Republic of the Philippines

BULACAN STATE UNIVERSITY

COLLEGE OF BUSINESS ADMINISTRATION
City of Malolos, Bulacan
Telephone Number : 7964131 or 919-7800 loc 1058, 1057
Webpage: www.bulsu.edu.ph

PARTNERSHIP AND CORPORATION ACCOUNTING

1st Long Quiz
PARTNERSHIP FORMATION
A, B, and C formed a partnership, named as ABC and Co., on January 1, 2017. A contributed 50% equivalent to the
capital credit of B. B contributed 75% equivalent to capital credit of C. C, a sole proprietor has the following
information:

Cash P 70,000
Accounts Receivable 80,000
Inventories 90,000
Land 200,000
Building 99,000
Accumulated Depreciation – Building 9,000
Equipment 98,000
Accumulated Depreciation – Equipment 8,000
Accounts Payable 95,000
The partners agreed that C’s Receivables collectability is 90%, inventories to be valued at P 100,000, Land and
Building to be valued at P 350,000, and Equipment at P 95,000
Required: All necessary adjusting entries for C’s books before partnership formation and all journal entries in the
partnership books for the partnership formation

PARTNERSHIP OPERATION
XXX and Co. was formed on January 1, 2017 with a capital contribution from X1, P 500,000, X2, P 700,000, X3, P
800,000. The partners agreed to have a regular drawing amounting to P 2,000 per month. These drawings are debited
to drawing account for that it will not affect the capital ratio of the partners. The partners also agreed to give salary
allowance for X1 as a managing partner equivalent to 30% of net profit after salaries, interest at 15% of average capital
balances, and a bonus of 15% of profit after salaries and interest and before bonus to X2, and a bonus of 25% of profit
after salaries, interest, and bonus to X1 and AFTER X2’s bonus to X2. On, January 15, 2017 X1 invested P 100,000
to the partnership, while X2 and X3 withdrew P 50,000 and P 100,000 respectively.
Given below is the trial balance of the partnership

XXX and Co.

Trial Balance
For the month ended January 31, 2017

Account Titles Debit Credit

Cash P ?
Accounts Receivable 50,000
Office Supplies 10,000
Land 500,000
Building 300,000
Accumulated Depreciation P 15,000
Accounts Payable 85,000
X1, Drawings ?
X2, Drawings ?
X3, Drawings ?
X1, Capital ?
X2, Capital ?
X3, Capital ?
Service Fees 1,000,000
Cost of Services 500,000
Depreciation Expense 15,000
Operating Expenses 100,000
Total ? ?

Required: Complete all the data missing in the Trial Balance provided above. Compute for the participation of the
partners to the profit/loss in good form. Prepare Closing entries for the partnership books, including the profit/loss
allocation entries.

Good Luck 

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