Mary the Queen College of Pampanga, Inc.

Partnership Formation
 Ease of
formation

Contractual
Limited life
agreement

Mutual agency

Ind. + Ind.

Assignment of
Ind./Sole Prop +
2 or more persons Partners
Sole Proprietor
Interest

Old Partnership
+ new
partnership

Current exchange
Definition
rate
Cash
Est. recoverable
amount

Contribute money, Agreed Value

property or
Non-cash/
industry
Properties Less: Liabilities
Fair Market
assumed by the
Value
partnership

Memorandum
Industry
entry
Partnership

Sharing of
Divide profit profits and
losses Bonus

Proprietary
Capital Account
Theory
Underlying Goodwill
Theories
Separate legal
Entity Theory Drawing
personality
Loan to Partner/
Interest Income
s (Receivable)
Unlimited
General Loans
liability Loan by the
Types Partnership Interest Expense
(Payable)
Limited
 Capital Accounts
Permanentcapital Initial/additional
withdrawalor investment
excessive/irregular Shareinnet
withdrawal income
Shareinnetloss
 Drawing Accounts
Personal
withdrawalsin
anticipationof
profits
Periodic
withdrawals
Set-up of Books
Individual+Individual(firsttime)
Investments
Newsetofbooksforthepartnership

Individual/SoleProprietor+SoleProprietorship
AdjustingandclosingentriesinthebookoftheSoleProprietor/s
Investments
Caneitherbenewsetofbooksorretainthebookofeithertheindividual/soleproprietor

OldPartnership+NewPartnership
Adjustingandclosingentriesinthebookofbothpartnerships
Investments
Caneitherbenewsetofbooksorretainthebookofeitherpartner
Problem 1.1
Problem 1.2
Problem 1.3
Problem 2
Problem 3.a
Problem 3.2
Problem 4.1