EXERCISE 7. Journal Entries.Catriona and Pia are partners who contributed ₱100,000 and₱70,000, respectively, to the partnership upon its inception in 2018.The 2021 partnershipledger showed the following movements in their capital accounts:Catriona, CapitalJan. 1300,000Apr. 120,000Jul. 1100,000Oct. 1190,000Pia, CapitalJan. 1200,000Oct. 140,000Apr. 1150,000Dec. 175,000Profit of the partnership for 2021was ₱280,000.Prepare andupload journal entriesrelated to profit distribution under the followingindependent cases,assuming permanent capital balances are not maintainedandCatriona and Pia agreed to share profits and losses:1.In the ratio 3:2, respectively2.According to original capital3.According to beginning capital4.According to average capital5.According to ending capitalEXERCISE 8. Statement Preparation.The partnership of Rafa, Andy, and Novak wasformed and started operations on January 1, 2021 under the business name Grand Slam TennisCenter (GSTC), a business following the calendar year.The initial contributions of each partnerwere as follows:RafaAndyNovakCash₱350,000₱300,000₱100,000Training Equipment200,000On August 31, Rafa invested an additional₱75,000 cash in the partnership.Andy made apermanent cash withdrawal of₱60,000 on May 1 and reinvested₱70,000 cash on October 1.According to partnership agreement, profits and losses are divided using average capital afterthe following:10% interest on average capital balances;Monthly salary allowances of ₱5,000 and ₱8,000 for Andy and Novak, respectively; and10% bonus to Rafa, the managing partner, based on net income before bonus and 30%income tax.You are required to prepare anduploadthe statement of changes in partners’ equitywith accompanying schedule of net income distribution, assuming the partnership hadan after-tax profit of ₱350,000in its first year of operations.
EXERCISE 9. Journal Entries: Admission by investment of assets.The real accounts inthe ledger of Chua-Tay Partnership showed the following balances before the admission ofMelan to the partnership:Cash₱60,000Accounts Receivable70,000Merchandise Inventory55,000Machinery120,000Accumulated Depreciation - Machinery21,600Accounts Payable40,000Income Taxes Payable35,000Notes Payable65,000Chua, Capital (50%)58,400Tay, Capital (50%)85,000Additional information:(a)The parties agreed to revalue the following: (a) Accounts Receivable at 85%; (b)Merchandise Inventory at 110%; and (c) Machinery at 90%.(b)They also agreed that additional interest of ₱3,500 on notes payable be accrued.(c)Melan was to contribute ₱140,000.Itwas agreed that after the admission of Melan, allpartners’ capital balances would equal to the contribution of Melan.Any partner whosecapital balance would be below the threshold should contribute additional cash to thepartnership.Prepare andupload journal entriesrelated to the following:1.Revaluation and accrual of interest;2.Admission of Melan; and3.Additional contribution of existing partners, if there is any.EXERCISE 10. Journal Entries and Statement Preparation: With capital deficiency;solvent/insolvent partner/s.The partners in the law firm of Mega, Nega, and Pipa hadstrong differences of opinion concerning client acceptance policies that made them decide toliquidate the business on February 14, 2022.As of December 31, 2021, their capital balanceswere: Mega, ₱350,000; Nega, ₱100,000; and Pipa, ₱105,000.Liabilities, cash, and non-cashassets were ₱145,000, ₱40,000, and ₱660,000, respectively.Cash revenues and expenses for2020amounted to ₱77,000 and ₱115,000, respectively.Profits and losses are shared by Mega,Nega, and Pipa in the ratio of 5:3:2, respectively.REQUIRED:1.Prepare andupload journal entriesto record liquidation under each of the followingcases:a.Non-cash assets were sold for ₱200,000.Assume any deficient partner is solvent.b.Non-cash assets were sold at a loss of ₱515,000.Assume any deficient partner issolvent.c.Non-cash assets were sold for ₱200,000.Assume any deficient partner is insolvent.d.Nnon-cash assets were sold at a loss of ₱515,000.Assume any deficient partner isinsolvent.2.Prepare andupload statement of liquidationfor Item 1d.
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Types of business entity, Managing Partner