CASE 1.

On July 1, 2019, Justine Theresa Lorejo and Amelia Mijos agreed to form a
partnership. The partnership agreement specified that Lorejo is to invest cash of P800,000 and
Mijos is to contribute land with an agreed fair market value of P1,500,000 with P500,000
mortgage. Compute the capital of the partners assuming:
a. The mortgage is assumed by the partnership.
b. The mortgage is assumed by the contributing partner.

CASE 2. The post-closing trial balance of Gerlie Maestre on December 31, 2018 before
accepting Ianne Rebucas as a partner is shows the following balances:

Account Title Debit Credit

Cash and Cash Equivalent P 33,000
Accounts Receivable 204,000
Allowance for Doubtful Accounts P 12,000
Merchandise Inventory 413,000
Supplies 51,000
Prepaid Insurance 48,000
Land 460,000
Building 1,750,000
Accumulated Depreciation – Building 350,000
Equipment 2,310,000
Accumulated Depreciation – Equipment 630,000
Accounts Payable 108,000
Mortgage Payable 2,600,000
Maestre, Capital 1,569,000
TOTAL P 5,269,000 P 5,269,000

Ianne Rebucas offered to invest cash equal to one-half of Maestre’s capital after adjustments as
indicated below.
1. The merchandise inventory is to be valued at 450,000.
2. Additional data provides that accounts receivable is only 90% collectible.
3. Interest on mortgage payable should be recognized at 1% until the date.
4. Accounts payable are to be assumed by Maestre.
5. Land is valued at P750,000.
6. Office supplies of P40,000 is to be recognized as an expense.
CASE 3. On June 30, 2019, Vera France Vidal and Joemer Sevilla, friendly competitors in a
certain line of business, decided to combine their talents and form a partnership. The balances of
the items in the statement of financial position (in their normal balance) shows the following:

Vidal Sevilla
Cash 50,000 40,000
Accounts receivable 100,000 80,000
Merchandise inventory 80,000 100,000
Furniture and fixtures 60,000 -
Delivery equipment - 90,000
Accounts payable 30,000 60,000
Notes payable 20,000 0

With the foregoing balances, the new partners agreed the following adjustments:
1. Actual count and bank reconciliation on Vidal proprietorship’s cash account revealed
cash short and unrecorded expenses of P3,500.
2. Establishment of a 10% allowance for uncollectible accounts for each book.
3. The merchandise inventory of Sevilla is to be increased by P100,000.
4. The furniture and fixtures of Vidal are to be depreciated by P6,000.
5. The delivery equipment of Sevilla is to be depreciated by P9,000.
6. The notes payable of Vidal is to be paid from her personal assets.
7. Vera and Joemer shall share in profits and losses 60% and 40% respectively.

CASE 4 – BONUS METHOD

Zea Estillore and Kevin Soriano formed a partnership. Zea shall contribute P40,000 cash while
Kevin shall contribute P100,000 cash. However, due to the expertise of Zea, the partners agreed
that they should initially have an equal interest in the partnership capital. Using the bonus
method, provide the journal entry to record the initial investments of the partners.

CASE 5 – CASH SETTLEMENT BETWEEN PARTNERS

A, B and C formed a partnership. Their contributions are as follows:
A B C
Cash 40,000 10,000 100,000
Equipment 80,000
Totals 40,000 90,000 100,000

Additional information:
1. Although C has contributed the most cash to the partnership, he did not have the full
amount of P100,000 available and was forced to borrow P40,000.
2. The equipment contributed by B has an unpaid mortgage of P20,000, the repayment of
which is assumed by the partnership.
3. The partners agreed to equalize their interest. Cash settlement among the partners are to
be made outside the partnership.

Requirements:
1. Which partner(s) shall receive cash payment from the other partner(s)?
2. Provide the entry to record the contributions of the partners.
CASE 6 – ADDITIONAL INVESTMENT (WITHDRAWAL)
A and B agreed to form a partnership. The partnership agreement stipulates the following:
 Initial capital of P140,000.
 A 60:40 interest in equity of the partnership.
 A contributed P100,000 cash while B contributed P40,000 cash.

Requirement:
Which partner should provide additional investment (or withdraw part of his investment) in order
to bring the partners’ capital credits equal to their respective interests in the equity of the
partnership?