Problem 1 KOBE and SHAQ each operate a separate business agreed to join in pa

Kobe Shaq
Cash 3,200 12,000
A/P 10,000
A/R 32,000 24,000
Notes Payable 2,000
Merchandise 40,000 36,000
Capital 73,200
Office Equipment 10,000 12,000
TOTAL 85,200 85,200 84,000

KOBE, CAPITAL SHAQ, CAPITAL

73,200 68,000
(4,800) (2,400)
68,400 (900)
(300) 64,700
68,100

Additional Cash would be:

3,400
ness agreed to join in partnership as of July 1, 2020. The balance sheet data presented by each as of this date were as follows:

Adjustments
Kobe's A/R are to be taken over at a book value less 15%.
16,000 Shaq's accounts receivable to be taken at book value less 10%
Shaq will dispose his equipment at the highest cash price possible and that Kobe bear 1/4 of the loss re
Shaq's office equipment is disposed at a book value less 10%
Shaq will pay sufficient cash to have 1/2 interest in the partnership after charging the capital of Kobe fo
68,000

84,000 Adjustment Journal Entries

Books of Kobe Books of Shaq
1. Kobe, Capital 4,800 1. Shaq, Capital
A/R 4,800 A/R

Cash
Shaq, Capital
Receivable from Kobe
Office Equipment

Books of the Partnership

Cash 3,200
A/R 27,200
Merchandise 40,000
OffiCe Equipment 10,000
A/P 10,000
N/P 2,000
Kobe, Capital 68,400

Cash 22,800
A/R 21,600
Merchandise 36,000

Receivable from Kobe 300

A/P 16,000
Shaq. Capital 64,700

Kobe, Capital 300

Receivable from Kobe 300
Cash 3,400
Shaq, Capita; 3,400
e as follows:

e bear 1/4 of the loss resulting from the sale

ng the capital of Kobe for his share opf the loss

ooks of Shaq
2,400
2,400

10,800
900 REQUIRED: What is the adjusted capital balanc
300
12,000 Lebron, Capital
Beg. Balance
Allowance for Bad Debts
Merchandise Inventory
Prepaid Expense
Accrues Expense
Adjusted Capital Balance

REQUIRED: How much cash should Anthony in

Lebron Capital
Anthony, Capital
Total Contributed Capital

REQUIRED: If Anthony contributed equipment

how much cash was contibuted for a one-fifth

Lebron Capital
Anthony, Capital
Total Contributed Capital

7,078
(4,500)
2,578
e adjusted capital balance of Lebron prior to the admission of Anthony

Lebron, Capital
26,400
(240)
2,200
350
(400)
28,310

cash should Anthony invest to secure a one-third interest in the partnership?

28,310 2/3 28,310

? 1/3 14,155
ibuted Capital 42,465

contributed equipment with carrying value of 4,000 and fair value of 4500,
ontibuted for a one-fifth interest in the partnership?

28,310 4/5 28,310

? 1/5 7,078
ibuted Capital 35,388
Equipment cobtributed by Anthony
Cash Contributed by Anthony
 Quiz
Partnership Formation

Capital Balances
Adjustments :
Allowance for Doubtful
Accounts (4% of A/R)
Furniture and Fixture
Office Equipment
Expenses incurred
Inventory
Adjusted Capital Balances

1 Investment Method: if Capital Ratio is 4:6

Kath 40%
Neil 60%

In investment Method, TAC is not equal to TCC.

Therefore, the additional investment should b

3 Bonus Method: if Capital Ratio is 4:6

Kath 40%
Neil 60%

In Bonus Method, TAC=TCC

Therefore, the additional investment of Neil should be:

4 What is the Beginning Capital Balance of Kath and Neil

The beginning capital balances of Kath and Neil are 59

43,160 respectively.
5 What is the Total Asset after formation?

6 What is the Total Liabilities after formation?

 GIVEN: Interest Ratio

Kath Neil Cash

59,625 43,500 Accounts Receivable
Inventories

(740) (940) Furnitures and Fixtures (net)

4,000 Office Equipment (net)
(750) Prepaid Expense
(1,200) (1,150) Total
(2,500) 2,500
59,185 43,160 Accounts Payable
Capital
Total

Capital Ratio is 4:6

TAC TCC
59,185 59,185
43,160 88,778
102,345 147,963

, TAC is not equal to TCC.

ore, the additional investment should be:
88,778
(43,160)
45,618

tal Ratio is 4:6

TAC TCC
59,185 40,938
43,160 61,407
102,345 102,345
=TCC
nal investment of Neil should be:
61,407
(43,160)
18,247

Capital Balance of Kath and Neil

capital balances of Kath and Neil are 59,185 and

43,160 respectively.
t after formation?
102,345
45,750
18,000
1,200
1,150
168,445

lities after formation?

45,750
18,000
1,200
1,150
(66,100)
40% 60%
Kath Neil
9,000 3,750
18,500 23,500
30,000 19,500

30,000 9,000
11,500 2,750
6,375 3,000
105,375 61,500

45,750 18,000
59,625 43,500
105,375 61,500
Beg. Balance
Underdepriciated
Allowance for DA
TCC

REQUIRED: How much cash must F

Under the Investmnent Method:

60%
40%

REQUIRED: Under Bonus Method

Under the Bonus Method:

60%
40%
 60% 40%
FF, Capital GG, Capital
570,000 495,000
(15,000) (45,000)
(120,000) (45,000)
435,000 405,000

How much cash must FF invest to bring the partner's capital balances proportionate to their profit and loss ratio?
Investmnent Method: TCC is not equal to TAC
TCC Additional TAC
FF, Capital 435,000 172,500 607,500
GG, Capital 405,000 405,000
840,000 1,012,500

Under Bonus Method

Bonus Method: TCC = TAC
TCC Bonus TAC
FF, Capital 435,000 69,000 504,000
GG, Capital 405,000 (69,000) 336,000
840,000 840,000

AA, Capital BB, Capital

Beg. Balance 70,000 78,500
Inventory 4,000
ADA (1,000) (1,500)
A/P (4,000)
TCC 65,000 81,000

No capital ratio given, therefore, TCC is the TAC

AA, Capital 65,000
BB. Capital 81,000
TOTAL 146,000
 ACCOUNTING FOR PARTNERSHIP OPERATIONS

Division of Profit and Losses

1. Agreement of the Partners
2. If silent, according to original capital contributions
3. If profit only, loss follows
4. If loss only, profit is distrbuted using the original capital contibution.

Kahit na NET LOSS ang declared pero dapat magprovide gihapon ug Interest and Salaries,
but BONUS is provided pag NET INCOME

BONUS FORMULA:

BEFORE BONUS:
BONUS= Bonus Rate ( Net Income - Whatever it is after the Bonus, except for the BONUS)

AFTER BONUS
BONUS= Bonus Rate ( Net Income - Whatever it is after the Bonus, except for the BONUS)
1 + Bonus Rate

REQUIRED: What is the share of KYRIE in th

FIRST YEAR
KD 60%
Net Income
Salary 120,000
Interest 16,000
Bonus 20,000

Distribution 93,600
Share in Income 249,600

BONUS= Bonus Rate ( Net Income - Whatever

= 10% (320,000- 120,000)

=20,000

REQUIRED: How much is the adjusted capital of KD at the beginning of

the second year

YEAR 2 CAPITAL BALANCES

 KD KYRIE
Beg. Balance 160,000 80,000
Profit 249,600 70,400
Beg. Balance for Year 2 409,600 150,400

REQUIRED: How much is the share of Kyrie and KD of the net income for the second year?
SECOND YEAR
KD KYRIE
Net Income
Salaries 120,000
Interest 40,960 15,040
Bonus 8,000

Distribution 8,000 8,000

Share in Income 176,960 23,040

BONUS= Bonus Rate ( Net Income - Whatever it is after the Bonus, except for the BONUS)

= 10% (2000,000- 120,000)

=8,000
P OPERATIONS

est and Salaries,

REQUIRED: What is the averag

, except for the BONUS) If simple average lang gipanga

except for the BONUS)

he share of KYRIE in the NET INCOME for the first year? WEIGHTED AVERAGE

01/01
KYRIE 40% 04/01
320,000 07/31
(120,000) 09/30
8,000 (24,000) 12/01
(20,000)
156,000
62,400 AVERAGE CAPITAL
70,400 320,000
REQUIRED: If the Partnership r
Net Income - Whatever it is after the Bonus, except for the BONUS) of Doncic, if salaries and intere

00)

Net Income
Salaries

Interest
 Bonus

Distribution
Profit Sharing

BONUS= Bonus Rate ( Net Inco

=20% (100,000-36,000-3,000)
=12,200

200,000
(120,000)
(56,000)
(8,000)
16,000

200,000

NUS)
REQUIRED: What is the average capital of PORZINGIS and DONCIC?
Sa average, naay simple and weighted
If simple average lang gipangayo, simply:
Beg. Capital Balance xxx
Add: Ending Capital Balance xxx
xxx
Divide by 2 2
SIMPLE AVERAGE xxx

WEIGHTED AVERAGE
DONCIC PORZINGIS
38,000 X3 114,000 01/01 15,000 X 5
33,000 X4 132,000 06/01 25,000 X 3
43,000 X2 86,000 09/01 22,000 X 1
48,000 X2 96,000 10/01 21,000 X 2
52,000 X1 52,000 11/30 26,000 X 1
12 480,000 12
Divide by 12 12
AVERAGE CAPITAL 40,000

REQUIRED: If the Partnership reports income of 100,000 in 2017 before salaries, interest, and bonus, what is the share
of Doncic, if salaries and interest are treated as allocation of net income?

DONCIC PORZINGIS
Net Income
12,000 24,000

2,000 1,000
 12,200

Distribution 32,533 16,267

Profit Sharing 58,733 41,267

BONUS= Bonus Rate ( Net Income - Whatever it is after the Bonus, except for the BONUS)
=20% (100,000-36,000-3,000)
=12,200

Net Income
Salary
Interest

Bonus

Share on Profit
PnL Distribution

BONUS= Bonus Rate ( Net Income - Whatever it is aft

HUNT 1 + Bonus Rate
=3% (105,000)
1.05
=3,000

BONUS= Bonus Rate ( Net Income - Whatever it is aft

ROB 1 + Bonus Rate
=2% (105,000)
1.05
=2,000
 75,000 DD, Capital
75,000 01/01 40,000
22,000 04/01 35,000
42,000 06/01
26,000 08/01 45,000
240,000 09/01
12 10/01 50,000
20,000 12/01 54,000

bonus, what is the share Divide by 12

AVERAGE CAPITAL

PROFIT ALLOCATION
100,000 DD
(36,000) Net Income

(3,000) Interest 20% 8,400

61,000
 (12,200) Distribution 52,800
48,800 61,200

100,000

HUNT ROB TURMAN KELLY

105,000
20,000 10,000 (30,000)
5,000 4,500 2,000 4,700 (16,200)
58,800
3,000 2,000 (5,000)
53,800
13,450 13,450 13,450 13,450
41,450 29,950 15,450 18,150 105,000

e ( Net Income - Whatever it is after the Bonus, except for the BONUS)
1 + Bonus Rate

e ( Net Income - Whatever it is after the Bonus, except for the BONUS)
1 + Bonus Rate
Months Outsanding EE, Capital Months Outstanding
3 120,000 25,000 5
4 140,000
35,000 3
2 90,000
32,000 1
2 100,000 31,000 2
1 54,000 36,000 1
12 504,000 12
12
42,000

EE
120,000

6,000 (14,400)

105,600
52,800
58,800

BONUS= Bonus Rate ( Net Income - Whatever it is after the Bonus, except for the BONUS)
1. Bonus= 20% (504,000)
= 100,800

BONUS= Bonus Rate ( Net Income - Whatever it is after the Bonus, except for the BONUS)
1 + Bonus Rate

0
Months Outstanding
125,000

105,000

32,000
62,000
36,000
360,000
12
30,000
Bonus, except for the BONUS)

Bonus, except for the BONUS)

Jerah Y. Torrejos
ACP311 (2960)

EX.1
A B
Net Income
Salary 120,000 80,000

Share on Profit (10,000) (10,000)

110,000 70,000

Entry: Income Summary 180,000

A, Capital 110,000
B, Capital 70,000

EX.2
F G H
Net Loss
Interest 12,000 6,000 4,000
Salaries 30,000 20,000

Share on Profit (35,000) (35,000) (35,000)

7,000 (29,000) (11,000)

The capital of F will have an additional of 7,000

EX. 3
J 60% P 40%
Net Income
Salary 100,000 50,000
Interest 50,000 20,000

Share on Profit 195,000 130,000

345,000 200,000
Total Partnership Income is 545,000
J, Capital 345,000
P, Capital 200,000
545,000

EX. 4 Net Income: 19,500

Depreciation (2,100)
Inventory (11,400)
Adjusted Net Income 6,000
 P- 3 R-2
Net Income
Salary 14,400 13,200

Equal Distribution (10,800) (10,800)

PNL Distribution 3,600 2,400

The Capital is increased by 3,600 for P and 2,400 for R.

EX. 5 Income from Fees 90,000

Expenses (48,000)
Net Income 42,000

CC-5 DD-3 EE-2

Net Income
Salary 14,000

Share on Profit 14,000 8,400 5,600

Additional Profit to DD (1,500) 2,100 (600)

PnL Distribution 12,500 10,500 19,000
The amounts to be credited in each capital account are:
CC, Capital 12,500
DD, Capital 10,500
EE, Capital 19,000

EX. 6
LL- 5 MM-3 PP-2
Net Income
Interest 2,000 1,250 750
Salary 8,500
Additional to MM 7,050

Share on Profit 9,500 5,700 3,800

20,000 14,000 4,550
The amount that must be earned by the partnership is 38,550.

EX. 7 A-60% B-30% C-10%

Capital Balances 252,000 126,000 42,000
For D (63,000) (31,500) (10,500)
189,000 94,500 31,500
Capital BONUS
A, Capital 189,000 198,000 9,000
B, Capital 94,500 99,000 4,500
C, Capital 31,500 33,000 1,500
 D, Capital 105,000 90,000 (15,000)
420,000 420,000

Cash 40,000
BV 35,000 Capital Balances:
5,000 A, Capital 198,000
Divide 1/4 B, Capital 99,000
20,000 C,Capital 33,000
.60 D, Capital 90,000
12,000 420,000
252,000
264,000
.75
198,000

EX. 8 A-60% B-30% C-10%

Capital Balances 252,000 126,000 42,000
For D (50,400) (25,200) (8,400)
201,600 100,800 33,600
Capital Balances of the Partners:
A, Capital 201,600 201,600
B, Capital 100,800 100,800
C, Capital 33,600 33,600
D, Capital 84,000 84,000
420,000 420,000
 180,000
(200,000)
(20,000)

180,000

(33,000) 60%
(22,000) EE
(50,000) 160,000
(105,000) (40,000)
120,000
(33,000)

120,000
60,000
30,000
? 210,000
(150,000) 420,000
(70,000)
325,000

545,000
 6,000
(27,600)
(21,600)

6,000

42,000
(14,000)
28,000
(28,000)
0

38,550
?
(4,000)
(8,500)
(7,050)
19,000

38,550

105,000
 D

84,000
 30% 10%
GG DD WW
80,000 40,000
(20,000) (10,000)
60,000 30,000 210,000

138,000 18,000 Cash 80,000

69,000 9,000 Book Value 70,000
33,000 10,000 increase
180,000 30,000 Divide 1/4
420,000 40,000
Multiply .60
24,000
160,000
184,000
Multiply 75%
138,000
REQUIRED: What is the weighted average capital for IGGY and SWAGGY in 2020?

IGGY
CAPITAL Months Outstanding
01/01 200,000 5
06/01 176,000 1
07/01 256,000 6
12
Divided by 12
AVERAGE CAPITAL

REQUIREMENT 2:

IGGY
Net Income
Salary 40,000
Interest 10% 22,400

Distribution 46,900
PROFIT DISTRIBUTION 109,300

Total Amount Allocated to Salary:

Iggy 40,000
Swaggy 60,000
100,000

Total Amount Allocated to Interest Distributions:

Iggy 22,400
Swaggy 23,800
46,200

REQUIREMENT 3:

IGGY
Net Income
Salary 40,000
Interest 10% 20,000
Distribution 48,000
PROFIT DISTRIBUTION 108,000

Total Amount Allocated to Salary:

Iggy 40,000
Swaggy 60,000
100,000

Total Amount Allocated to Interest Distributions:

Iggy 20,000
Swaggy 24,000
44,000
GGY in 2020?

SWAGGY
CAPITAL Months Outstanding
1,000,000 01/01 240,000 4 960,000
176,000 05/01 210,000 5 1,050,000
1,536,000 10/1 310,000 3 930,000
2,712,000 12 2,940,000
12 12
226,000 245,000

SWAGGY
240,000
60,000 (100,000)
23,800 (46,200)
93,800
46,900
130,700 240,000

t Distributions:

SWAGGY
240,000
60,000 (100,000)
24,000 (44,000)
96,000
 48,000
132,000 240,000

t Distributions:
Partnership Admission
By investment to the Partnership
naay new total capital and asset

P1 xxx
P2 xxx
New P xxx
xxx
 DISSOLUTION
Withdrawal/Retirement
ent to the Partnership
otal capital and asset

Allocate the Bonus from or to using

the PnL Ratio
xxx xxx
xxx

BONUS
HUGO 81,000 67,635 (13,365)
ISKO 40,500 31,590 (8,910)
JOSE 43,875 66,150 22,275
165,375 165,375

Entry:
Cash 43,875
Jose, Capital 43,875

Hugo, Capital 13,365

Isko, Capital 8,910
Jose, Capital 22,275
 DISSOLUTION
Goodwill (Revaluation) with increase
to theassets

By investment By Purchase
naay changes remain unchanged except GOODWILL
is used
 Payment is made to the partners- b

Capital Balances
Land

Louwill, Capital

Kawhi, Capital
PG, Capital
Louwill, Capital
TOTAL CAPITAL

Payment is made to the partnershi

Cash 170,000
Equipment 80,000 Capital Balances
Louwill, Capital 250,000 Land

Kawhi, Capital
PG, Capital
Louwill, Capital
TOTAL CAPITAL
made to the partners- by purchase

60% 40%
Kawhi Louwill, Capital PG
500,000 400,000
24,000 16,000
524,000 416,000
(104,800) 188,000 (83,200)
419,200 332,800

Kawhi, Capital 419,200

PG, Capital 332,800
Louwill, Capital 188,000
TOTAL CAPITAL 940,000

made to the partnership- by investment

60% 40%
Kawhi Louwill, Capital PG
500,000 400,000
24,000 16,000
524,000 250,000 416,000

Difference
Kawhi, Capital 524,000 531,200
PG, Capital 416,000 420,800
Louwill, Capital 250,000 12,000 238,000
TOTAL CAPITAL 1,190,000 1,190,000
Curry purchases GREEN's interest for 111,000

Green, Capital 90,000

Curry, Capital 90,000

Green sells one-third of his interest to Curry for 37,500 and two-thirds to Thompson for 57,000

Green, Capital 90,000

Curry, Capital 30,000
Thompson, Capital 60,000

Curry, Capital Thompson, Capital Green, Capital

225,000 135,000 90,000
A/R (6,000) (2,400) (2,000) (1,600)
Inventory 7,500 3,000 3,750 2,000
Equioment 15,000 6,000 5,000 4,000
231,600 141,750 94,400

Green, Capital 94,400

Notes Payable 94,400