Chapter 13- 11 and 12

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13-34 | Basic Financial Accounting and Reporting by Prof. WIN Ballada Partnerships: Operations and Financial Reporting | 13-35 NAME: SCORE : NAME: SECTION: PROFESSOR: SECTION: SCORE : Problem #11 Problem #12 PROFESSOR: Preparation of Financial Statements Correction of Errors The following are the adjusted account balances of Calamba and Santiago as at Dec. 31, 2019: The partnership agreement of Pangilinan, Gumban and De Guzman provided that profits are to be divided as follows: Accounts Payable P 677,820 Accounts Receivable 545,070 Pangilinan is to receive a salary allowance of P100,000 for managing the business. Accumulated Depreciation-Equipment 462,870 Partners are to receive 10% interest on average capital balances. Allowance for Uncollectible Accounts 18,790 Remaining profits are to be divided in the ratio of 30:30:40 to Pangilinan, Gumban Cash 132,310 and De Guzman, respectively. Calamba, Capital 612,000 Calamba, Drawing 326,400 753,150 Pangilinan had a capital balance of P600,000 at Jan. 1, 2019 and had drawings of Equipment 224,880 P80,000 during the year. Gumban's capital balance on Jan. 1, 2019 was P900,000 and Transportation In General Expenses (control) 149,390 invested an additional P300,000 on Sept. 1, 2019. De Guzman's beginning capital Interest Expense 35,000 balance was P1,100,000, and she withdrew P100,000 on July 1 but invested an additional P200,000 on Oct. 1, 2019. Merchandise Inventory, December 31 1,320,420 Notes Payable 299,000 Prepaid Insurance 7,350 The partnership had a loss of P120,000 during the year. The bookkeeper allocated the Purchases 5,407,160 loss as follows: P2,000 to Pangilinan; P(48,000) to Gumban and P(74,000) to De Guzman. Purchases Discounts 43,050 Purchases Returns and Allowances 259,600 Required: Santiago, Capital 499,600 244,800 1. Prepare the schedule to allocate the P120,000 loss correctly. Santiago, Drawing Sales 7,155,000 2. Prepare the statement of changes in partners' equity. Sales Returns and Allowances 375,750 Selling Expenses (control) 385,880 3. . Prepare the correcting journal entry at Dec. 31, 2019 assuming that the books have been closed. There were no changes in the partners' Capital accounts during the year. The merchandise inventory at the beginning of the year was P1,440,590. The partnership agreement provides for salary allowances of P330,000 for Calamba and P290,000 for Santiago. It also stipulates an interest allowance of 10% on invested capital at the beginning of the year, with the remainder of the profit to be divided equally. Required: 1. Prepare an income statement for the year. Show the division of profit. 2. Prepare a statement of changes in partners' equity for the year. 3. Prepare a statement of financial position at the end of the year