On January 1, 2018, A, B and C formed ABC Partnership with original capital contribution of P300,000, P500,000 and P200,000. A is appointed as managing partner.

 

During 2018, A, B and C made additional investments of P500,000, P200,000 and P300,000, respectively. At the end of 2018, A, B and C made drawings of P200,000, P100,000 and P400,000,

respectively. At the end of 2018, the capital balance of C is reported at P320,000. The profit or loss agreement of the partners is as follows:

 

 10% interest on original capital contribution of the partners. Quarterly salary of P40,000 and P10,000 for A and B, respectively. Bonus to A equivalent to 20% of Net Income after interest and salary to all partners. Remainder is to be distributed equally among the partners.

 

5. What is the partnership profit for the year ended December 31, 2018?

6. What is A's share in partnership profit for 2018?

7. What is B's share in partnership profit for 2018?

 

Number 8 (Admission of partner by purchase) On December 31, 2018, the Statement of Financial Position of ABC Partnership provided the following data with profit or loss ratio of 1:6:3:

Current Assets

1,000,000

Total Liabilities

600,000

Noncurrent Assets

2,000,000

A, Capital

900,000

B, Capital

800,000

C, Capital

700,000

On January 1, 2019, D is admitted to the partnership by purchasing 40% of the capital interest of B at a price of P500,000.

 

What is the capital balance of B after the admission of D on January 1, 2019?

Number 11 (Partnership Dissolution - Admission of New Partner by Investment) On December 31, 2018, the Statement of Financial Position of ABC Partnership provided the

following data with profit or loss ratio of 1:6:3: 

Current Assets

1,300,000

Total Liabilities

300,000

Noncurrent Assets

2,000,000

A, Capital

1,400,000

B, Capital

700,000

C, Capital

900,000

On January 1, 2019, D is admitted to the partnership by investing P1,000,000 to the partnership for20% capital interest.

 

If the all the assets of the existing partnership are properly valued, what is the capital balance of C after the admission of D?

 

 

Numbers 16, 17 and 18 (Partnership Liquidation - Installment Liquidation) On December 31, 2018, the Statement of Financial Position of ABC Partnership with profit or loss ratio of 5:3:2 of respective partners A, B and C. showed the following information:

Cash

1,600,000

Total Liabilities

2,000,000

Noncash assets

1,400,000

A, Capital

100,000

B, Capital

500,000

C, Capital

400,000

 

On January 1, 2019, the partners decided to liquidate the partnership in installment. All partners are legally declared to be personally insolvent.

 

As of January 31, 2019, the following transactions occurred:

Noncash assets with a carrying amount P1,000,000 were sold at a gain of P100,000.

Liquidation expenses for the month of January amounting to P50,000 were paid.

It is estimated that liquidation expenses amounting to P150,000 will be incurred for the month of February, 2019.

 

20% of the liabilities to third persons were settled. Available cash was distributed to the partners.

 

As of February 28, 2019, the following transactions occurred: Remaining noncash assets were sold at a loss of P100,000.

The final liquidation expenses for the month of February amounted to P100,000.

The remaining liabilities to third persons were settled at a compromise amount of P1,500,000.

Remaining cash was finally distributed to the partners.

 

16. What is the amount of cash received by partner C on January 31, 2019?

17. What is the share of B in the maximum possible loss on January 31, 2019?

18. What is the amount of total cash withheld on January 31, 2019?

Answer rating: 100% (QA)

To answer your questions lets go through each scenario step by step 5 Partnership Profit for the year ended December 31 2018 To calculate the partnership profit we need to consider the additional inve... View the full answer