Name: CHERLY C. AMBANE BS ACCOUNTANCY 1-C
UNIT 3: PARTNERSHIP FORMATION
ASSESSMENT:
Directions: Read and analyze each activity. Answer what is asked. Encode your answer in a separate word file and
submit it in the classwork section of our google class on or before the date stated. Please follow the format in
naming the file for submission. Lastname_Unit3_Assessment
ACTIVITY 1
Answer Problem 1 of the Chapter 11 of your book Financial Accounting and Reporting (Millan) pages 435-436.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
False
True
True
False
True
True
True
True
True
True
ACTIVITY 2
Answer Problem 4 of the Chapter 11 of your book Financial Accounting and Reporting (Millan) pages 440-443.
Answer the questions given on each problem. Provide solutions. No merit shall be given for answers without
solutions.
1.
2.
3.
a
c
d
Solution:
A
B
Partnership
Cash
600,000
600,000
Inventory
20,000
20,000
Land (700,000 – 100,000)
600,000
Equipment
50,000
Total
670,000
Mortgage Payable
Adjusted Capital Balance
600,000
50,000
600,000
1,270,000
670,000
600,000
1,270,000
4.
b
Solution:
A
Cash
400,000
Account Receivable (100,000-30,000)
70,000
Equipment (700,000-240,000)
450,000
Total
470,000
A’s Capital
470,000
B’s Capital
Adjusted Capital Balances
B
450,000
450,000
470,000
450,000
Journal Entry
Debit
5.
6.
Cash
400,000
Accounts Receivable
70,000
Equipment
450,000
Credit
A’s Capital
470,000
B’s Capital
430,000
a
b
Solution:
Agreed Initial Capital
2,500,000
A’s Capital (2,500,000×60%)
1,500,000
B’s Capital (2,500,000×40%)
1,000,000
7.
a
Solution:
A
B
C
Partnership
Cash
750,000
1,000,000
500,000
2,250,000
Accounts Receivable
875,000
875,000
Inventories (1.125M-375k)
750,000
Building (1.875M-125k)
1,750,000
750,000
1,750,000
Net Contribution
1,625,000
2,750,000
1,250,000
5,625,000
Equal Interest (5.625M÷3)
1,875,000
1,875,000
1,875,000
5,625,000
Cash receipt (payment)
(250,000)
875,000
(625,000)
-
8. b
9. c
10. b
ACTIVITY 3
Read and analyze each problem. Answer and provide solutions. No merit shall be given for answers without
solutions
Problem 1
Kent Maula, Reynaldo Montecina and Jeremy Maceda have decided to form a partnership business for the first time.
Their respective contributions consisted of the following:
Maula contributed cash of P150,000 and Furniture and Fixtures worth P100,000 but has a fair market value of
P120,000.
Montecina contributed a brand new delivery van which he acquired from Kia Motors at P850,000 and a balance of
P100,000 from a financing company aside from his P50,000 cash contributions;
Maceda’s contribution was his expertise in managing the affair of the business and is given a 15% share in profit.
Required:
1. Prepare a compound journal entry to open the partnership book assuming:
a. The P100,000 balance from a financing company is assumed by the partnership.
b. The P100,000 balance from a financing company is not assumed by the partnership.
2. Prepare a Statement of Financial Position right after the formation in requirement 1-a only
1. Journal Entry
Debit
Cash
200,000
Furniture and Fixture
120,000
Equipment
850,000
Credit
Accounts Payable
100,000
Maula’s, Capital
750,000
Montecina’s, Capital
270,000
To record initial investment of
the partnertship
Maula, Montecina, and Maceda
Statement of Financial Position
As of June 30, 2021
ASSETS
Cash
200,000
Furniture and Fixture
120,000
Equipment
850,000
Total Assets
P 1,170,000
LIABILITIES AND EQUITY
Accounts Payable
100,000
Maula’s, Capital
750,000
Montecina’s, Capital
270,000
Total Liabilities and Equity
P 1,170,000
Problem 2
Marilou Malquisto, Ma. Fretcyl Beringuel and Mark Anthony Alemanza were all successful entrepreneurs. They
believed that once they pulled their resources together and with their combined expertise and managerial skills, they
can surely beat the existing competitors in the locality. Their respective post-closing trial balance are presented
below:
Cash
Accounts receivable
Malquisto
Beringuel
Alemanza
P 950,000
P 850,000
P 750,000
70,000
90,000
25,000
(5,000)
(2,000)
Estimated uncollectible accounts
(3,000)
Merchandise inventory
420,000
600,000
450,000
Equipment
350,000
480,000
250,000
Accumulated Depreciation
(180,000)
(230,000)
(175,000)
Capital
P1,607,000
P1,785,000
P1,298,000
They agreed to comply with the following adjustments:
1.
Accounts receivable should have the following probability of collection:
Malquisto, 90%; Beringuel, 95%; and Alemanza, 98%
2. Merchandise should be revalued at 90% of the book value to provide for obsolescence
3. Equipment should have the carrying values as follows:
Malquisto, P165,000; Beringuel, P150,000; and Alemanza, P180,000
4. Each of the prospective partner should level off their cash contribution to P1,000,000.
Required:
1. Adjusting entries in their respective sole proprietorship book.
2. Closing entries in their respective sole proprietorship book.
3. Compound journal entries to open the books of the partnership.
Books of Marilou Malquisito
(1)
Malquisito’s, Capital
270,000
Interest Receivable
7,000
Cash
50,000
Merchandise Inventory
42,000
Accumulated Depreciation
185,000
To record adjustment to restate Malquisito’s capital.
(2)
Estimated Uncollectable Accounts
3,000
Accumulated Depreciation
365,000
Malquisito’s, Capital
1,337,000
Cash
900,000
Accounts Receivable
70,000
Interest Receivable
7,000
Merchandise Inventory
378,000
Equipment
350,000
To close the books of Malquisito
Books of Fretcyl Beringuel
(1)
Beringuel’s, Capital
535,500
Interest Receivable
4,500
Cash
150,000
Merchandise Inventory
60,000
Accumulated Depreciation
330,000
To record adjustment to restate Beringuel’s capital.
(2)
Estimated Uncollectable Accounts
5,000
Accumulated Depreciation
560,000
Malquisito’s, Capital
1,249,500
Cash
700,000
Accounts Receivable
90,000
Interest Receivable
4,500
Merchandise Inventory
540,000
Equipment
480,000
To close the books of Beringuel
Books of Mark Anthony Alemanza
(1)
Alemanza’s, Capital
364,500
Interest Receivable
500
Cash
250,000
Merchandise Inventory
45,000
Accumulated Depreciation
70,000
To record adjustment to restate Alemanza’s capital.
(2)
Estimated Uncollectable Accounts
2,000
Accumulated Depreciation
245,000
Malquisito’s, Capital
933,500
Cash
500,000
Accounts Receivable
25,000
Interest Receivable
500
Merchandise Inventory
405,000
Equipment
250,000
To close the books of Alemanza
Compound Journal Entry
Cash
2,550,000
Accounts Receivable
185,000
Merchandise Inventory
1,470,000
Equipment
1,080,000
Estimated Uncollectable Accounts
10,000
Accumulated Depreciation
585,000
Malquisito’s, Capital
1,607,000
Beringuel’s, Capital
1,785,000
Alemanza’s, Capital
1,298,000
To record the investment of Malquisito, Beringuel and Alemanza