Partnership Formation
Exercise No. 1
Peter and Senen formed a partnership and agreed to distribute profit and loss 70% to Peter and 30% to
Senen. The following are the trial balance of their respective business prior to formation of partnership
business.
Cash
Accounts Receivable
Inventories
Land
Building
Furniture and Fixtures
Total
Senen
49, 500
1,055,412
540,158
2,713,500
235,552
4,594,122
Peter
100,593
2,555,505
1,170,458
1,927,202
172,751
5,926,509
Accounts Payable
Notes Payable
Senen Capital
Peter Capital
Total
805,230
900,000
2,888,892
4,594,122
1,096,425
1,552,500
3,277,584
5,926,509
Peter and Senen agreed to contribute their respective assets and liabilities in their separate business to
the partnership subject to the following adjustments:
 The allowance for doubtful accounts is to be set up in the books of Senen and Peter
amounting to P90,000 and P157, 500 respectively.
 Inventories are to be written down by P24,750 for Senen and P30,150 for Peter.
 Other Assets of P9,000 for Senen and P16,200 for Peter are to be writeen off.
Required:
Prepare journal entries to record the formation of the Partnership assuming
!. New Set of Books for the Partnership
2. Books of Senen will be used by the Partnership
3. Books of Peter will be used by the Partnership.
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