Inventories should be recognized only at 80% of their book values. . Prepaid expenses of P6,000 for Gem and P2,000 for Rhizza is to be recognized. Furniture and fixtures of Gem is under-depreciated by P5,000, while the equipment of Rhizza is under-depreciated by P1,500. The first five months of operation was successful and each partner withdrew P20,000 on December 1, 2013 in anticipation for profit. True enough, the operation resulted to a profit of P65,000. 10. The net adjustment to the capital of Gem, considering a tax rate of 30% is 11. The entry to record the settlement between Gem and Rhizza will be debit credit 12. The capital balance of Rhizza on December 31, 2013 is Problem 6 Racina and Coline share profits and losses equally. Racina and Coline receive salary allowances of P20,000 and P30,000, respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month balance regardless of when additional capital contributions or permanent withdrawals are made subsequently within the month. Partners' drawings are not used in determining the average capital balances. Total net income for 2013 is P120,000. Racina Coline Capital, January 1, 2013 P100,000 P120,000 Yearly drawings, P1.500 monthly 18,000 18,000 Permanent capital withdrawals: June 5, 2013 12,000 May 8, 2013 15,000 Additional Investments: October 1, 2013 50,000 July 7, 2013 40,000 13. What is the weighted-average capital for Coline in 2013? 14. If the average capital for Racina and Coline from the above information is P112,000 and P119,000, respectively, what will be the total amount of profit allocated after the salary and interest distributions are completed? 15. If the average capital balances for Racina and Coline are P100,000 and P120,000, what will the final profit allocations for Racina and Coline in 2013? Problem 7 Hyomin and Jiyeon share profits and losses in a ratio of 2:3, respectively. Hyomin and Jiyeon receive salary allowances of P10,000 and P20,000, also respectively, and both partners receive 10% interest based upon the balance in their capital accounts on January 1. Partners' drawings are not used in determining the average capital balances. Total net income for 2013 is P60,000. If net income after deducting the interest and salary allocations is greater than P20,000, Carnes receives a bonus of 5% of the original amount of net income. The beginning capital balances of the partners are P200,000 and P300,000 for