sol man baysa chapter 1

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EXERCISES Exercise 1 –1

1.a Campos, Capital 14,000

Allowance for Uncollectible Accounts 14,000

Goodwill 30,000

Campos, Capital 30,000

Accumulated Depreciation 6,000

Furniture and Fixtures 12,500

Cash 40,000

1.b Cash (P83,500 x 1/2) 41,750

Tomas, Capital 41,750

To record contributions of Tomas Req. 2.

Campos and Tomas Partnership Statement of financial Position

July 1, 2008

Assets Liabilities & Owners’ Equity

Cash P41,750 Accounts Payable P90,000

Accounts Rec’l P60,000 Campos, Capital 83,500 Less Allowance for

Uncol Accts. 24,000 36,000 Tomas, Capital 41,750

Inventory 100,000

Furniture 7,500

Goodwill 30,000 ________

TOTAL ASSETS P215.250 TOTAL LIABILITIES & OWNERS’ EQUITY P215,250

Exercise 1-2

1. Cash 90,000 Accounts Receivable 36,000 Merchandise Inventory 54,000 Equipment 25,000

Accounts Payable 21,000

Notes Payable 18,000

Bernal, Capital 164,000

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Camino, Capital 100,000 Exercise 1 –3 1. Cash 800,000 Land 540,000 Building 900,000 Legaspi, Capital 800,000 Sabino, Capital 1,440,000 2. Cash 800,000 Land 540,000 Building 900,000 Legaspi, Capital 1,120,000 Sabino, Capital 1,120,000 Exercise 1 - 4 1. Income Summary 238,000 Santos, Capital (P238,000 x 260/425) 145,600 Abad, Capital (P238,000 x 165/425) 92,400 2. Income Summary 238,000 Santos, Capital (P238,000 x 3,125/5,000) 148,750 Abad, Capital (P238,000 x 1,875/5,000) 89,250 Santos: Jan. 1 – Mar. 31 P260,000 x 3 P780,000 Apr. 1 – Apr. 30 290,000 x 1 290,000 May 1 – July 31 360,000 x 3 1,080,000 Aug. 1 – Dec. 31 320,000 x 5 1,600,000 P3,750,000/12 P312,500 Abad: Jan. 1 – May 31 P165,000 x 5 P825,000 June 1 – Aug. 31 215,000 x 3 645,000 Sept.1 – Dec. 31 195,000 x 4 780,000 P2,250,000/12 P187,500 3. Income Summary 238,000 Santos, Capital 147,750 Abad, Capital 90,250

Santos Abad Total

Interest on ave. capital P 18,750 P 11,250 P 30,000

Salaries to partners 150,000 100,000 250,000 Balance - equally ( 21,000) ( 21,000) (42,000) Net Profit P 147,750 P 90,250 P238 000 4. Income Summary 238,000 Santos, Capital 164,840 Abad, Capital 73,160

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Santos Abad Total Bonus to Santos 25% (P238,000 - B) P 47,600 P 47,600 Interest of 6% on excess average investment 6% (P312,500 - P187,500) 7,500 7,500 Balance - 3:2 109,740 73,160 182,900 Net Profit P 164,840 P73,160 P238,000 5. Income Summary 238,000 Santos, Capital (P238,000 x 15/25) 142,800 Abad, Capital (P238,000 x 10/25) 95,200 Exercise 1 – 5

Sanchez and Gomez

Schedule of Distribution of Net Profit December 31, 2008

Sanchez Gomez Total

6% interest on average capital P 6,246 P 14.440 P 20,686

10% bonus on net profit after interest 8,331 8,331

Salaries 20,000 30,000 50,000

Balance – 70%, 30% 17,488 7,495 24,983

Net Profit P52,065 P51,935 P104,000

Computation of average capital:

Sanchez, Capital Gomez, Capital

Jan. 1 P81,600 x 3 P 244,800 Jan. 1 P224,000 x 7 P1,568,000

Apr. 1 P111,600 x 9 1,004,400 Aug. 1 P264,000 x 5 1,320,000

P1,249,200 P2,888,000

Ave. capital (P1,249,200/12) P104,100 Ave. capital (P2,888,000/12) P240,667

Computation of bonus: P160,000 x 65%= P104,000– P20,686 x 10% = P8,331 2.

Sanchez and Gomez Statement of Partners’ Capital For the Year Ended December 31, 2008

Sanchez Gomez Total

Capital, January 1 P 81,600 P224,000 P305,600 Additional investment 30,000 40,000 70,000 Net profit 52,065 51,935 104,000 Drawings ( 41,600) ( 41,600) ( 83,200) Capital, December 31 P122,065 P274,335 P396,400

3. Sanchez Gomez Total

6% interest on average capital P 6,246 P14.440 P 20,686

10% bonus on net profit after interest 8,331 8,331

Balance – Salary ratio 34,083 40,000 74,983

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Exercise 1-6

1. Mercado Puzon Total

8% interest on beg capital P 48,000 P 54.000 P102,000

Salaries 225,000 112,500 337,500

Balance 3:2 ( 38,700) ( 25,800) ( 64,500)

Net Profit P234,300 P140,700 P375,000

2. Mercado Puzon Total

8% interest on beg capital P 48,000 P 54.000 P102,000

Balance – Salary ratio 182,000 91,000 273,000

Net Profit P230,000 P145,000 P375,000

3. Puzon P375,000 x 2/3 = P150,000; however, minimum guaranteed amount is P160,000

Mercado P375,000 – P160,000 = P215,000

Exercise 1 – 7

Net profit after salary, interest and bonus P374,000

Interest P200,000 x 10% P20,000

Salary P8,000 x 12 96,000 116,000

Net profit before interest and salary P490,000

Bonus rate x 25%

Amount of bonus to Lirio P122,500

Exercise 1 – 8 1. B = .25 x P500,000 = P125,000 2. B = .25 x P500,000 = P100,000 1.25 3. B = .25 (P500,000 - Tax) T = .35 x P500,000 = P175,000 B = .25 (P500,000 – P175,000) B = P 81,250 4. B = .25 (P500,000 - B - Tax) B = .25 (P50,0000 - B - P175,000) B = P81,250 - .25B B = P81,250/1.25 B = P65,000 Exercise 1 - 9 1.

Estrella Felipe Garcia Jimenez Total

Salary P40,000 P20,000 P 60,000

Bonus 6,000 4,000 10,000*

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Balance 26,900 26,900 26,900 26,900 107,600

Total P82,900 P59,900 P30,900 P36,300 P210,000

*B = 5% (P210,000 – B) = P10,000 2.

Salary P40,000 P20,000 P 60,000

Interest 10,000 9,000 P 4,000 P 9,400 32,400

Balance ( 43,100) ( 43,100) ( 43,100) ( 43,100) (172,400)

Total P 6,900 (P 14,100) (P39,100) (P33,700) (P 80,000)

3.

Interest P10,000 P 9,000 P 4,000 P 9,400 P 32,400 Bonus 6,000 4,000 10,000 Salary 25,067 12,533 _______ ________ 37,600* Total P41,067 P25,533 P 4,000 P 9,400 P 80,000 *P37,600 x 4/ 6 = P25,067; P37,600 x 2/ 6 = P12,533 Exercise 1-10 1. Fees Earned 750,000 Joseph, Capital 50,000 Luis, Capital 200,000 Operating Expenses 100,000 Income Summary 500,000 2. Income Summary 500,000 Joseph Capital 150,000 Luis, Capital 250,000 Nicolas, Capital 100,000 Exercise 1 – 11 1.

Benito Cabral Duenas Total

Capital balances before payment

of cash P120,000 P100,000 P100,000 P320,000

Required capital balances based on

on profit and loss ratio 128,000 112,000 80,000 320,000

Cash received (paid) (P 8,000) (P 12,000) P 20,000

-Journal entry on the partnership books

Duenas, Capital 20,000

Benito, Capital 8,000

Cabral, Capital 12,000

2.

Capital balances before additional

cash investment P120,000 P100,000 P100,000 P320,000

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lowest possible cash investment* 160,000 140,000 100,000 400,000

Required additional cash investment P 40,000 P 40,000 - P 80,000

* P120,000/40% = P300,000; P100,000/35% = P285,174; P100,000/25% = P400,000 Journal entry on the partnership books

Cash 80,000

Benito, Capital 40,000

Cabral, Capital 40,000

3.

Capital balances P120,000 P100,000 P100,000 P320,000 Required capital 120,000 105,000 75,000 300,000 Additional investment(withdrawals) --- 5,000 (P 25,000) P 20,000 Duenas, Capital 25,000 Cash 20,000 Cabral, Capital 5,000 Exercise 1 – 12

Enriquez and Flores

Schedule Showing Adjustments in Capital For the Year Ended December 31, 2008

Reported net profit P400,000

Adjustments:

Equipment purchased charged to expense P200,000 Depreciation on equipment ( 20,000) Overstatement of 2008 ending inventory ( 24,000) P156,000

x 65% 101,400

Corrected net profit P501,400

Distribution of 2008 net profit

Enriquez Flores Total

Salaries P120,000 P120,000 P240,000

Interest 30,000 45,000 75,000

Balance 51,000 34,000 85,000

P201,000 P199,000 P400,000

Distribution of 2008 corrected net profit

Salaries P120,000 P120,000 P240,000

Interest 30,000 45,000 75,000

Balance 111,840 74,560 186,400

P261,840 P239,560 P501,400

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2. Equipment 200,000

Enriquez, Capital 60,840

Flores, Capital 40,560

Accumulated Depreciation 20,000

Inventory 24,000

Income Tax Payable 54,600

PROBLEMS Problem 1 – 1

1. a. Merchandise, Inventory 60,000

Ruiz, Capital 60,000

b. Ruiz, Capital 30,000

c. Interest Receivable 1,500 Ruiz, Capital 1,500 P150,000 x 6% x 2/12 = P1,500 d. Ruiz, Capital 7,500 Interest Payable 7,500 P300,000 x 10% x 3/12 = P7,500 e. Accumulated Depreciation 180,000 Ruiz, Capital 60,000

f. Office Supplies 5,000

Ruiz, Capital 5,000

g. Cash 524,500

Santos, Capital 524,500

Ruiz and Santos

Statement of Financial Position December 1, 2008

Assets

Cash P 764,500

Notes Receivable 150,000

Accounts Receivable P900,000

Less Allowance for Uncollectible Accounts 90,000 810,000

Interest Receivable 1,500

Merchandise Inventory 300,000

Office Supplies 5,000

Total Assets P2,511,000

Liabilities and Capital

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Accounts Payable 630,000 Interest Payable 7,500 Total Liabilities P 937,500 Ruiz, Capital P1,049,000 Santos, Capital 524,500 Total Capital 1,573,500

Total Liabilities and Capital P2,511,000

Problem 1-2 1. Cash 518,000 Merchandise Inventory 1,152,000 Tomas, Capital 1,670,000 2. Accounts Receivable 1,792,000 Merchandise Inventory 256,000 Office Equipment 160,000 Goodwill 198,000

Accounts Payable 576,000

Vicente, Capital 1,670,000

Tomas and Vicente Statement of Financial Position

June 1, 2008

Assets

Cash P 518,000

Accounts Receivable P1,792,000

Less Allowance for Uncollectible Accounts 160,000 1,632,000

Inventories 1,408,000

Office Equipment 160,000

Goodwill 198,000

Total Assets P3,916,000

Liabilities and Capital

Accounts Payable P 576,000

Tomas, Capital P1,670,000

Vicente, Capital 1,670,000 3,340,000

Total Liabilities and Capital P3,916,000

Problem 1 – 3

1. Merchandise Inventory 3,000

Goodwill 3,000

Accumulated Depreciation 900

Equipment 2,000

Rosas, Capital 3,900

Cash 5,000

Accounts Receivable 46,000

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Equipment 12,000

Goodwill 3,000

Accounts Payable 54,000 Perlas, Capital 125,000 2. Cash 5,000 Accounts Receivable 46,000 Merchandise Inventory 108,000 Equipment 12,000

Goodwill 3,000

Accounts Payable 54,000 Perlas, Capital 125,000 Cash 7,000 Accounts Receivable 49,000 Merchandise Inventory 75,000 Equipment 7,000 Goodwill 3,000

Accounts Payable 36,000 Rosas, Capital 100,000 Problem 1 – 4 1. Cash 900,000 Inventories 1,500,000 Equipment 3,000,000 Notes Payable 1,050,000 Serrano, Capital 4,350,000 Cash 600,000 Land 6,000,000 Mortgage Payable 1,950,000 Torres, Capital 4,650,000 Torres, Capital 150,000 Serrano, Capital 150,000 Purchases 900,000 Accounts Payable 900,000 Accounts Payable 720,000 Cash 720,000 Mortgage Payable 300,000 Interest Expense 120,000 Cash 420,000 Notes Payable 225,000 Interest Expense 75,000

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Cash 300,000

Accounts Receivable 3,450,000

Sales 3,450,000

Cash 3,150,000

Accounts Receivable 3,150,000

Selling and General Expenses 870,000

Cash 630,000 Accumulated Depreciation 150,000 Accrued expenses 90,000 Serrano, Drawing 351,000 Torres, Drawing 351,000 Cash 702,000 Income Tax 204,750

Income Tax Payable 204,750

Inventories, end 600,000

Sales 3,450,000

Inventories, beginning 1,500,000

Purchases 900,000

Interest Expense 195,000 Income Tax 204,750 Income Summary 380,250 Income Summary 380,250 Serrano, Capital 192,150 Torres, Capital 188,100

Serrano Torres Total

Interest on beginning capital P180,000 P180,000 P360,000

Salaries 150,000 100,000 250,000 Remainder – 60%, 40% ( 137,850) ( 91,900) ( 229,750) Net Profit P192,150 P188,100 P380,250 Serrano, Capital 351,000 Torres, Capital 351,000 Serrano, Drawing 351,000 Torres, Drawing 351,000

Serrano and Torres Partnership Statement of Recognized Income and Expenses

For the Year Ended December 31, 2008

Sales P3,450,000

Cost of Goods Sold:

Inventories, beginning P1,500,000

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Cost of Goods Available for Sale P2,400,000

Less Inventories, end 600,000 1,800,000

Gross Profit P1,650,000

Operating Income P 780,000

Interest Expense 195,000

Net Profit before Income Tax P 585,000

Income Tax 204,750

Net Profit P 380,250

Serrano and Torres Partnership Statement of Financial Position

December 31, 2008 Assets Current Assets: Cash P1,878,000 Accounts Receivable (P3,450,000 – P3,150,000) 300,000 Inventories 600,000 P 2,778,000

Property, Plant and Equipment:

Land P6,000,000

Equipment P3,000,000

Less Accumulated Depreciation 150,000 2,850,000 8,850,000

Total Assets P11,628,000

Liabilities

Current Liabilities:

Accounts Payable (P900,000 – P720,000) P180,000

Accrued Expenses 90,000

Income Tax Payable 204,750 P 474,750

Long-term Liabilities: Notes Payable (P1,050,000 – P225,000) P 825,000 Mortgage Payable (P1,950,000 – P300,000) 1,650,000 2,475,000 Total Liabilities P 2,949,750 Capital Serrano, Capital P4,341,150 Torres, Capital 4,337,100 Total Capital 8,678,25 0

Total Liabilities and Capital P11,628,000

Problem 1 - 5

1. P2,700,000 (P200,000 + P1,100,000 + P500,000 + P1,500,000 – P600,000 = P2,700,000) 2 P2,600,000. (P2,500,000 + P2,700,000) / 2 = P2,600,000

Problem 1 – 6

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Bernabe, Capital 505,800

Burgos, Capital 194,200

Bernabe Burgos Total

Interest on beg. capital P 28,800 P 35,200 P 64,000

Balance – 3:1 477,000 159,000 636,000 Net Profit P 505,800 P 194,200 P700 000 2. Income Summary 700,000 Bernabe, Capital 284,000 Burgos, Capital 416,000

Salaries P 140,000 P 260,000 P400,000

Interest on end capital 48,000 60,000 P108,000

Balance – Equally 96,000 96,000 96,000

Net Profit P 284,000 P 416,000 P700 000

3. Income Summary 700,000

Salaries P 90,000 P 170,000 P260,000

Interest on average. cap 49,000 50,800 99,800

Balance – 3:1 255,150 85,050 340,200 Net Profit P 394,150 P 305,850 P700 000 Bernabe: Jan. 1 – May 31 P360,000 x 5 P1,800,00 0 June 1 – Oct. 31 460,000 x 5 2,300,000 Nov, 1 – Dec. 31 400,000 x 2 800,000 P4,900,000/12 P408,333 Burgos: Jan. 1 – June 30 P440,000 x 6 P2,640,00 0 July 1 – Oct. 31 360,000 x 4 1,440,000 Nov.1 – Dec. 31 500,000 x 2 1,000,000 P5,080,000/12 P423,333 4. Income Summary 700,000 Bernabe, Capital 267,567 Burgos, Capital 432,433

Salaries P 100,000 P 200,000 P300,000

Interest on average. cap 40,833 42,333 83,166

Balance – 40%, 60% 126,734 190,100 316,834

Net Profit P 267,567 P 432,433 P700 000

5. Income Summary 700,000

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Salaries P 100,000 P 100,000 P220,000

Interest on beg. cap 28,800 35,200 64,000

Bonus 43,600 43,600

Balance – 2:3 156,960 235,440 392,400

Net Profit P 329,360 P 370,640 P700 000

B = 10%(NI –S – I)

Problem 1 – 7

Sandy Tammy Manny Total

1. 6% interest on capital P 16,800 P 12,000 P 7,200 P 36,000 Salaries 48,000 40,000 88,000 Balance – 5:3:2 ( 74,500) ( 44,700) ( 29,800) (149,000) Net Profit P(57,700) P 15,300 P 17,400 P(25,000) 2. 6% interest on capital P 16,800 P 12,000 P 7,200 P 36,000 Salaries 48,000 40,000 88,000 Balance – 5:3:2 ( 32,000) ( 19,200) ( 12,800) ( 64,000) Net Profit P( 15,200) P 40,800 P 34,400 P 60,000 3. 6% interest on capital P 16,800 P 12,000 P 7,200 P 36,000 Salaries 48,000 40,000 88,000 Bonus 13,500 13,500 Balance – 5:3:2 56,250 33,750 22,500 112,500 Net Profit P 73,050 P107,250 P 69,700 P250,000 B = (P250,000 – P36,000 – P88,000 – P72,000)25% = P13,500 Problem 1 - 8

1. Delmar Pilar Total

5% interest on capital P 2,500 P 1,500 P 4,000

Salaries 12,000 8,000 20,000

20% bonus on net profit 22,100 22,100

Balance – capital ratio 40,250 24,150 64,400

Net Profit P76,850 P33,650 P110,500

2. Sales 480,000

Cost of Goods Sold 210,000

Operating Expenses 100,000 Income Taxes 59,500 Income Summary 110,500 Income Summary 110,500 Delmar, Capital 76,850 Pilar, Capital 33,650 Delmar, Capital 6,000 Pilar, Capital 10,000 Delmar, Drawing 6,000 Pilar, Drawing 10,000

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Statement of Changes in Partners’ Capital For the Year Ended December 31, 2008

Delmar Pilar Total

Capital balances, January 1, 2008 P 50,000 P30,000 P 80,000

Add Distribution of net income for 2008:

Interests P 2,500 P 1,500 P 4,000

Salaries 12,000 8,000 20,000

Bonus 22,100 22,100

Balance - capital ratio 40,250 24,150 64,400

Total share in net profit P 76,850 P33,650 P110,500

Total P126,850 P63,650 P190,500

Less Drawings 6,000 10,000 16,000

Capital balances, December 31, 2008 P120,850 P53,650 P174,500

Problem 1 - 9

Ramos, Gonzales and Martinez Statement of Changes in Partners’ Capital For Three Years Ended December 31, 2008

Ramos Gonzales Martinez Total

Capital, January 1, 2006 P 80,000 P 48,000 P 40,000 P 168,000

Distribution of net loss (Sch. 1) ( 2,000) ( 1,520) ( 2,000) ( 5,520)

Withdrawals (12,000) (14,480) (16,000) (42,480)

Capital, December 31, 2006 P 66,000 P 32,000 P 22,000 P120,000

Distribution of net profit (Sch. 2) 7,960 8,320 7,720 24,000

Withdrawals (13,960) (16,320) (17,720) (48,000)

Capital, December 31, 2007 P 60,000 P 24,000 P12,000 P 96,000

Distribution of net profit (Sch. 3) 21,840 18,840 18,120 58,800

Withdrawals (20,400) (24,000) (21,200) (65,600)

Capital, December 31, 2008 P 61,440 P 18,840 P 8,920 P 89,200

Schedule 1 - Distribution of 2006 net loss

Salaries to partners P 9,600 P 12,000 P 12,000 P 33,600

Interest of 6% on beg. Capital 4,800 2,880 2,400 10,080

Balance – equally (16,400) (16,400) (16,400) P 49,200

Net income P( 2,000) P( 1,520) P( 2,000) P( 5,520)

Schedule 2 - Distribution of 2007 net profit

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Interest of 6% on beg. Capital 3,960 1,920 1,320 7,200

Balance – equally ( 5,600) ( 5,600) ( 5,600) (16,800)

Net income P 7,960 P 8,320 P 7,720 P 24,000

Schedule 3 - Distribution of 2008 net profit

Interest of 6% on beg. Capital 3,600 1,440 720 5,760

Bonus - 20% (P58,800 - P39,360 - B) 3,240 3,240

Balance – equally 5,400 5,400 5,400 16,200

Net income 21,840 18,840 18,120 58,800

Problem 1 -10

Robles, Bernal and Reyes Statement of Partners’ Capital For the Year Ended December 31, 2008

Robles Berna

l Reyes Total

Capital balances before closing

the nominal accounts P120,000 P ( 2,000) P20,000 P138,000

Add Distribution of net profit:

Drawing allowance 20,000 14,000 10,000 44,000

Interest on average capital 7,200 240 560 8,000

Balance - 60%, 30%, 10% 58,800 29,400 9,800 98,000

Total P206,000 P41,640 P40,360 P288,000

Deduct Cash distribution 122,720 26,480 149,200

Capital, December 31, 2008 P 83,280 P41,640 P13,880 P138,800

P206,000 / 60% = P343,333; P40,360 / 10% = P403,600 P41,640 / 30% = P138,800 (required total capital)

Problem 1 - 11

Chavez, Roman, and Valdez Statement of Changes in Partners’ Capital

January 1 to November 1, 2008 Chavez Loan Chavez Capital Roman Capital Valdez Capital Total Beginning balances P 80,000 P 80,000 P 80,000 P240,000

Loan from Chavez P 60,000 60,000

Transfer of equipment to Valdez ( 16,000) ( 16,000)

Balances P 60,000 P 80,000 P 80,000 P 64,000 P284,000

Distribution of loss on realization*

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Int. to Chavez for 7 months 2,100 2,100

Balance divided equally* ( 76,700) ( 76,700) ( 76,700) ( 230,100)

Balances P 60,000 P 5,400 P 3,300 P 11,300 P 80,000

Dist. of cash in final settlement 60,000 5,400 3,300 11,300 80,000

*Total partners’ equity as shown above P284,000

Less Cash available for distribution 80,000

Loss on realization P204,000

Less Salary and interest 26,100

Total loss to be divided equally P230,100

Problem 1 - 12

Canlas, David, Estrella and Fajardo

Statement of Changes in Partners’ Capital Accounts For the Year Ended December 31, 2008

Canlas David Estrella Fajardo Total

Investment P309,000 P159,000 P327,000 --- P 795,000

Net profit 237,700 186,230 140,310 P 24,010 588,250

Total P546,700 P345,230 P467,310 P 24,010 P1,383,250

Less: Excess rent (P225 x 6) P 13,500 P 13,500

Withdrawals P 78,000 P 66,000 87,000 P 37,500 268,500

Uncollectible accounts 18,000 6,750 24,750

P 96,000 P 72,750 P100,500 P 37,500 P 306,750

Capital, December 31 P450,700 P272,480 P366,810 P(13,490) P1,076,500

Supporting computations:

Revenue from fees P 900,000

Expenses:

Total expenses, excluding depreciation and uncollectible

accounts (P290,000 - P13,500) P 276,500

Depreciation [(P195,000 x 10%) + (P75,000 x 5%) 23,250

Doubtful accounts (P24,000 x 50%) 12,000 311,750

Net profit P588,250

Distribution of net income

Canlas David Estrella Fajardo Total

20% of gross fees from respective

clients P 66,000 P 36,000 P 33,000 P135,000

20% of fees after April 1 after

expenses but before bad debts P24,010* 24,010

Balance -Canlas-40%, David-35%,

Estrella-25% 171,700 150,230 107,310 429,240

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After April 1

Revenues P 180,000

Expenses before uncollectible accounts (P276,500 + P23,250) x 180 / 900 59,950

P120,050 20% Share of Fajardo P 24,010 Problem 1-13 1. Equipment 13,500 Accumulated Depreciation 1,350

Profit and Loss 12,150

2. Profit and Loss 4,375

Interest Payable 4,375

P87,500 x 6% x 10/12 = P4,375

3. Profit and Loss 159,025

Abaya, Capital 63,700

Reyes, Capital 95,505

Abaya Reyes Total

Salaries P 39,000 P 58,500 P 97,500 Bonus [25% x (NI – B – S) ] 12,305 12,305 Balance – equally 24,610 24,610 49,220 Total P 63,610 P 95,415 P159,025 4. Abaya, Capital 36,000 Reyes, Capital 62,500 Abaya, Drawing 36,000 Reyes, Drawing 62,500 Problem 1-14

1.

Jaime = 5/10 x 80% = 40% Soriano = 2/10 x 80% = 16% Madrid = 3/10 x 80% = 24% Matias = 20%

2. Corrected net income = P250,000 – (P12,000 – P31,000 – P20,000 + P15,000 + P9,000 x

65%) = P240,250 Jaime = P240,250 x 40% = P96,100 Soriano = P240,250 x 16% = P38,440 Madrid = P240,250 x 24% = P57,660 Matias = P240,250 x 20% = P48,050 MULTIPLE CHOICE 1. D 2. D 3. A 4. C Total Abena (60%) Buendia (40%) Abena – MV – Cost (P90,000 – P60,000) P30,000 P18,000 P12,000

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Buendia – MV – Cost (P60,000 – P70,000) ( 10,000) ( 6,000) ( 4,000) Actual P20,000 P12,000 P 8,000 Inequity ( 20,000) ( 30,000) 10,000 P 0 (P18,000) P18,000 5. A 6. C 7. B 8. B Molina’s contribution (P190,000 – P60,000) P130,000

Nuevo’s tangible contribution 100,000

Total capital contributions P230,000

x 60%

Capital credit of Molina P 138,000

Contribution of Molina 130,000 Bonus to Molina P 8,000 9. Roxas = P596,250 - P5,550 = P590,700 Bernardo = P335,000 - P4,050 - P9,000 = P321,950 10. Roxas = (P590,700 + P321,950) x 60% = P547,590 Bernardo = (P590,700 + P321,950) x 40% = P365,060 11. Roxas = P650,000 – P590,700 = P59,300 Bernardo = P400,000 – P321,950 = P78,050 12. Bruno = P150,000 - P90,000 = P60,000

13. Total assets = Total liab. + Total capital

= P25,000 + P300,000 = P325,000

14. Cash contribution = (P248,850 x 1/3) – P50,000 = P32,950

15 Total capital = (P158,400 + P17,500 – P5,000 – P5,000) ÷ 2/3 = P248,850

16. Required capital of Esteban (P287,500 x 60%) P172,500

Non-cash contributions of Esteban (P125,000 – P30,000) 95,000

Cash contribution P 77,500

17. Contribution of Diaz P115,000

Contribution of Esteban (P125,000 – P30,000 + P50,000) 145,000

Total partnership capital P260,000

18. C P115,000 + P95,000 = P210,000/2 P105,000

19. A Net increase (decrease) in capital (P120,000)

Add Withdrawals 260,000

Total (P140,000)

Less Additional investments 50,000

Profit share P 90,000

Profit share percentage ÷ 30%

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20. C

21. B

22. C Net profit (exclusive of salary, interest and bonus) P 93,500

Salary (P2,000 x 12) 24,000

Interest (P50,000 x 5%) 2,500

Net profit after deduction of bonus P120,000

Bonus = .20 (P120,000 + Bonus) = P24,000 + .20 Bonus = P24,000/.80 = P30,000

23. D

24. C Alberto Bustos Cancio Total

10% x P1,000,000 P 100,000 P 100,000

20% x P1,500,000 300,000 300,000

5% (P1M – P400,000) P30,000 P30,000 60,000

Balance – equally 680,000 680,000 680,000 2,040,000

Net income P1,080,000

25. A Ramos Campos Ocampo Total

Interest P24,000 P12,000 P 8,000 P 44,000

Salaries 60,000 40,000 100,000

Balance – equally ( 70,000) (70,000) ( 70,000) ( 210,000)

P14,000

26. C Sison Torres Velasco Total

Bonus - 10%(P44,000 - B) P 4,000 P 4,000 Interest on capital in excess of P100,000 P 1,000 1,000 Salaries to partners P10,000 12,000 22,000 Balance - 4:4:2 6,800 6,800 3,400 17,000 P19,400 P44,000

27. B Sison Torres Velasco Total

Bonus - 10%(P22,000 - B) P 2,000 P 2,000 Interest on capital in excess of P100,000 P 1,000 1,000 Salaries to partners P10,000 12,000 22,000 Balance - 4:4:2 (1,200) (1,200) (600) (3,000) P13,400 P22,000

28. D Sison Torres Velasco Total

Bonus - 10%(P22,000 - B) P 2,000 P 2,000

Interest on capital

in excess of P100,000 P 1,000 1,000

Balance – Salary ratio P8,636 10,364 19,000

P12,364 P22,000

29. A Average capital of Tamayo Average capital of Vidal

P100,000 x 6 = P 600,000 P225,000 x 9 = P2,025,000

160,000 x 6 = 960,000 155,000 x 3 = 465,000

P1,560,000/12 P2,490,000/12

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Average capital of Banson - P150,000

Total int. on ave. capital= (P130,000 + P207,500 + P150,000) 10% = P48,750

30. D Interest on ave. capital P 48,750

Salaries to partners 144,000

Balance - divided equally 9,000

P 201,750

31. B Total capital before net income

(P475,000 + P60,000 – P70,000) P465,000

Add Net profit 201,750

Total capital, Dec. 31, 2008 P666,750

32. D Andal Briones Camba Total

Int. on average capital P 47,250 P 23,865 P 16,235 P 87,350

Salaries to partners 122,325 82,625 204,950

Balance - equally (139,308) (139,308) (139,308) (417,924)

Net increase (decrease) P 30,267 P(115,443) P( 40,448) P(125,624)

33. C Net income = Net sales - CGS - Depr. - Oper. exp. Others)

= P228,000 - P123,000 - P7,500 - P58,100 x

65% P25,610

Mariano Lucas total

Salary to partner for 10 mos. P10,000 P 10,000

Bonus to managing partner 1,561 1,561

Balance – based on orig. cap. 8,781 P 5,268 14,049

TOTAL share in profit P 20,342 P 5,268 P 25,610

34. A TOTAL share in profit P 20,342 P 5,268 P 25,610

Add Capital, beginning 125,000 75,000 200,000

TOTAL P145,342 P 80,268 P 225,610

Less Withdrawals 20,000 30,000 50,000

Capital, end P125,342 P 50,268 P 175,610

35. D Belen Lorna Ursula Edna Total

36. A Interest P 5,000.00 P 2,500.00 P 2,500.00 P2,000.00 P12,000.00 37. A Salaries 10,000.00 6,000.00 16,000.00 Balance 10,000.00 10,000.00 6,666.67 6,666.67 33,333.34 Add’l profit for Edna ________ ________ _________ 3,333.33 3,333.33 Net profit P25,000.00 P18,500.00 P9,166.67 P12,000.00 P64,666.67

38. B Puno Quirino Romero Total

Salaries P40,000 P36,000 P13,650 P 89,650

Bonus 13,000 13,000

Interest 1,000 750 4,600 6,350

Balance 7,000 7,000 7,000 21,000

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Computation of average capital: Puno, capital Jan. 1 – P10,000 x 3 P 30,000 Apr 1 - 9,000 x 3 27,000 July 1 - 11,000 x 3 33,000 Oct. 1 - 10,000 x 3 30,000 P120,000 / 12 P10,000 Quirino, capital Jan. 1 – P 6,000 x 6 P 36,000 July 1 - 10,000 x 3 30,000 Oct. 1 - 8,000 x 3 24,000 P 90,000 / 12 P 7,500 Romero, capital Jan. 1 – P40,000 x 3 P120,000 Apr. 1 - 38,000 x 3 114,000 July 1 - 53,000 x 6 318,000 P552,00 / 12 P46,000

Let X = Net Income

P40,000 + 10% X + P1,000 + 1/3 (X – P89,650 – 10% X – P6,350 = P61,000 P40,000 + 10% X + P1,000 + 1/3 (90% X – P96,000) = P61,000 P40,000 + 10% X + P1,000 + 30% X – P32,000 = P61,000 10% X + 30% X = P61,000 – P40,000 – P1,000 + P32,000 40% X = P52,000 X = P130,000 39. D Legarda- 5/10 x 80% = 40% Sotto - 2/10 x 80% = 16% Madrigal-3/10 x 80% = 24% Pimentel - 20% 40. C Share of Legarda = P25,000 – ( P1,200 - P3,100 - P2,000 + P1,500 + P 900 x 65%) = P24,025 x 40% = P9,610 41. C Serrano Toledo 2008 Net income (P50,000 – P8,000) P42,000 Salary to Serrano ( 36,000) P36,000 Remainder P 6,000 Divided equally ( 6,000) 3,000 P 3,000 Understatement in 2007 NI P8,000 Divided 60:40 ( 8,000) 4,800 3,200 Income allocation P43,800 P 6,200