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Download INTERMEDIATE ACCOUNTING Vol.1 (2021 Edition) Conrado T. Valix, Jose F. Peralta & Christian and more Exercises Accounting in PDF only on Docsity!
ILLUSTRATIVE PROBLEMS: PARTNERSHIP FORMATION A partnership may be formed in any of the following ways: 1. Individuals with no existing business form a partnership. 2. Conversion of a sole proprietorship to a partnership. a. Asole proprietor and an individual without an existing business form a partnership. b. Two or more sole proprietors form a partnership. I. INDIVIDUALS WITH NO EXISTING BUSINESS FORM A PARTNERSHIP On January 2, 20A, Cesario Edulan, Edgar Detoya and Pamela Tao formed a partnership business with the following contributions: eC. Edulan (General partner) contributed cash of P100,000 and shares profit of 50%. ¢ _E. Detoya (Limited Partner) contributed a brand new motorcycle costing P120,000 in which his liability of P15,000 from Cebu Motorama will be assumed by the partnership and shares profit of 50%. ¢ P. Tao’s (Industrial Partner) contribution will be her personal services and shares 10% in profit. Prepare two single journal entries recording their respective contributions. Cash P100,000 C. Edulan, Capital P100,000 Initial investment of C. Edulan. Equipment P120,000 Accounts Payable P 15,000 E. Detoya, Capital 105,000 Initial investment of E. Detoya With assumption of a liability. Ms. Pamela Tao was admitted in the partnership as an industrial partner with a 10% share in profit. Signed: C. Edulan E. Detoya P. Tao II. ASOLE PROPRIETOR AND ANOTHER INDIVIDUAL FORM A PARTNERSHIP Albert Malquisto was already in trading business a year ago. He offered Julius Rocabo to join with him in the business for the first time. The general ledger balances of Malquisto prior to partnership formation follows: Cash P 375,000 Accounts Receivable 90,000 Estimated Uncollectible Accounts ( 1,000) Merchandise 420,000 Equipment 250,000 Accumulated Depreciation ( 50,000 ) Accounts Payable ( 75,000 ) 2 Malquisto, Capital ? Rocabo will contribute cash equal to one-half of Malquisto’s capital balance after the following adjustments are reflected in the sole proprietor’s book of Malquisto. a. Accounts Receivable sr Le} 4 realizable value of P85,000. b. Merchandise Inventory 62 0 zable value of P390,000 after considering obsolescence. 
