Roberts and Smith drafted a partnership agreement that lists the following assets

contributed at the partnership’s formation:

Contributed by
Roberts Smith
Cash P 20,000 P 30,000
Inventory 15,000
Building 40,000
Furniture & Equipment 15,000

The building is subject to a mortgage of P 10,000, which the partnership has assumed.
The partnership agreement also specifies that profits and losses are to be distributed
evenly. What amounts should be recorded as capital for Roberts and Smith at the
formation of the partnership?
Roberts Smith
a. 35,000 85,000
b. 35,000 75,000
c. 55,000 55,000
d. 60,000 60,000

The partnership agreement provides for equal initial capital. Thus under the bonus
method, the capital credit for Redd should be the same as the contribution for
Grey, resulting to P20,000 bonus from Grey to Redd.

1. On May 1, 2010, the business assets of John and Paul appear below:

John Paul
Cash P 11,000 P 22,354
Accounts Receivable 234,536 567,890
Inventories 120,035 260,102
Land 603,000
Building 428,267
Furniture & Fixture 50,345 34,789
Other Assets 2,000 3,600
Total P 1, 020, 916 P 1, 317, 002

Accounts Payable P 178,940 P 243,650

Notes Payable 200,000 345,000
John, Capital 641, 976
Paul, Capital\ 728,352
Total P 1, 020, 916 P1, 317, 002

John and Paul agreed to form a partnership contributing their respective assets and
equities subject to the following adjustments:
a. Accounts receivable of P20, 000 in John’s books and P35, 000 in Paul’s are
uncollectible.
b. Inventories of P5, 500 n P6, 700 are worthless in John’s and Pail’s respective
books.
c. Other assets of P2, 000 and P3, 600 in John’s and Paul’s respective books are to
be written off.
The capital accounts of John and Paul, respectively, after the adjustments will be:
a. 614, 476 683, 052 c. 640, 876 712, 345
b. 615, 942 717, 894 d. 613,576 683, 350

2. Based on No. 4, how much assets does the partnership have?

a. 2, 317, 918
b. 2, 237, 918
c. 2, 265, 118
d. 2, 365, 218