Book 6

PROBLEM SOLVING:
a 1 On January 1, 2017, Angel, Bea and Colleen formed ABC & Co., a general professional partnership for the
exercise of their common profession. Angel contributed a building with cost of P5M and accumulated
depreciation of P4M. Based on the city assessor's records, the building has an assessed value of P 2M
The building has an annotated mortgage payable amount to P 500,000 to be assumed by the partnership.
On the other hand, Bea contributed 10,000 shares of stocks with par value of P200/per share and
prevailing quoted price of P 300/share. On January 2, 2017, the building contributed by Angel was sold
for P5.5M.
If Colleen wants to have 20% capital interest in the newly formed partnership, how much shall be
contributed by her?
a P 875,000 b. P 1,125,000 c P 2,125,000
Computation:
100% 50% 30%
Total Angel Bea
Contributuons ### 5,000,000 3,000,000
a 2 On July 1, 2016, Anne, Bianca, and Carla formed a business partnership to be operated as an advertising
agency. Anne contributed P10M cash while Bianca shall have a capital credit of P6M upon receipt of
bonus of P1M from Anne based on the provision in Articles of Co-Partnership. The terms of the agreement
provides that Anne and Bianca shall have a combined40% capital inters in the newly formed partnership
What is the capital contribution made by Carla to the partnership?

a P 24,000,000 b. P 22,500,000 c P 25,000,000
Computation:
100% 40%
Total Anne Bianca
Contributuons ### 9,000,000 6,000,000
b 3 On January 1, 2016, Regina, Jessica and Nataly formed a partnership with profit and loss sharing agreement
of 2:3:5;
Regina contributed a land with assessed value from city assessor in the amount of P 1,000,000. The land is
subject to a real estate mortgage which is annotated to the title of the land in the amount of P 800,000 and
will be assumed by the partnership. The appraised value of the land is P 2,400,000. Jessica contributed a
building with a cost of P 2,000,000 and accumulated depreciation of P 1,500,000. The fair value of the
building is P 800,000. Nataly contributed investment in trading securities with historical cost of
P 6,000,000. The trading securities have a quoted price in active market of P 3,000,000.
The partners decided to bring their capital balances in accordance with their profit or loss sharing
agreement. The total agreed capitalization of the new partnership is P 10,000,000.
Which of the following statements is correct?
a The agreed capital of Nataly is P 500,000
b Regina should contribute additional capital in the amount of P 1,800,000
c Jessica should contribute additional capital in the amount of P 2,200,000
d Nataly is entitled to withdraw in the amount of P 1,000,000
c 4 On January 1, 2017, Len, May and Nancy decided to form a business partnership to operate supermarkets.
Len and May both owned a grocery business with the Statements of Financial Position as of December 31,
2016
LEN
Cash P 10M P
Accounts receivable 20
Inventories 70
Property, Plant and Equipment 50
Accounts payable 40
Notes payable 10%, 5%, respectively 30
Capital 80M
The following additional notes are provided:

a Len and May will contribute all its assets and liabilities to the newly formed partnership;
b. The parties agree to provide 10% and 20% allowance for bad debts to the accounts receivable of
Len and May, respectively
c. The inventories of Len and May are reported at historical cost and have net realizable value of
P 60M and 45M respectively
d. The PPE of Len and May have not been depreciated and should be depreciated by 40% and 30%
respectively;
e. The interest payable on both notes payable were unrecorded and unpaid since the date of the
contract. Len's note payable is dated April 1, 2016 while May's note payable is dated June 30, 2016;
f. Nancy shall have 20% interest in the partnership upon contribution of sufficient cash.
What is the amount of cash to be contributed by Nancy on January 1, 2017?

a P 16,375,000 b. P 17,625,000 c P 15,825,000
Computation:
100% 80%
Total Len
Contributuons ### 65,500,000
onal partnership for the
5M and accumulated
essed value of P 2M
med by the partnership.
0/per share and

ted by Angel was sold
ow much shall be
d. P 2,000,000
ated as an advertising
6M upon receipt of
e terms of the agreement
wly formed partnership
d. P 32,000,000
nd loss sharing agreement
P 1,000,000. The land is

amount of P 800,000 and
0. Jessica contributed a
The fair value of the
torical cost of
t or loss sharing
o operate supermarkets.
tion as of December 31,
MAY
20M
30
40
10
20
50
30M
rmed partnership;
the accounts receivable of
e net realizable value of
preciated by 40% and 30%
aid since the date of the

ayable is dated June 30, 2016;
f sufficient cash.
d. P 18,475,000
80% 20%
May Nancy
65,500,000 ###

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PROBLEM SOLVING:

What is the capital contribution made by Carla to the partnership?

The following additional notes are provided:

What is the amount of cash to be contributed by Nancy on January 1, 2017?

0/per share and

nd loss sharing agreement

P 1,000,000. The land is

e net realizable value of

preciated by 40% and 30%

aid since the date of the

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