,000
53,500
19,000
34,500

90,000
2,000
2,000
88,000
50,000
38,000
20,000
18,000

10,000
(1,000)
500
(500)
10,500
(5,000)
15,500
(1,000)
16,500

% of increase
(Decrease)
11
(50)
100
(25)
12
(10)
41
(5)
92

74

10 5

S. Bolivar Enterprises

Requirement A:
Receivable Turnover

Credit Sales

Average Capital
Requirement B:
Average Collection Period

200,000

4 times

91.25 days

50,000

365 days

Receivable Turnover

365

4 times

Requirement C:
Inventory Turnover

Cost of Sales
Average Inventory

210,000
70,000

3 times

Requirement D:
Average Age of Inventory

365 days
Inventory Turnover

365
3

121.66 days

10 6

Dreamworld Corporation

Requirement 1:
Dreamworld Company
Statement of Financial Position
As of December 31, 20B and 20A

Cash
Accounts Receivable
Inventories
Plant and Equipment (Net)

Accounts Payable
5% Bonds Payable
Share Capital (P10 par)
Accumulated Profit

20B
P 150,000
120,000
90,000
360,000
P 720,000

20A
P 130,000
80,000
70,000
300,000
P 580,000

Amount of
Increase
(Decrease)
P 20,000
40,000
20,000
60,000
P 140,000

P 100,000
200,000
260,000
160,000
P 720,000

80,000
200,000
200,000
100,000
P 580,000

% of
Increase
(Decrease)
15.38%
50.00%
28.57
20.00%
24.14%

20,000
-060,000
60,000
P 140,000

25.00%
.00%
30.00%
60.00%
24.00%

Requirement 2:
Dreamworld Company
Statement of Financial Position
As of December 31, 20B and 20A
Sales
Cost of Goods Sold
Gross Profit
Operating and Non-Operating Expense
Profit before Income Tax

100.00%
55.56%
44.44%
27.78%
16.1%

100.00%
58.33%
41.67%
25.00%
16.67%

Requirement 3A:
Current Ratio

Credit Assets
Current Liabilities

360,000
100,000

3.60

Quick Assets
Current Liabilities

270,000
100,000

2.70

Credit Sales
Average Receivable

360,000
100,000

3.60 times

No. of days in a year


Receivable Turnover

365 days
3.60

101.39 days

Cost of Sales
Average Inventory

200,000
80,000

2.50 times

Requirement 3B:
Acid Test Ratio
Requirement 3C:
Receivable Turnover
Requirement 3D:
Average Collection Period
Requirement 3E:
Inventory Turnover

Solution Manual in Partnership and Corporation 2014-2015

75

10 7

Bluemoon Trading Corporation

Requirement 1:
20A Sales and Cost of Sales
Sales

=
=
=

Accounts Receivable Turnover x Average Receivable


8 x P 80,000
P 640,000

Cost of Sales

=
=
=

Inventory Turnover x Average Inventory


6 x P 100,000
P 600,000

Requirement 2:
Expected Sales and Cost of Sales for 20B
Sales

=
=
=

Average Receivable x Receivable Turnover


P 130,000 x 12 times
P 1,560.00

Average Collection Period

365 days
Receivable Turnover

30 days

365 days
?

Receivable Turnover

365 days
30

Cost of Sales

=
=
=

Average Inventory x Inventory Turnover


P 100,000 x 9
P 900,000

365 days
Inventory Turnover

365 days
?

COMPUTATION:

12 times

COMPUTATION:
No. of days Sales in Inventory

Inventory Turnover

9 times

10 8 D&T Shafer Corporation


Requirement 1:
a)

b)

c)

d)

e)

20B

20A

Gross Profit Percentage


Gross Profit
Net Sales

610,000
1,460,000

41.78%

320,000
1,100,000

29.09%

Rate of Return on Sales


Profit
Net Sales

360,000
1,460,000

24.65%

20,000
1,100,000

.01%

Rate of Return on Investment


Profit
Ave. Investment

360,000
1,200,000

30%

20,000
1,500,000

.01%

850,000
210,000

4.04 tomes

780,000
195,000

4 times

1,460,000
290,000

5.03 times

1,100,000
190,000

5.78 times

Inventory Turnover
Cost of Sale
Ave. Inventory
Accounts Receivable Turnover
Credit Sales
Ave. Receivable

Solution Manual in Partnership and Corporation 2014-2015

76

10 9

Krizzie Corporation
a)

b)

c)

d)

Current Ratio

Quick Ratio

Working Capital

Debt Ratio

Current Assets
Current Liabilities

1,080,000
300,000

Quick Assets
Current Liabilities

420,000
300,000

Accounts Receivable
Turnover

Inventory Turnover

1.4:1

Current Assets Current Liabilities

1,080,000 300,000 = 780,000

f)

3.6:1

e)

Solution Manual in Partnership and Corporation 2014-2015

Total Liabilities
Total Assets
960,000
2,400,000

40%

18 times

6.2 times

Credit Sales
Ave. Receivable
5,580,000
310,000
Cost of Sales
Ave. Inventory
3,348,000
540,000

77