Group Members:

Cailipan, Kay Ann

Dela Cruz, Mary Ann
Gregorio, Ericka
Oreta, Hanna Eunice
Ranoco, Liezel
Santiago, Ericka
Talastas, Mark Andrei

Problem Exercises
G. On August 1, 2018, Ralph admits Lauren for an interest in his business. On this date, Ralph’s
capital account shows a balance of P245, 000. The terms and agreement of the partner’s before
information follow:
 Ralph’s outstanding account receivable were P100, 000, with related allowance for
uncollectible accounts of P5, 000. An assessment of collectability of the receivables
indicates that 80% of the balance is collectible.
 The credit balance of P6, 000 in the Unearned Interest account in the books of Ralph
represents interest collected in advance for six months starting on June 1, 2018. Of this
amount, P2, 000 has already been earned as of August 1, 2018.
 A count of supplies revealed unused supplies approximating P8, 000, which were not
recognized in the books of Ralph, since the entire amount of supplies purchased during the
year was charged to supplies expense.
 Inventory valuation of Ralph should be increased by P15, 000.
 Equipment account of Ralph should be depreciated by an additional P10, 000.
 Lauren is to invest cash equal to one-third of the total partnership capital. The new capital
is based on the adjusted capital of Ralph, which means that Ralph’s adjusted capital
represents two-thirds of the total partnership capital.

Journal Entries
 Ralph, Capital 15, 000
Allowance for Uncollectible Accounts 15, 000

 Unearned Interest 2, 000

Ralph, Capital 2, 000

 Supplies 8, 000
Ralph, Capital 8, 000
  Inventory 15, 000
Ralph, Capital 15, 000

 Ralph, Capital 10, 000

Accumulated Depreciation- Equipment 10, 000

Ralph, Capital
Debit Credit
P15, 000 P2, 000
P10, 000 P8,000
P15,000
P25, 000 P25, 000

The Ledger Account above of Ralph Capital illustrates that there is no changes in capital.

P 4,000 10.) What is the adjusted book balance of unearned interest income in the books of
Ralph, prior to the formation of partnership?
P 80,000__11.) What is the amortized cost of accounts receivable invested by Ralph?
P 245,000_12.) What is Ralph’s adjusted capital balance?
P 367,500_13.)What is the total partners’ equity immediately after the formation of the
partnership?
P 122,000 _14.)How Much cash did Lauren invest in the partnership?