PROBLEM #1

Chichay and Joaqi decided to form a partnership. On April 1, Joaqi contributed the following
assets: Cash, P50,000; Land, P310,000. The land was subject to a mortgage of P30,000 which
was assumed by the partnership. Under the partnership agreement, Chichay is to contribute
cash in order to make the partners capital balances proportionate to the profit or loss ratio of
one-third and two-thirds for Chichay and Joaqi, respectively.
1.) Compute for Joaqis capital account at April 1.
2.) Compute for Chichays capital account at April 1.
3.) Journal entries to reflect the investment of the partners.
PROBLEM #2
On April 30, 2013, Papa Bear, Mama Bear, and Care Bear formed a partnership by combining
their separate business proprietorships. Papa Bear contributed P50,000. Mama Bear contributed
property with P36,000 carrying amount, a P40,000 original cost, and P80,000 fair value. The
partnership did not assume the P35,000 mortgage attached to the property. Care Bear
contributed equipment with P30,000 carrying amount, a P75,000 original cost, and P55,000 fair
value. The partnership assumed the P10,000 mortgage attached to the equipment. Also, the
partnership agreement specified that profits and losses are to be shared equally. What are the
capital balances of Papa Bear, Mama Bear, and Care Bear, respectively, on April 30, 2013?
PROBLEM #3
Kuru and Borj are fierce competitors who sell hunting equipment. They finally decided to join
forces in order to increase their business and reduce costs. An agreement is reached between
the two to begin operations as a partnership on March 1, 2013. In addition, they have decided to
share profits and losses in the ratio of 60:40, respectively.
The statements of financial position of Kuru and Borj as at March 1, 2013 are as follows:
Kuru
Borj
Cash
P
P
42,000
30,000
Accounts receivable
389,200
169,20
0
Allow.
For
uncollectible
(22,400)
(14,400
accounts
)
Merchandise inventory
461,600
300,80
0
Prepaid rent
6,000
Office supplies
30,400
4,000
Land
40,000
Building
128,000
Acc. Depreciation Bldg.
(32,000)
Office equipment
24,000
62,000
Acc. Depreciation OE
(6,000)
(13,200
)
Repair equipment
172,000
Acc. Depreciation RE
(68,000)
TOTAL ASSETS
P1,158,
P544,4
800
00
Notes payable
P
120,000
Accounts payable
170,000
111,60
0
Mortgage payable
200,000
Kuru, Capital
668,800
Borj, Capital
432,80
0
TOTAL LIAB. &
P1,158,
P544,4
OWNERS EQUITY
800
00
The name of the partnership will be KuBo Hunting Gears. The partners have agreed to effect the
following adjustments:
a) Kurus merchandise inventory is to be reduced by P105,200. The inventory of Borj will be
increased by P7,200.
b) The following are the fair market values of the various assets:
Kuru
Borj
Land
P
108,000
Building
192,000
-

Office
16,000
P
equipment
40,000
Repair
124,000
equipment
c) One-half of the notes payable of Kuru are personal notes. All other liabilities of the partners
are assumed by the partnership.
d) The prepaid rent in the books of Borj will be consumed by the partnership.
REQUIRED:
1. Prepare journal entries to record the formation of the partnership. (Adjusting, closing and
opening entries)
2. Prepare the partnerships statement of financial position as at March 1, 2013.
PROBLEM #4
As part of the initial investment, a partner contributes equipment that had originally cost of
P100,000 and on which accumulated depreciation of P75,000 has been recorded. If similar
equipment would cost P150,000 to replace and the partners agree on a valuation of P40,000 for
the contributed equipment, what amount should be debited to the equipment account?