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TitlePartnership
TagsInvesting Balance Sheet Corporate Jargon Inventory Partnership
File Size95.7 KB
Total Pages10
Document Text Contents
Page 1

1. Aiden, Amelia and Madison formed a partnership on April 30, with the following assets,
measured at their fair market values, contributed by each partner:

Aiden Amelia Madison
Cash P 100,000 P 120,000 P 300,000
Automobile 85,000
Delivery trucks 280,000
Computer and printer 51,000
Office furniture 35,000 25,000
Land and building 1,500,000


P 1,685,000 P 486,000 P 325,000



Although Madison has contributed the most cash to the partnership; he did not have the
full amount of P300,000 available and was forced to borrow P200,000. The land and
building contributed by Aiden has a mortgage of P900,000 and the partnership is to
assume responsibility of the loan. Of the profit and loss sharing agreement is 40 percent,
40 percent, and 20 percent, respectively, for Aiden, Amelia and Madison, what is the total
capital investment of all the partners at the opening of business on April 30?
a. P 2,496,000 b. 1,596,000 c. 1,396,000 d. 1,644,000

2. The balance sheet as of July 31, 2016, for the business owned by Sunshine, shows the
following assets and liabilities:

Cash P 50,000 Furniture and Fixtures P 164,000
Accounts Receivable 134,000 Accounts Payable 28,800
Merchandise Inventory 220,000

It is estimated that 5% of the receivables will prove uncollectible. The cash balance
includes a 1,000 shares marketable equity securities recorded at its cost, P4,000. The
stock last sold on the market at P17.50 per share. Merchandise inventory includes
obsolete items costing P18,000 that will probably realized only P4,000. Depreciation has
never recorded; however, the furniture and fixtures are two years old, have an estimated
useful life of 10 years, and would cost P240,000 if purchased new. Prepaid items amount
to P5,000. Paulo is to be admitted as a partner upon investing P200,000 cash and
P100,000 merchandise. How much capital is to be credited to Sunshine upon formation of
partnership?
a. P539,200 b. 613,000 c. 565,000 d. 606,200

3. Paul admits Timothy as a partner in business. Accounts in the ledger for Paul on
November 30, 2016, just before the admission of Timothy, show the following balances:

Cash P 26,000 Accounts payable P 62,000
Accounts Receivable 120,000 Paul, capital 264,000
Merchandise Inventory 180,000

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