Reference no: EM132819737

Question - Partnership Questions -

Q1. Teddy, Bobbie, Alex, and Gabbie organized a partnership called Four Sisters. Their business is engaged in providing wedding services. Teddy and Bobbie contributed cash of P600,000 each. Alex contributed building and land, which she inherited from her father three (3) years ago. For the transfer tax purposes, the value of the building and land was P900,000. A week before the partnership was formed, several buyers signify their intention of buying the building and land for P920,000. The building has been subjected to a mortgage with a carrying amount of P200,000, which will be assumed by the partnership. Gabbie, being an event planner, contributed her skills and knowledge to the partnership. The partners agreed that Gabbie would be given a salary of P15,000. She will also receive 20% of the remaining profits.

a. What is the value of the building contributed by Alex? Justify your answer in no more than three sentences.

b. Give the adjusting entry to be made at the date of formation.

Q2. Cyril, Joseph, and Reggie formed a partnership named CJR Partnership Ltd. Cyril contributed cash of P150,000 and his store equipment that originally cost P160,000 with the second value of P125,000.

Joseph will contribute P180,000 cash while Reggie, whose family sells computers, will contribute P250,000 cash and a brand-new computer that cost his family's computer dealership P150,000 but with a regular selling price of P160,000. They agreed to share profits and losses equally.

a. Assuming that you are hired as the new accountant of the new partnership, how will you record the contributions made by Cyril and Reggie? Justify your answer in no more than three (3) sentences.

b. Give the adjusting entry to be made at the date of formation.