1.

On December 1, 2015, DD and EE formed a partnership with each contributing the following assets
at fair market values:
DD
EE
Cash
Machinery and Equipment
Land
Building
Office Furniture

P 9,000
P 18,000
13,500
90,000
27,000
13,500

The land and building are subject to a mortgage loan of P54,000 that the partnership will assume. The
partnership agreement provides that DD and EE share profits and losses 40% and 60%, respectively.
Partners agreed to bring their capital balances in proportion to the profit and loss ratio and using the
capital balance of EE as the basis. The additional cash investment made by DD should be:

2.

JJ and KK are joining their separate business to form a partnership. Cash and non-cash assets are to
be contributed for a total capital of P300,000. The non-cash assets to be contributed and liabilities to be
assumed are:
JJ
KK
Book Value
Fair Value
Book Value
Fair Value
Accounts receivable P22,500
P22,500
Inventories
22,500
33,750
60,000
67,500
Equipment
37,500
30,000
67,500
71,250
Accounts payable
11,250
11,250
7,500
7,500
The partners capital accounts are to be equal after all contributions of assets and assumptions of
liabilities.
Determine:
a. The total assets of the partnership.
b. The amount of cash that each partner must contribute?

3.

On July 1,2016, AA and BB decided to form a partnership. The firm is to take over business assets
and assume liabilities, and capitals are to be based on net assets transferred after the following
adjustments:
a. AA and BBs inventory is to be valued at P31,000 and P22,000, respectively.
b. Accounts receivable of P2,000 in AAs books and P1,000 in BBs books are uncollectible.
c. Accrued salaries of P4,000 for AA and P5,000 for BB are still to be recognized in the books.
d. Unused office supplies of AA amounted to P5,000, while that of BB amounted to P1,500.
e. Prepaid rent of P7,000 and P4,500 are to be recognized in the books AA and BB, respectively.
f. AA is to invest or withdrew cash necessary to have a 40% interest in the firm.
Balance sheets for AA and BB on July 1 before adjustments are given below:
AA
BB
Cash
31,000
50,000
Accounts receivable
26,000
20,000
Inventory
32,000
24,000
Office supplies
5,000
Equipment
20,000
24,000
Accumulated depreciation equipment
(9,000)
(3,000)

Total assets

100,000

Accounts payable
Capitals
Total liabilities and capital
Determine:
a.
b.
c.
d.
e.
f.
g.

4.

The
The
The
The
The
The
The

28,000
72,000
100,000

120,000
20,000
100,000
120,000

net adjustments capital in the books of AA and BB.

adjusted capital of AA and BB in their respective books.
additional investment (withdrawal) made by AA.
total assets of the partnership after formation.
total liabilities of the partnership after formation.
total capital of the partnership after formation.
capital balances of AA and BB in the combined balance sheet.

Bonnie and Clyde entered into a partnership agreement in which Bonnie is to have 55% interest in
the partnership and 35% in the profit and loss and Clyde will have 45% interest in the partnership and 65%
in the profit and loss.
Bonnie contributed the following:
Building
Equipment
Land

235,000
168,000
500,000

255,000
156,000
525,000

The building and the equipment had a mortgage of P50,000 and P35,000, respectively. Clyde is to
contribute P150,000 cash and an equipment. The partners agreed that only the building mortgage will be
assumed by the partnership.
a. What is the fair value of the equipment which Clyde contributed?
b. What is the amount of total assets of the partnership upon formation?

5.

Conrad and Pedro agreed to form a partnership. Conrad is to contribute P135,000 cash and an
equipment with a carrying amount of P135,000 and a fair value of P115,000.
The equipment however has a mortgage attached to it and it is agreed that the partners will assume the
mortgage.
On the other hand, Pedro contributed P240,000 cash.
The partners share profit and loss in the ratio 4:5. Furthermore, part of the agreement is to bring initial
capital in conformity with the profit and loss ratio.
What is the amount of mortgage on the equipment?

6.

On march 1, 2016, II and JJ formed a partnership with each contributing the following assets:
Cash
P300,000
Machinery and equipment 250,000
Building
-

P700,000
750,000
2,250,000

Furniture and Fixtures

100,000

The building is subject to mortgage loan of P800,000, which is to be assumed by the partnership
agreement provides that II and JJ share profits and losses 30% and 70%, respectively. On March 1,2016
the balance in JJs capital account should be:
7.

CC admits DD as a partner in business. Accounts in the ledger for CC on November 30,2015, just
before the admission of DD, show the following balances:
Cash
P6,800
Accounts receivable
14,200
Merchandise inventory
20,000
Accounts payable
8,000
CC, capital
33,000
It is agreed that for purposes of establishing CCs interest, the following adjustments shall be made:
a. An allowance for doubtful accounts of 3% of accounts receivable is to be established.
b. The merchandise inventory is to be valued at P23,000.
c. Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized.
DD is to invest sufficient cash to obtain a 1/3 interest in the partnership.
Compute for:
a. CCs adjusted capital before the admission of DD.
b. The amount of cash investment by DD.