Please include solution and explanation. (P/L to use: 3:4:5) Ria, Celso, and Mercy agreed to pool together their resources on July 1, 2017, and put up a recording firm. An article of co-partnership was drawn with the following provisions.

a) That the partners contribute cash of P300,000, P400,000, and P500,000, respectively.

b) That they will co-manage the business.

c) That the partners will divide the profits based on contributions after monthly salary allowance of P5,000 for each partner.

d) In the event of retirement or death, partners will be paid six months after the date of death plus accrued interest at 18%. Profit will be computed pro-rata from the start of the year to date of death.

The salary allowances were withdrawn by the partners and at the end of the year, the operation had a net profit of P300,000.

For 2017

a) Prepare entries to record investments, withdrawals, and distribution of net profit,

b) Prepare a statement of changes in partners' equity.

Mercy died on August 2, 2018. And for the year 2018, the partnership earned P350.000 before accruing interest on the Payable to Mercy's Estate". Ria and Celso were able to withdraw their salaries for the year while Mercy's salary was not withdrawn anymore starting in July. On February 2, 2019, Mercy's estate received the amount due from the partnership.

For 2018

a) Close the capital and drawing accounts of Mercy to a payable account.

b) Increase the Payable to Mercy's Estate for a proportionate share in the profit from the start of the year to date of death.

c) Accrue interest and increase the Payable to Mercy's Estate from date of death to the end of the year.

d) Distribute the remaining profit to Ria and Celso.

e) make a Statement of Partners' Equity

For 2019

1. Record the settlement including additional interest. 2. Liza, Fe and Arman are partners with capital balances of P200,000, P300,000 and P100,000 respectively as at the close of the year. Profit and loss ratio is 4:4:2, respectively. Six months later, Arman decides to retire from the partnership. His drawing account at this date is P15,000 and the net income for the first half of the current year was determined by the bookkeeper from the records to be 150,000.

DIRECTION:

1. Update the capital balances of the partners by recording the profit.
2. Close the drawing account of Arman to the capital account.
3. Record the partner's retirement based on three options:
4. His interest is personally paid by the partners in the amount of PI50,000. The partners agree on an equal sharing of Arman's interest.
5. The partnership will pay P80,000 with bonus capital recognized for the difference
6. The partnership will pay P200,000. Assets of die partnership should first be revalued.
7. Make a revised partners' equity using each option.

3. As of December 31, 2018, Harry, Oliver and Peter have capital balances of P700,000 P500,000, and P800,000, respectively, when Peter decided to withdraw from the partnership. Profits and losses are shared equally among the partners. The partnership agreed to pay P750,000 to Peter in exchange for his partnership interest. The amount paid to Peter should reflect his share for the revaluation of equipment's.

Effective at the beginning of 2019. Princess will join the firm with a 20% interest in capital and profits after a cash contribution of P300,000 plus goodwill. Princess, as managing partner, will receive an annual salary of P120,000.

Direction:

a. Entries to record the revaluation of land and the retirement of Peter.

b. Make a revised partners' equity after the retirement.

c.. Entry to record the admission of Princess of 2019.

d. Give the profit share of each partner if the firm earned P420,000 at the end.