Answer in Chapter 1 of Advanced Accounting by Guerrero

Topics: Asset, Balance sheet, Generally Accepted Accounting Principles Pages: 25 (2155 words) Published: October 12, 2013

Partnership – Basic Considerations and Formation1

CHAPTER 1

MULTIPLE CHOICE ANSWERS AND SOLUTIONS

1-1: a
Jose's capital should be credited for the market value of the computer contributed by him. 1-2: b(40,000 + 80,000)  2/3 = 180,000 x 1/3 = 60,000. 1-2: c

1-3: a
CashP100,000
Land300,000
Mortgage payable(  50,000)
Net assets (Julio, capital)P350,000

1-4: b
Total Capital (P300,000/60%)P500,000
Perla's interest ______40%
Perla's capitalP200,000
Less:Non-cash asset contributed at market value
LandP 70,000
Building90,000
Mortgage Payable(  40,000)_120,000
Cash contributionP 80,000

1-5: d- Zero, because under the bonus method, a transfer of capital is only required.

1-6: b
ReyesSantos
CashP200,000P300,000
Inventory150,000
Building400,000
Equipment150,000
Mortgage payable________( 100,000)
Net asset (capital)P350,000P750,000

1-7: c
AABBCC
CashP 50,000
Property at Market ValueP 80,000
Mortgage payable(  35,000)
Equipment at Market Value______________P55,000
CapitalP 50,000P 45,000P55,000

2Chapter 1

1-8: a
PPRRSS
CashP 50,000P 80,000P 25,000
Computer at Market Value__25,000_______­­__60,000
CapitalP 75,000P 80,000P 85,000
1-9: c
MariaNora
CashP 30,000
Merchandise inventoryP 90,000
Computer equipment160,000
Liability( 60,000)
Furniture and Fixtures 200,000________
Total contributionP230,000P190,000

Total agreed capital (P230,000/40%)P575,000
Nora's interest______60%
Nora's agreed capitalP345,000
Less: investment190,000
Cash to be investedP155,000

1-10: d
Roy Sam Tim
CashP140,000
Office EquipmentP220,000
Note payable_________( 60,000) ______
Net asset investedP140,000P160,000 P       –
Agreed capitals, equally (P300,000/3) =P100,000

1-11: a
LaraMitra
CashP130,000P200,000
Computer equipment50,000
Note payable________­_( 10,000)
Net asset investedP130,000P240,000

Goodwill (P240,000 - P130,000) =P110,000

1-12: a
PerezReyes
CashP 50,000P 70,000
Office Equipment30,000
Merchandise110,000
Furniture100,000
Notes payable_______(  50,000)
Net asset investedP 80,000P230,000
Partnership – Basic Considerations and Formation3

Bonus Method:
Total capital (net asset invested)P310,000

Goodwill Method:
Net assets investedP310,000
Add: Goodwill (P230,000-P80,000)_150,000
Net capitalP460,000

1-13: b
Required capital of each partner (P300,000/2)P150,000
Contributed capital of Ruiz:
Total assetsP105,000
Less Liabilities__15,000__90,000
Cash to be contributed by RuizP 60,000

1-14: d
Total assets:
CashP 70,000
Machinery75,000
Building_225,000P370,000
Less: Liabilities (Mortgage payable)__90,000
Net assets (equal to Ferrer's capital account)P280,000
Divide by Ferrer's P & L share percentage____70%
Total partnership capitalP400,000

Required capital of Cruz (P400,000 X 30%)P120,000
Less Assets already contributed:
CashP 30,000
Machinery and equipment25,000
Furniture and fixtures__10,000__65,000
Cash to be invested by CruzP 55,000

1-15: d
Adjusted assets of C Borja
CashP  2,500
Accounts Receivable (P10,000-P500)9,500
Merchandise inventory (P15,000-P3,000)12,000
Fixtures__20,000P 44,000
Asset contributed by D. Arce:
CashP 20,000
Merchandise__10,000__30,000
Total assets of the partnershipP 74,000

4 Chapter 1

1-16: a
Cash to be invested by Mendez:
Adjusted capital of Lopez (2/3)
Unadjusted capitalP158,400
Adjustments:...
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