In January 1, 2019 Jay and Dee, owners of a single proprietorship business decide to consolidate their businesses into a partnership to which they agreed to contribute 40% and 60%, respectively for the total partnership capitalization. Their respective businesses ledger accounts at their normal balances are:

Jay Dee

Cash P28,500 P10,000

Accounts receivable 450,000 200,000

Allowance for doubtful accounts 12,500 5,000

Equipment 320,000

Accumulated depreciation 36,000

Notes payable 550,000

Capital balances ? ?

Additional agreements of Jay and Dee:

• Their respective receivables are to be valued at 90%
• The equipment of Jay is agreed as overstated by P18,000 and the accumulated depreciation is agreed to be adjusted.
• P2,000 accrued interest on notes payable is agreed to be recognized.
• The total agreed partnership capitalization is to be based on the adjusted capital balance of Jay
• Dee is to invest additional cash to meet his agreed capital contribution

In the first year of operation, partnership net income amounted to P 150, 000. Salaries amounting to P50, 000 will be allocated for Jay being the managing partner. Interest on the beginning capital will be 10% and a bonus of 10% before interest, salaries and bonus will be given to Jay. Residual profits or losses are divided base on the ratio of beginning capital contribution.

In January 2, 2020 Lou admitted in the partnership by investing P 200, 000 cash for 20% interest in the partnership. Bonus method will be applied.

In October 31, 2020 the partners decided to liquidate the partnership. Net income as of the date of liquidation amounted to P 180, 000. Effective January 2020 after the admission of partner Lou partners will divide profits and losses using the following provisions:

1. Salaries of P 50,000 and P20, 000 for partners Jay and Lou respectively.

2. Interest of 10% on the beginning capital balances.

3. Bonus of 10% after salaries and interest but before bonus to partner Jay.

4. New P/L ratio is 5:3:2 for Jay, Dee and Lou respectively.

Assuming that the balance of Cash account is P 350, 000 and the rest are noncash assets. Total Liabilities amounted to P 550, 000. All non-cash assets were sold for P 800, 000.

Required: Compute for the following: Please provide solution.

1. The unadjusted capital balance of Jay
2. The unadjusted capital balance of Dee
3. The total agreed capital of the partnership
4. The total cash balance after formation
5. The adjusted capital of Jay after the agreed adjustments
6. The adjusted capital balance of Dee after the agreed adjustments
7. The total partnership assets right after formation
8. The total partnership liabilities right after formation
9. Bonus allocated to Jay
10. Total share of Jay in the 2019 net income
11. Total share of Dee in the 2019 net income
12. Capital balance of Jay after distribution of 2019 net income
13. Capital balance of Dee after distribution of 2019 net income
14. The amount of bonus during the admission of partner Lou
15. Capital balance of partner Jay after admission
16. Capital balance of partner Dee after admission
17. Capital balance of partner Lou after admission
18. Total partnership assets after admission of partner Lou
19. Total share of partner Jay in Oct. 31 net income
20. Total share of partner Dee in Oct. 31 net income
21. Total share of partner Lou in October net income
22. Total gain/loss on realization of assets
23. Total cash received by partner Jay during liquidation
24. Total cash received by partner Dee during liquidation
25. Total cash received by partner Lou during liquidation