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CHAPTER 1 - Partnership Basic Considerations and Formation...

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Partnership – Basic Considerations and Formation 1 CHAPTER 1 MULTIPLE CHOICE ANSWERS AND SOLUTIONS 1-1: a Jose's capital should be credited for the market value of the computer contributed by him. 1-2: b (40,000 + 80,000) ÷ 2/3 = 180,000 x 1/3 = 60,000 . 1-3: a Cash P100,000 Land 300,000 Mortgage payable ( 50,000 ) Net assets (Julio, capital) P350,000 1-4: b Total Capital (P300,000/60%) P500,000 Perla's interest ______40 % Perla's capital P200,000 Less:Non-cash asset contributed at market value Land P 70,000 Building 90,000 Mortgage Payable ( 40,000 ) _120,000 Cash contribution P 80,000 1-5: d - Zero, because under the bonus method, a transfer of capital is only required. 1-6: b Reyes Santos Cash P200,000 P300,000 Inventory 150,000 Building 400,000 Equipment 150,000 Mortgage payable ________ ( 100,000 ) Net asset (capital) P350,000 P750,000 1-7: c AA BB CC Cash P 50,000 Property at Market Value P 80,000 Mortgage payable ( 35,000) Equipment at Market Value _______ _______ P55,000 Capital P 50,000 P 45,000 P55,000
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2 Chapter 1 1-8: a PP RR SS Cash P 50,000 P 80,000 P 25,000 Computer at Market Value __25,000 _______ __60,000 Capital P 75,000 P 80,000 P 85,000 1-9: c Maria Nora Cash P 30,000 Merchandise inventory P 90,000 Computer equipment 160,000 Liability ( 60,000) Furniture and Fixtures 200,000 ________ Total contribution P230,000 P190,000 Total agreed capital (P230,000/40%) P575,000 Nora's interest ______60 % Nora's agreed capital P345,000 Less: investment 190,000 Cash to be invested P155,000 1-10: d Roy Sam Tim Cash P140,000 Office Equipment P220,000 Note payable ________ _( 60,000 ) ______ Net asset invested P140,000 P160,000 P Agreed capitals, equally (P300,000/3) = P100,000 1-11: a Lara Mitra Cash P130,000 P200,000 Computer equipment 50,000 Note payable ________ _( 10,000 ) Net asset invested P130,000 P240,000 Goodwill (P240,000 - P130,000) = P110,000 1-12: a Perez Reyes Cash P 50,000 P 70,000 Office Equipment 30,000 Merchandise 110,000 Furniture 100,000 Notes payable _______ ( 50,000 )
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Net asset invested P 80,000 P230,000 Partnership – Basic Considerations and Formation 3 Bonus Method: Total capital (net asset invested) P310,000 Goodwill Method: Net assets invested P310,000 Add: Goodwill (P230,000-P80,000) _150,000 Net capital P460,000 1-13: b Required capital of each partner (P300,000/2) P150,000 Contributed capital of Ruiz: Total assets P105,000 Less Liabilities __15,000 __90,000 Cash to be contributed by Ruiz P 60,000 1-14: d Total assets: Cash P 70,000 Machinery 75,000 Building _225,000 P370,000 Less: Liabilities (Mortgage payable) __90,000 Net assets (equal to Ferrer's capital account) P280,000 Divide by Ferrer's P & L share percentage ____70% Total partnership capital P400,000 Required capital of Cruz (P400,000 X 30%) P120,000 Less Assets already contributed: Cash P 30,000 Machinery and equipment 25,000 Furniture and fixtures __10,000 __65,000 Cash to be invested by Cruz P 55,000 1-15: d Adjusted assets of C Borja Cash P 2,500 Accounts Receivable (P10,000-P500) 9,500 Merchandise inventory (P15,000-P3,000) 12,000 Fixtures __20,000 P 44,000 Asset contributed by D. Arce: Cash P 20,000 Merchandise __10,000 __30,000 Total assets of the partnership P 74,000
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4 Chapter 1 1-16: a Cash to be invested by Mendez: Adjusted capital of Lopez (2/3) Unadjusted capital P158,400 Adjustments: Prepaid expenses 17,500 Accrued expenses ( 5,000) Allowance for bad debts (5% X P100,000) _( 5,000 ) Adjusted capital P165,900 Total partnership capital (P165,900/2/3) P248,850 Multiply by Mendez's interest Mendez's capital P 82,950 Less Merchandise contributed __50,000 Cash to be invested by Mendez P 32,950 Total Capital: Adjusted capital of Lopez P165,900 Contributed capital of Mendez __82,950 Total capital P248,850 1-17: d Moran, capital (40%) Cash P 15,000 Furniture and Fixtures _100,000 P115,000 Divide by Moran's P & L share percentage ______40 % Total partnership capital P287,500
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