Direction: Write TRUE if the statement is true and FALSE if the statement is false. _1. A written partnership contract is required to be prepared whenever a partnership is formed. _2. All partnerships are subject to income tax. _3. A partner's contribution in the form of industry or service is recorded by debiting the account "Industry". _4. In the partnership books, there are as many capital and drawing accounts as there are partners. _5.A partners contribution in the form of noncash assets should be recorded at its fair market value in the absence of an agreed value. 6A partnershin is much egsier and less expensive to orggnize than corporation

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problems 1
Sole Proprietors Alvis and Ancheta established a partnership on December 31, 2014 sharing
profits and losses in the ratio 60% and 40%. They agreed that each would make the following
contributions:
Alvis
50,000
375,000
1,200,000
Ancheta
Cash
P
750,000
Land
Building
Furniture and Fixture
675,000
Accounts Payable of Alvis totaling P 250,000 is to be assumed by the partnership.
Requirements: Prepare the entries on December 31, 2014 to record the investments in the
partnership by Alvis and Ancheta under each of the following independent assumptions:
1. Each partner is credited for the full amount of the net assets invested.
2. Each partner initially should have an equal interest in the partnership capital.
3. Each partner receive capital credit proportionate to his profit and loss ratio.
Problem 2
Aguilar and Angeles formed a partnership wherein Aguilar is to contribute cash while
Angeles is to transfer the assets and liabilities (net asssets) of his business. Account balances
on the books of Angeles are as follows:
Debit
Credit
Cash
P300,000.00
Accounts Receivable
Inventories
450,000.00
240,000.00
Accounts Payable
Angeles, Capital
P 90,000.00
900,000.00
The partners agreed on the following:
1. An allowance for uncollectible accounts is to be established.
2. The inventories are to be valued at their current replacement cost of P270,000.00
3. Prepaid expenses of P12,000.00 and accrued expenses of P 5,000.00 are to be
recognized
4. Angeles is to be credited for an amount equal to the
5. Aguilar is to contribute sufficient cash to have an equal interest in the partnership.
assets transferred
1 Peter 4:8
And above all things have fervent love for one another,
For "Love will cover a multitude of sins."
Requirements:
1. Prepare entries to adjust and close the balances of accounts in the books of Angeles.
2. Prepare the entries to record the investments of Aguilar and Angeles.
Transcribed Image Text:Problems 1 Sole Proprietors Alvis and Ancheta established a partnership on December 31, 2014 sharing profits and losses in the ratio 60% and 40%. They agreed that each would make the following contributions: Alvis 50,000 375,000 1,200,000 Ancheta Cash P 750,000 Land Building Furniture and Fixture 675,000 Accounts Payable of Alvis totaling P 250,000 is to be assumed by the partnership. Requirements: Prepare the entries on December 31, 2014 to record the investments in the partnership by Alvis and Ancheta under each of the following independent assumptions: 1. Each partner is credited for the full amount of the net assets invested. 2. Each partner initially should have an equal interest in the partnership capital. 3. Each partner receive capital credit proportionate to his profit and loss ratio. Problem 2 Aguilar and Angeles formed a partnership wherein Aguilar is to contribute cash while Angeles is to transfer the assets and liabilities (net asssets) of his business. Account balances on the books of Angeles are as follows: Debit Credit Cash P300,000.00 Accounts Receivable Inventories 450,000.00 240,000.00 Accounts Payable Angeles, Capital P 90,000.00 900,000.00 The partners agreed on the following: 1. An allowance for uncollectible accounts is to be established. 2. The inventories are to be valued at their current replacement cost of P270,000.00 3. Prepaid expenses of P12,000.00 and accrued expenses of P 5,000.00 are to be recognized 4. Angeles is to be credited for an amount equal to the 5. Aguilar is to contribute sufficient cash to have an equal interest in the partnership. assets transferred 1 Peter 4:8 And above all things have fervent love for one another, For "Love will cover a multitude of sins." Requirements: 1. Prepare entries to adjust and close the balances of accounts in the books of Angeles. 2. Prepare the entries to record the investments of Aguilar and Angeles.
Direction: Write TRUE if the statement is true and FALSE if the statement is false.
_1. A written partnership contract is required to be prepared whenever a partnership
is formed.
_2. All partnerships are subject to income tax.
3. A partner's contribution in the form of industry or service is recorded by debiting
the account "Industry".
_4. In the partnership books, there are as many capital and drawing accounts as
there are partners.
_5.A partners contribution in the form of noncash assets should be recorded at its fair
market value in the absence of an agreed value.
_6.A partnership is much easier and less expensive to organize than corporation.
7. A newly organized partnership should always open a new set of books .
_8. All partnerships have at least one general partner.
9. Each partner generally has the authority to enter into contracts which are binding
upon the partnership
10. The property invested in a partnership by a partner becomes the property of the
partnership.
IDENTİFICATION
II.
Direction: Write the word or group of words that identify each of the following statements.
_1. A partnership wherein all the partners have limited liability except
for at least one general partner.
_2. The contribution of an industrial partner.
_3. A partner who contributes money, property and industry.
_4. An entry prepared when a partner contributes skill or industry into
the partnership.
_5. A contract whereby two or more persons bind themselves to
contribute money, property, or industry to a common fund with the intention of dividing the profits
among themselves.
_6. The government body which is in charge with administration of
various laws affecting partnerships and corporations in the Philippines.
_7. The word added to the name of the partnership to inform the
public that it is a limited partnership.
_8. A partner whose liability is limited to the extent of his/her personal
contribution into the partnership.
_9. A written partnership contract which governs the formation,
operation and dissolution of the partnership.
10. A characteristic of a partnership wherein any partner can act in
behalf of the partnership as long as these acts are within the scope of normal partnership
activities.
Transcribed Image Text:Direction: Write TRUE if the statement is true and FALSE if the statement is false. _1. A written partnership contract is required to be prepared whenever a partnership is formed. _2. All partnerships are subject to income tax. 3. A partner's contribution in the form of industry or service is recorded by debiting the account "Industry". _4. In the partnership books, there are as many capital and drawing accounts as there are partners. _5.A partners contribution in the form of noncash assets should be recorded at its fair market value in the absence of an agreed value. _6.A partnership is much easier and less expensive to organize than corporation. 7. A newly organized partnership should always open a new set of books . _8. All partnerships have at least one general partner. 9. Each partner generally has the authority to enter into contracts which are binding upon the partnership 10. The property invested in a partnership by a partner becomes the property of the partnership. IDENTİFICATION II. Direction: Write the word or group of words that identify each of the following statements. _1. A partnership wherein all the partners have limited liability except for at least one general partner. _2. The contribution of an industrial partner. _3. A partner who contributes money, property and industry. _4. An entry prepared when a partner contributes skill or industry into the partnership. _5. A contract whereby two or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing the profits among themselves. _6. The government body which is in charge with administration of various laws affecting partnerships and corporations in the Philippines. _7. The word added to the name of the partnership to inform the public that it is a limited partnership. _8. A partner whose liability is limited to the extent of his/her personal contribution into the partnership. _9. A written partnership contract which governs the formation, operation and dissolution of the partnership. 10. A characteristic of a partnership wherein any partner can act in behalf of the partnership as long as these acts are within the scope of normal partnership activities.
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