Question
On May 1, 2020, the business assets and liabilities of LONZO and BRANDON were as follows: LONZO BRANDON Cash P 28,000 P 62,000 Receivables 200,000
On May 1, 2020, the business assets and liabilities of LONZO and BRANDON were as
follows:
LONZO BRANDON
Cash P 28,000 P 62,000
Receivables 200,000 600,000
Inventories 120,000 200,000
Land, buildings, and equipment 650,000 535,000
Other assets 2,000 3,000
Accounts payable (180,000) (250,000)
Notes payable (200,000) (350,000)
LONZO and BRANDON agreed to form a partnership by contributing their net assets,
subject to the following adjustments:
Receivables of P 20,000 in LONZO's books and P 40,000 in BRANDON's books
are uncollectible
Inventories of P 6,000 and P 7,000 in the respective books of LONZO and
BRANDON are worthless.
Other assets in both books are to be written off.
15
REQUIREMENT:
1. Upon the partnership's formation, the respective capital of partners LONZO and
BRANDON would be?
2. Under the Bonus Method, if the partner agreed to have a capital ratio of 40:60 for
LONZO and BRANDON respectively, how much is the amount of bonus to or (from)
LONZO?
3. Under the Bonus Method, if the partner agreed to have a capital ratio of 40:60 for
LONZO and BRANDON respectively, how much is the adjusted capital of BRANDON?
4. Under the Bonus Method, if the partner agreed to have a capital ratio of 60:40 for
LONZO and BRANDON respectively and they further agreed to have a total capital of
P 1,500,000, how much is the amount of bonus to or (from) LONZO?
5. Under the Bonus Method, if the partner agreed to have a capital ratio of 60:40 for
LONZO and BRANDON respectively, and they further agreed to have a total capital
of P 1,500,000, how much is the adjusted capital of LONZO?
6. If the partners agreed that LONZO should withdraw or invest in order to have a capital
ratio of 40%, how much should be the amount of additional investment or withdrawal?
7. If the partners agreed that LONZO should withdraw or invest in order to have a capital
ratio of 40%, how much is the adjusted capital of LONZO and BRANDON?
8. If the partner agreed to revalue assets to maintain 40:60 capital ratio for LONZO and
BRANDON respectively, how much is the adjusted capital of LONZO?
9. If the partner agreed to revalue assets to maintain 40:60 capital ratio for LONZO and
BRANDON respectively, how much is the adjusted capital of BRANDON?
10.If the partner agreed to effect revaluation down of assets to maintain 40:60 capital
ratio for LONZO and BRANDON respectively, how much is the adjusted capital of
LONZO?
11.If the partner agreed to effect revaluation down of assets to maintain 40:60 capital
ratio for LONZO and BRANDON respectively, how much is the adjusted capital of
BRANDON
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