The partnership of RRD and OBAMA began business on January 1, 2016. The following assets were contributed by each partner (the noncash assets are stated at their fair values on January 1, 2016): RRD OBAMA Cash P30,000 P 20,000 Inventories 50,000 - Land - 200,000 Equipment 100,000 - The land was subject to a P65,000 mortgage, which the partnership assumed on January 1, 2016. The equipment was subject to an instalment note payable that had an unpaid principal amount of P35,000 on January 1, 2016. The partnership also assumed this note payable. According to the partnership agreement, each partner was to have a 50 percent capital interest on January 1, 2016 with total partnership capital being P300,000. RRD and OBAMA agreed to share partnership income and losses in the following manner: RRD OBAMA Interest on beginning capital balances 4% 4% Salaries P15,000 P10,000 Remainder 60% 40%   During 2016, the following events occurred:

The partnership of RRD and OBAMA began business on January 1, 2016. The following assets were
contributed by each partner (the noncash assets are stated at their fair values on January 1, 2016):

RRD OBAMA
Cash P30,000 P 20,000
Inventories 50,000 -
Land - 200,000
Equipment 100,000 -
The land was subject to a P65,000 mortgage, which the partnership assumed on January 1, 2016. The
equipment was subject to an instalment note payable that had an unpaid principal amount of P35,000 on
January 1, 2016. The partnership also assumed this note payable. According to the partnership agreement,
each partner was to have a 50 percent capital interest on January 1, 2016 with total partnership capital being
P300,000. RRD and OBAMA agreed to share partnership income and losses in the following manner:

RRD OBAMA
Interest on beginning capital balances 4% 4%
Salaries P15,000 P10,000
Remainder 60% 40%

During 2016, the following events occurred:
 Inventory was acquired at a cost of P30,000. At December 31, 2016, the partnership owed P6,000 to its
supplier.
 Principal of P10,000 was paid on the mortgage. Interest expense incurred on the mortgage was P4,000,
all of which was paid by December 31, 2016.
 Principal of P7,500 was paid on the instalment note. Interest expense incurred on the instalment note
was P2,500, all of which was paid by December 31, 2016.
 Sales on account amounted to P115,000. At December 31, 2016, customers owed the partnership
P10,000.
 The partnership inventory at December 31, 2016 was P20,000.
 Selling and general expenses excluding depreciation amounted to P21,000. At December 31, 2016 the
partnership owed P3,000 of accrued expenses. Depreciation expense was P5,000.
 Each partner withdrew P225 per week in anticipation of partnership profits.
 The partners allocated the net income for 2016 and closed the accounts.

The capital credited to RRD on Jan. 1, 2016 at the formation of the partnership must be
a. P150,000
b. P145,000

c. P155,000
d. P115,000

How much is the net income of the partnership?
a. P29,000
b. P22,500

c. P55,000
d. P12,500