Reference no: EM133031190

Questions -

Part A - Moira admits Joni as a partner in the business. Balance sheet accounts of Moira just before the admission of July shows: Cash, P43,000, Accounts Receivable, P150,000, Merchandise Inventory, P170,000, and Accounts Payable, P52,000. It was agreed that for purposes of establishing Moira's interest, the following adjustments should be made:

an allowance for doubtful accounts of 3% of accounts receivable is to be established;

merchandise inventory is to be increased by P25,000; and

prepaid expenses of P7,600 and accrued liabilities of P4,800 are to be recognized.

If Joni is to invest sufficient cash to obtain 2/5 interest in the partnership, what amount should she contribute to the new business?

Part B - 1. John and Paul are partners who share profits and losses in the ratio of 3:2 respectively. John's salary is P180,000 and Paul's is P140,000. The partners are paid interest on their average capital balances where John received interest of P 30,000 and Paul, P15,000. The profit and loss allocation is determined after deduction for the salary and interest payments. If John received P280,000 from partnership income, what was the total partnership income?

2. The partners of Triple A Partnership are Adah, Ana and Ara. During the current year, their average capital balances are as follows: Adah - P 180,000; Ana - P160,000; Ara - P 150,000. The articles of partnership provided the following terms: 1. Annual interest of 8% on their average capital balances. 2. Salary allowances as follows: Adah - P 50,000 and Ana - P 80,000. 3. Ana shall receive bonus of 15% of income in excess of P40,000 after partner's interest and salary allowances. 4. Residual profits shall be divided in the ratio of 2:2:6 to Adah, Ana and Ara. What amount will Ana receive if the net income earned is P 470,000?

3. Gerald, Julia and Bea are partners who decided to terminate their partnership due to misunderstanding. Total assets of the partnership is P480,000 including Cash of P30,000, Capital Balances of the partners were as follows Gerald P150,000; Julia P175,000; Bea P67,500. Unpaid liabilities amounted to P87,500. Assets with a book value of P175,000 were sold for P125,000 and the cash was distributed. The P/L ratio is 5:3:2. What amount must the remaining assets be sold in order for Julia to receive P197,500 after liquidation?

4. Bruce, Parker and May formed a partnership. Their capital balances showed the following. Bruce Capital P252,000; Parker, Capital-P126,000; May, Capital-P42,000. Their profit and loss ratio are 6:3:1. The partners decide to sell 20 percent of their interest to Violet for a total payment of P120,000 Violet will pay the money directly to the other partners. How much was the bonus debited or credited in partner Bruce's capital account?

Part C - BB, WW, and FF agree to sell construction tools for a period of one month. BB agrees to construct a stand on the front of the lawn of FF. FF will be paid P2,500 for cleaning up the lawn after the one-month selling period.

BB, WW and FF decide that net income, if any will be allocated first by the P2,500 payment to FF and then by a 40% commission on individual sales. The balance will be distributed 75% to BB and 25% to WW. They agree that a cash box will complicate the matters and that all purchases and sales transactions will be out-of-pocket and the responsibility of the individual. Sales to BB, WW and FF are to be at cost, except that the ending inventory may be purchased at 50% of cost. All other sales are to be made at 100% mark-up on cost.

The activity of the joint operation is as follows:

1. BB construct the stand on the front of the lawn at a cost of 10,000

2. BB pays for P100,000 for various construction tools. FF pays P5,000 for permit to operate the concession or business

3. BB purchases additional construction tools for P150,000, using P50,000 contributed by WW and P100,000 of personal money

4. Sales for the period were as follows: BB, P170,000; WW, P260,000; FF, P60,000

5. FF pays P9,000 for office supplies and these are distributed equally between BB, WW, and FF for their personal use at home. FF agrees to pay P5,000 for the stand.

6. The balance of construction tools inventory was taken by BB

Requirement - Determine the amount to be received (paid) by BB during cash settlement.