Chapter 1 Advanced Accounting
Chapter 1 Advanced Accounting
CHAPTER 1
MULTIPLE CHOICE
1-1: a
1-2: b
1-2: c
Jose's capital should be credited for the market value of the computer contributed by
him.
(40,000 + 80,000) 2/3 = 180,000 x 1/3 = 60,000.
1-3: a
Cash
Land
Mortgage payable
P100,000
300,000
( 50,000)
P350,000
P500,000
______40%
Perla's capital
Less:Non-cash asset contributed at market value
Land
P 70,000
Building
90,000
Mortgage Payable
( 40,000)
P200,000
Cash contribution
P 80,000
1-4: b
1-5: d
_120,000
- Zero, because under the bonus method, a transfer of capital is only required.
1-6: b
Reyes
Santos
P200,000
Cash
Inventory
Building
Equipment
Mortgage payable
________
P300,000
150,000
400,000
150,000
( 100,000)
P350,000
P750,000
AA
BB
CC
P55,000
P55,000
1-7: c
Cash
Property at Market Value
Mortgage payable
Equipment at Market Value
P 50,000
_______
P 80,000
( 35,000)
_______
Capital
P 50,000
P 45,000
2
Chapter 1
1-8: a
PP
RR
SS
Cash
Computer at Market Value
P 50,000
__25,000
P 80,000
_______
P 25,000
__60,000
Capital
P 75,000
P 80,000
P 85,000
Maria
Nora
1-9: c
Cash
Merchandise inventory
Computer equipment
Liability
Furniture and Fixtures
P 30,000
200,000
P 90,000
160,000
( 60,000)
________
Total contribution
P230,000
P190,000
P575,000
______60%
P345,000
190,000
Cash to be invested
P155,000
1-10: d
Roy
Sam
Tim
Cash
Office Equipment
Note payable
P140,000
________
P220,000
_( 60,000)
______
P140,000
P160,000
P100,000
1-11: a
Lara
Mitra
Cash
Computer equipment
Note payable
P130,000
________
P200,000
50,000
_( 10,000)
P130,000
P240,000
P110,000
1-12: a
Perez
Cash
Office Equipment
Merchandise
Furniture
Notes payable
P 50,000
30,000
_______
Reyes
P 70,000
110,000
100,000
( 50,000)
P 80,000
P230,000
Bonus Method:
Total capital (net asset invested)
P310,000
Goodwill Method:
Net assets invested
Add: Goodwill (P230,000-P80,000)
P310,000
_150,000
Net capital
P460,000
1-13: b
Required capital of each partner (P300,000/2)
Contributed capital of Ruiz:
Total assets
P105,000
Less Liabilities
__15,000
P150,000
P 60,000
__90,000
1-14: d
Total assets:
Cash
Machinery
Building
Less: Liabilities (Mortgage payable)
P 70,000
75,000
_225,000
P370,000
__90,000
P280,000
____70%
P400,000
P120,000
P 55,000
__65,000
1-15: d
Adjusted assets of C Borja
Cash
P 2,500
Accounts Receivable (P10,000-P500)
9,500
Merchandise inventory (P15,000-P3,000) 12,000
Fixtures
__20,000
Asset contributed by D. Arce:
Cash
P 20,000
Merchandise
__10,000
__30,000
P 74,000
P 44,000
4
Chapter 1
1-16: a
Cash to be invested by Mendez:
Adjusted capital of Lopez (2/3)
Unadjusted capital
Adjustments:
Prepaid expenses
Accrued expenses
Allowance for bad debts (5% X P100,000)
P158,400
17,500
( 5,000)
_( 5,000)
Adjusted capital
P165,900
P248,850
Mendez's capital
Less Merchandise contributed
P 82,950
__50,000
P 32,950
Total Capital:
Adjusted capital of Lopez
Contributed capital of Mendez
P165,900
__82,950
Total capital
P248,850
1-17: d
Moran, capital (40%)
Cash
Furniture and Fixtures
Divide by Moran's P & L share percentage
P 15,000
_100,000
P115,000
______40%
P287,500
______60%
P172,500
P 45,000
15,000
__65,000
P125,000
__30,000
P 95,000
P 77,500
1-18: c
Garcia's adjusted capital (see schedule 1)
Divide by Garcia's P & L share percentage
P40,500
______40%
P101,250
______60%
P 60,750
__43,500
P 17,250
Schedule 1:
Garcia, capital:
Unadjusted balance
Adjustments:
Accumulated depreciation
Allowance for doubtful account
P 49,500
( 4,500)
( 4,500)
Adjusted balance
P 40,500
Schedule 2:
Flores capital:
Unadjusted balance
Adjustments:
Accumulated depreciation
Allowance for doubtful accounts
P 57,000
( 1,500)
( 12,000)
Adjusted balance
P 43,500
1-19: d
Ortiz
Ponce
Total
( 60%)
( 40%)
P133,000
P108,000
P241,000
( 2,700)
3,000
_( 2,400)
P130,900
( 1,800)
2,000
( 1,600)
P106,000
( 4,500)
5,000
( 4,000)
P237,500
Total capital before the formation of the new partnership (see above) P237,500
Divide by the total percentage share of Ortiz and Ponce (50% + 30%) ______80%
Total capital of the partnership before the admission of Roxas
Multiply by Roxas' interest
P296,875
______20%
P 59,375
1-20: d
Merchandise to be invested by Gomez:
Total partnership capital (P180,000/60%)
P300,000
P120,000
__30,000
P 90,000
P180,000
__48,000
P132,000
_180,000
P 48,000
6
Chapter 1
1-21: b
Unadjusted Ell, capital (P75,000 P5,000)
Allowance for doubtful accounts
Accounts payable
P 70,000
( 1,000)
( 4,000)
P 65,000
P340,920
_113,640
P227,280
P211,200
1-22: c
1,920
( 16,000)
( 5,200)
___3,200
1-23: a
Total assets at fair value
Liabilities
Capital balance of Flor
P4,625,000
(1,125,000)
P3,500,000
P5,000,000
30%
1,500,000
812,000
P 688,000
1-24: c
1-25: c
__Rey
Contributed capital (assets-liabilities)P471,000
Agreed capital (profit and loss ratio) 382,800
Capital transfer (Bonus)
P 88,200
__Sam_ __Tim
__Total_
P291,000 P195,000 P957,000
382,800 191,400 957,000
P(91,800) P 3,600
-
1-26: d
Total agreed capital (P90,000 40%)
Contributed capital of Candy (P126,000+P36,000-P12,000)
Total agreed capital (P90,000 40%)
Candy, agreed capital interest
Agreed capital of Candy
Contributed capital of Candy
Withdrawal
P225,000
150,000
225,000
60%
135,000
150,000
P 15,000
P300,000
30%
P 90,000
42,000
P 48,000
P138,000
210,000
P 72,000
1-28: a
1-29: c
Contributed capital
Agreed capital
Capital invested
__Alex_
P100,000
92,000
P( 8,000)
_Carlos_
P84,000
92,000
P 8,000
__Total__
P184,000
184,000
-
8
Chapter 1
SOLUTIONS TO PROBLEMS
Problem 1 1
1.
600
200
35
Computation:
P1,000 x 6% x 3/12 =
P2,000 x 6% x 2/12 =
600
200
P15
_20
Total................................P35
4. Pedro Castro, Capital............................................................
Accrued Interest Payable..................................................
(P4,000 x 5% x 6/12 = P100)
100
800
6. Office Supplies.....................................................................
Pedro Castro, Capital........................................................
400
100
800
400
15,067.50
P30,135
Jose Bunag, Capital : 1/2 x P30,135 = P15,067.50
Partnership Basic Considerations and Formation
b.
4,000
10,000
100
1,200
1,400
30,135
6,000
3,000
24,000
7,400
400
6,000
6,000
3,000
24,000
35
7,400
400
6,000
4,000
10,000
100
1,200
1,400
30,135
15,067.50
10
Chapter 1
2.
Cash ..........................................................................................................
Notes receivable.........................................................................................
Accounts receivable................................................................................... P 24,000
Less Allowance for bad debts..................................................................... ___1,200
Accrued interest receivable........................................................................
Merchandise inventory...............................................................................
Office supplies ..........................................................................................
Furniture and fixtures.................................................................................
6,000
Less Accumulated depreciation.................................................................. ___1,400
Total Assets........................................................................................
P21,067.50
3,000.00
22,800.00
35.00
7,400.00
400.00
__4,600.00
P59,302.50
P 4,000.00
10,000.00
100.00
30,135.00
_15,067.50
P59,302.50
Problem 1 2
Contributed Capitals:
Jose:
P 135,000
28,000
___68,500
P 231,500
Goodwill Method. To have a goodwill, the only possible base is the capital of Pablo. The
computation is:
Contributed
Capital
Jose
Pedro
Pablo
Total
Agreed
Capital
P135,000
28,000
__68,500
P231,500
Goodwill
P137,000 (50%)
68,500 (25%)
__68,500 (25%)
274,000
2,000
40,500
_____
42,500
Bonus Method
Goodwill Method
P 49,000
48,000
57,500
85,000
45,000
______
P284,500
P 49,000
48,000
57,500
85,000
45,000
__42,500
P327,000
P 53,000
115,750
57,875
__57,875
P284,500
P 53,000
137,000
68,500
__68,500
P327,000
Problem 1 3
1.
3,200
3,200
500
500
12
Chapter 1
4,800
1,500
3,600
31,500
400
16,000
20,000
5,000
400
16,000
20,000
5,000
4,800
1,500
3,600
31,500
47,250
47,250
P31,500
___40%
P78,750
___60%
P47,250
3,200
(b) Goodwill...............................................................................
Sales, Capital....................................................................
32,000
3,200
32,000
2.
Closing Entry
Allowance for Bad Debts............................................................
Accumulated Depreciation Delivery Equipment......................
Accumulated Depreciation Fixtures.........................................
Accounts Payable........................................................................
Notes Payable..............................................................................
Accrued Taxes.............................................................................
Sales, Capital...............................................................................
Cash......................................................................................
Accounts Inventory...............................................................
Merchandise Inventory.........................................................
Prepaid Insurance..................................................................
Delivery Equipment..............................................................
Fixtures.................................................................................
Goodwill...............................................................................
12,800
8,000
91,200
64,000
40,000
8,000
224,000
4,800
72,000
192,000
3,200
48,000
96,000
32,000
2.
Adjusting Entries
(a) Roces, Capital.............................................................................
Allowance for Bad Debts......................................................
1,600
16,000
8,000
(d) Goodwill.....................................................................................
Roces, Capital.......................................................................
40,000
1,600
16,000
8,000
40,000
4,800
72,000
192,000
3,200
48,000
96,000
32,000
12,800
8,000
91,200
64,000
40,000
8,000
224,000
14
Chapter 1
b.
1,600
12,800
64,000
104,000
6,400
224,000
14,400
57,600
132,800
4,800
19,200
144,000
40,000
Adjusting Entries
See Requirement (a).
2.
14,400
57,600
132,800
4,800
19,200
144,000
40,000
1,600
12,800
64,000
104,000
Accrued Taxes.............................................................................
Roces, Capital.............................................................................
6,400
224,000
c.
19,200
129,600
324,800
8,000
46,400
84,800
72,000
14,400
168,000
40,000
14,000
224,000
224,000
16
Chapter 1
Problem 1 5
1.
2.
5,000
13,000
12,000
3,000
9,000
3.
1,000
6,000
10,000
300
24,700
8,000
210
7,790
5,000
13,000
12,000
3,000
9,000
1,000
6,000
10,000
300
24,700
10,300
10,300
J. Lagman, Capital.............................................................................
Cash. ...........................................................................................
Accounts Payable to J. Lagman...................................................
(P63,000 + P7,790 = P70,790 P35,000 = P35,790)
35,790
23,300
12,490
4.
P
P34,000
1,210
32,790
21,000
8,000
46,000
___8,000
P115,790
P 18,000
15,000
300
12,490
35,000
__35,000
P115,790
Problem 1 6
1.
Books of Toledo
Toledo, Capital............................................................................
Allowance for Bad Debts (15% x P32,000)..........................
4,800
4,800
Books of Ureta
Ureta, Capital..............................................................................
Allowance for Bad Debts (10% x P24,000)..........................
2,400
10,800
1,200
2,400
12,000
300
900
1,200
18
Chapter 1
2.
3.
3,200
32,000
40,000
10,000
Cash. ...........................................................................................
Accounts Receivable...................................................................
Merchandise................................................................................
Toledo, Capital............................................................................
Allowable for Bad Debts......................................................
Accounts Payable..................................................................
Ureta, Capital........................................................................
To record the investment of Ureta.
22,800
24,000
36,000
300
Cash...................................................................................................
Ureta, Capital..............................................................................
To record Ureta's cash contribution.
3,400
Computation:
Toledo, capital (P68,400 P300)................................................
Divide by Toledo's profit share percentage..................................
Total agreed capital of the partnership.........................................
Multiply by Ureta's profit share percentage.................................
Agreed capital of Ureta...............................................................
Ureta, capital...............................................................................
Cash contribution of Ureta..........................................................
or
Toledo, capital (P68,400 P300)................................................
Less Ureta, capital.......................................................................
Cash contribution of Ureta..........................................................
4,800
10,000
2,000
68,400
2,400
16,000
64,700
3,400
P 68,100
____50%
P136,200
____50%
P 68,100
__64,700
P 3,400
P 68,100
__64,700
P 3,400
4.
P 29,400
P56,000
__7,200
48,800
76,000
__10,000
P164,200
P 26,000
2,000
68,100
__68,100
P164,200