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Part. Accounting

The document contains 7 multiple choice questions about determining partners' capital accounts and contributions in various partnership formation scenarios. The questions cover topics such as how to calculate a partner's initial capital based on assets contributed, how to adjust capital accounts when assets are sold, and how to apply the bonus method to equalize capital balances when partners contribute different asset types.

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1K views3 pages

Part. Accounting

The document contains 7 multiple choice questions about determining partners' capital accounts and contributions in various partnership formation scenarios. The questions cover topics such as how to calculate a partner's initial capital based on assets contributed, how to adjust capital accounts when assets are sold, and how to apply the bonus method to equalize capital balances when partners contribute different asset types.

Uploaded by

촏교새벼
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EX-1. Partner's interest in a partnership is generally equal to:


a. The fair value of net assets at date of contribution
b. The sum of the fair values of the assets the partner contributes to the firm,
increased by any liabilities of other partners assumed and decreased by any
personal liabilities that are assumed by oner partners.
c. The sum of the bases of the individual assets the partner contributes to the firm,
decreased by the partner's share of partnership liabilities
d. The unamortized cost of the assets to the partner

EX-2. On May 1, 2020, JORDAN and PIPPEN formed a partnership and agreed to
share cost him P50,000. PIPPEN contributed P 200.000 cash. The computer was sold
for P55,000 on May 1, 2020 immediately after the formation of the partnership. What
amount should be recorded in JORDAN's capital account on formation of the
partnership?

J’s share = (sale value


– book value) (J’s share
in profit)
= (P55,000 –
P50,000) (3 / 10)
= P1,500.00

J’s capital = Contributed


capital + Gain on sale
EX3. = P50,000 + RODMAN, WILL, and BJ form a partnership
on May 1, P1,500 2020. they agree that RODMAN will contribute
office = P51,500 equipment with a total fair value of P40,000;
WILL will contribute delivery equipment with a fair value
of P80,000; and BJ will contribute cash. If BJ wants a one third interest in the capital
and profits, he should contribute the following of cash.

Rodman
P40,000
Will
P80,000
BJ
P50,000
EX4. ( P150,000/3) EWING and BARKLEY form a new
partnership. EWING invests P300,00 in cash for her 60
percent interest in the capital and profits of the
business. BARKLEY contributes and that has an
original cost of P40,000 and a fair market value of P70,000, and a building that has a
tax basis of P50,000 and a fair market value of P90,000. The building is subject to a
P40,000 mortgage that the partnership will assume. what amount of cash should
BARKLEY contribute?

L
and

Buil
EX-5. MAGIC and KAREEM din formed a partnership and
agreed to divide initial g capital equally, even though
Aton contributed P 100,000 Barkley and KAREEM contributed P
84,000 in identifiable assets. P70,000 Under the bonus method, to
adjust the capital accounts, P90,000 KAREEMs intangible assets
should be debited for: Mortgage

(40,000)
Magic 42,000
Intangible Assets
42,000 50,000

EX-6. KG, PAUL, and RAY decided to engage in a real


estate venture as a partnership RG invested 140,000 cash ana FAUL provided an office
and furnishings valued at P220,000. (There is a P60,000 note payable remaining on the
furnishings to be assumed by the partnership). Although RAY has no tangible assets to
invest, both KG and PAUL believe that RAYS expert salesmanship provides an
adequate investment. The partners agree to receive an equal capital interest in the
partnership. Using the bonus method, what is the capital balance of RAY?

KG PAUL
Cash Office and Furnishings 220,000
140,000
Notes Payable (60,000)
160,000 x .50 = 80,000
RAY

EX-7. TIM, TONY, and MANU are new CPA's and are to form a partnership. TIM is to
contribute cash of P 50,0000 and his computer originally costing P 60,000 but has a
second-hand value of P 25,000. TONY is to contribute cash of P 80,000. MANU, whose
family is selling computers, is to contribute cash of P 25,000 and a brand-new computer
with a regular selling price of P 60,000 but which cost is P 50,000. Partners agree to
share profits equally. The capital balances of each partner upon formation are?
TIM TONY MANU
Cash 50,000 Cash 80,000 Cash 20,000
Computer 25,000 Computer 60,000
Total 75,000 Total 80,000

Entry

Cash 155,000
Computer Equipment 85,000
Tim, Capital 75,000
Tony, Capital 80,000
Man, Capital 85,000

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