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Chapter 1 AST

The document outlines the assets and liabilities of two partners, Malachi and Haggai, detailing adjustments made to their financial figures. After adjustments, Malachi's net investment is calculated at P812,000 and Haggai's at P700,000, necessitating an additional cash investment of P274,400 from Haggai. The final totals for the partnership include total cash of P486,400, total assets of P2,206,400, and total capital of P1,786,400.

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434 views3 pages

Chapter 1 AST

The document outlines the assets and liabilities of two partners, Malachi and Haggai, detailing adjustments made to their financial figures. After adjustments, Malachi's net investment is calculated at P812,000 and Haggai's at P700,000, necessitating an additional cash investment of P274,400 from Haggai. The final totals for the partnership include total cash of P486,400, total assets of P2,206,400, and total capital of P1,786,400.

Uploaded by

elmeeralariena
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

PROBLE 1-8

Got it! Let's break down this problem step by step. Here's what I see from the image:

Assets and Liabilities of Malachi and Haggai:


Malachi:
- Cash: P136,000
- Accounts Receivable: P88,000
- Inventories: P304,000
- Machinery: P480,000 (over-depreciated by P20,000) = 500k
- Accounts Payable: P216,000
- Notes Payable: P140,000 (Malachi decided to pay this off from personal assets.)

Haggai:
- Cash: P76,000
- Accounts Receivable: P48,000
- Inventories: P364,000 (Overstated by P24,000) = 340k
- Machinery: P440,000
- Accounts Payable: P144,000
- Notes Payable: P60,000

Notes:
- Malachi's machinery is over-depreciated by P20,000.
- Haggai is to invest/withdraw cash to receive a capital credit that is 20% more than Malachi's total
net investment in the partnership.

Calculations and Adjustments:


1. Adjustments:
- Malachi:
- Machinery is over-depreciated, so we increase machinery by P20,000.
- Adjusted Machinery: P480,000 + P20,000 = P500,000
- Pay off notes payable from personal assets, so we exclude it from the partnership.
- Adjusted Notes Payable: P0

- Haggai:
- Inventories are overstated by P24,000, so we decrease inventories by P24,000.
- Adjusted Inventories: P364,000 - P24,000 = P340,000

2. Total Net Investment:


- Malachi:
- Total Assets = Cash + Accounts Receivable + Inventories + Machinery = P136,000 + P88,000 +
P304,000 + P500,000 = P1,028,000
- Total Liabilities = Accounts Payable = P216,000
- Net Investment = Total Assets - Total Liabilities = P1,028,000 - P216,000 = P812,000

- Haggai:
- Total Assets = Cash + Accounts Receivable + Inventories + Machinery = P76,000 + P48,000 +
P340,000 + P440,000 = P904,000
- Total Liabilities = Accounts Payable + Notes Payable = P144,000 + P60,000 = P204,000
- Net Investment = Total Assets - Total Liabilities = P904,000 - P204,000 = P700,000

3. Capital Credit Adjustment for Haggai:


Haggai should receive a capital credit that is 20% more than Malachi's total net investment:
- Malachi's Net Investment = P812,000
- Haggai's Capital Credit = P812,000 + 1.20 (20%) = P974,400

Since Haggai’s net investment is P700,000, he needs to invest additional cash:


- Additional Cash to be Invested = P974,400 - P700,000 = P274,400

4. Partnership Totals:
- Total Cash: Malachi's Cash + Haggai's Cash + Additional Cash Invested by Haggai = P136,000 +
P76,000 + P274,400 = P486,400
- Total Assets: Malachi's Total Assets + Haggai's Total Assets + Additional Cash Invested by Haggai =
P1,028,000 + P904,000 + P274,400 = P2,206,400
- Total Capital: Malachi's Net Investment + Haggai's Capital Credit = P812,000 + P974,400 =
P1,786,400

Summary:
1. Total Cash of the Partnership: P486,400
2. Total Assets of the Partnership: P2,206,400
3. Total Capital of the Partnership: P1,786,400

PROBLEM 1-9

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