Solution Manual Baysa Chapter 1

CHAPTER 1
Partnership Formation and Operations
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 Tomas, Capital 41,750
Uncol Accts. 24,000 36,000
Inventory 100,000
Furniture 7,500
Goodwill 30,000 ________
TOTAL LIABILITIES &
TOTAL ASSETS P215.250 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
2. Cash 100,000
AA 1 - Chapter 1 (2008 edition) page 2
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

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

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

Abad, Capital 73,160
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

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
Net Profit P48,660 P 55,340 P104,000
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*
Interest 10,000 9,000 P 4,000 P 9,400 32,400
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

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
Required capital balances based on
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
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 P 20,000
25,000)
Duenas, Capital 25,000

Cash 20,000
Exercise 1 – 12
Enriquez and Flores
Schedule Showing Adjustments in Capital
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
Adjustments P 60,840 P 40,560 P101,400
2. Equipment 200,000
Enriquez, Capital 60,840
Flores, Capital 40,560
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
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
Office Supplies 5,000
Total Assets P2,511,000
Liabilities and Capital
Notes Payable P300,000

Total Liabilities P 937,500
Ruiz, Capital P1,049,000
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

Office Equipment 160,000
Goodwill 198,000
Vicente, Capital 1,670,000
Tomas and Vicente

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
Liabilities and Capital
Accounts Payable P 576,000
Tomas, Capital P1,670,000
Vicente, Capital 1,670,000 3,340,000
Problem 1 – 3
1. Merchandise Inventory 3,000

Goodwill 3,000
Accumulated Depreciation 900
Equipment 2,000
Rosas, Capital 3,900
Cash 5,000
Equipment 12,000
Goodwill 3,000
Perlas, Capital 125,000
2. Cash 5,000
Equipment 12,000
Goodwill 3,000
Perlas, Capital 125,000
Cash 7,000
Equipment 7,000
Goodwill 3,000
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

Cash 720,000
Mortgage Payable 300,000

Interest Expense 120,000
Cash 420,000
Notes Payable 225,000

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
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
Income Tax 204,750

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, Drawing 351,000
Torres, Drawing 351,000
Serrano and Torres Partnership

Statement of Recognized Income and Expenses
Sales P3,450,000
Cost of Goods Sold:
Inventories, beginning P1,500,000
Purchases 900,000
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
Net Profit before Income Tax P 585,000
Income Tax 204,750
Net Profit P 380,250
Serrano and Torres Partnership

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
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
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

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

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

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

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

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)

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

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

Delmar, Capital 76,850
Pilar, Capital 33,650
Delmar, Capital 6,000

Pilar, Capital 10,000
Delmar, Drawing 6,000
Pilar, Drawing 10,000
Delmar and Pilar Company

Statement of Changes in Partners’ Capital

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

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


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
Robles Berna Reyes Total

l
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
January 1 to November 1, 2008
Chavez Chavez Roman Valdez

Loan Capital Capital 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*
Salary to Valdez 24,000 24,000
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
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
Total P237,700 P186,230 P140,310 P24,010 P588,250
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
Profit and Loss 12,150
2. Profit and Loss 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 Abena Buendia
Total (60%) (40%)
Abena – MV – Cost (P90,000 – P60,000) P30,000 P18,000 P12,000
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%
Total partnership net profit P300,000
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
P130,000 P207,500
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 P25,610
65%
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
Total P61,000 P43,750 P25,200 P130,000
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

Solution Manual Baysa Chapter 1

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CHAPTER 1

Partnership Formation and Operations

1.a Campos, Capital 14,000

Accumulated Depreciation 6,000

Campos, Capital 40,000

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

Assets Liabilities & Owners’ Equity

Camino, Capital 100,000

1. Income Summary 238,000

2. Income Summary 238,000

3. Income Summary 238,000

4. Income Summary 238,000

Santos Abad Total

5. Income Summary 238,000

Computation of average capital:

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

Sanchez Gomez Total

3. Sanchez Gomez Total

1. Mercado Puzon Total

2. Mercado Puzon Total

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

Net profit after salary, interest and bonus P374,000

1. B = .25 x P500,000 = P125,000

2. B = .25 x P500,000 = P100,000

3. B = .25 (P500,000 - Tax)

4. B = .25 (P500,000 - B - Tax)

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

1. Fees Earned 750,000

2. Income Summary 500,000

Journal entry on the partnership books

Duenas, Capital 20,000

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

Journal entry on the partnership books

Duenas, Capital 25,000

Reported net profit P400,000

Distribution of 2008 net profit

Distribution of 2008 corrected net profit

1. a. Merchandise, Inventory 60,000

b. Ruiz, Capital 30,000

c. Interest Receivable 1,500

d. Ruiz, Capital 7,500

e. Accumulated Depreciation 180,000

f. Office Supplies 5,000

Ruiz and Santos

Accounts Payable 630,000

2. Accounts Receivable 1,792,000

Tomas and Vicente

1. Merchandise Inventory 3,000

Torres, Capital 150,000

Accounts Payable 720,000

Mortgage Payable 300,000

Notes Payable 225,000

Accounts Receivable 3,450,000

Selling and General Expenses 870,000

Serrano, Drawing 351,000

Income Tax 204,750

Inventories, end 600,000

Income Summary 380,250

Serrano Torres Total

Serrano, Capital 351,000

Serrano and Torres Partnership

Cost of Goods Available for Sale P2,400,000