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Partnership Dissolution Questions

The document contains 5 exercises involving the admission, withdrawal, and calculation of partner and partnership capital amounts for various partnership transactions. Exercise 1 provides 4 independent transactions admitting a new partner, Kaila, through cash investments. Exercise 2 involves admitting a new partner, Patricia, through cash, equipment, and land investments which requires calculating adjusted capital balances and profit/loss ratios. Exercise 3 covers withdrawing an existing partner, Pam, under 4 scenarios involving cash payments and asset distributions. Exercises 4 and 5 involve computational problems for admitting new partners and calculating resulting capital balances.

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309 views

Partnership Dissolution Questions

The document contains 5 exercises involving the admission, withdrawal, and calculation of partner and partnership capital amounts for various partnership transactions. Exercise 1 provides 4 independent transactions admitting a new partner, Kaila, through cash investments. Exercise 2 involves admitting a new partner, Patricia, through cash, equipment, and land investments which requires calculating adjusted capital balances and profit/loss ratios. Exercise 3 covers withdrawing an existing partner, Pam, under 4 scenarios involving cash payments and asset distributions. Exercises 4 and 5 involve computational problems for admitting new partners and calculating resulting capital balances.

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Arkkk
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 3

Use google sheet .

Use one tab per Exercise

Exercise 3 – 1. Admission of a Partner by Investment: Bonus Method


A. The partnership of Hanna, Isabel and Jay has been in RTW business for seven years. On
January 2, 2019, they decided to admit Kaila into the partnership. The adjusted capital
balances of each partner at December 31, 2018 were as follows: Hanna, P250,000; Isabel,
P300,000 and Jay, P150,000. The partners allocate partnership profits and losses in the ratio
of 2:3:5 respectively.
Given the preceding data, journalize the following independent
transactions:
1. Kaila invests P200,000 cash for a fifteen percent interest in the new
firm’s capital of P900,000.
2. Kaila invests P150,000 cash in the business and is credited with 20%
interest in the new firm’s capital of P850,000.
3. Kaila invests P200,000 cash in the business for an 18% interest in the
partnership.
4. Kaila invests P 300,000 cash in the business for a 35% interest in the
partnership.

Exercise 3 –2. Admission of a New Partner by Investment: Revaluation of Assets


and Calculation of Required Contribution

Nadia and Oscar are partners with capital balances of P250,000 and P100,000,
respectively. The profits and losses are shared by Nadia and Oscar in the ratio of 60:40,
respectively. The partners agreed to admit Patricia as a partner in exchange for her
contribution of cash, equipment and land with fair values of P20,000, P30,000 and
P100,000 respectively. In exchange for her investment, Patricia will receive a 30% share
in profits and losses.

Nadia and Oscar agreed to revalue partnership assets before the admission of
Patricia. An analysis of existing assets held by the original partnership indicates the
following carrying and fair values:

Carrying Value Fair Value


Accounts Receivable P 70,000 P 50,000
Inventory 120,000 140,000
Machinery &Equipment 260,000 220,000

The liabilities of the firm before Patricia’s admission amount to P100,000.

Required : Compute for the following:


1. Adjusted capital of Nadia and Oscar.
2. Amount invested and capital credit of Patricia.
3. Amount of Bonus. To whom is the bonus given?
4. Final capital balances of partners after Patricia’s admission.
5. New profit and loss ratio.

Exercise 3-3. Withdrawal of a Partner

Olga, Quinee and Pam are partners in a business that buys and sells second hand
cars. On December 31, 2019, Pam decided to withdraw from the partnership.
The partnership ledgers reflected the following capital balances for each partner at
December 31, 2019: Olga, P300,000; Quinee, P400,000 and Pam, P240,000. The
partners allocate partnership income and loss in the ratio 20:30:50, respectively.

Based on the foregoing data, journalize the withdrawal of Pam under each of the
following independent cases:

a. Pam, with the permission of the other partners, sells one-fourth of her interest to Remy
for P50,000 cash and sells the other three-fourths to Rosie for P200,000 cash.
b. Pam sold her equity in the partnership to Olga, 40% and 60% to Quinee for a total
payment of P300,000.
c. Pam received P200,000 of the firm’s cash and a P80,000, 10% promissory note upon
her withdrawal from the partnership.
d. Pam was given P200,000 of the partnership assets upon her withdrawal. Assets given
consist of Land, P150,000 and Inventories, P50,000.

3-4 PROBLEM SOLVING

Solve the following problems. Show your computations in good accounting form and
double rule your final answer.

a. Anton and Bernie are partners with capital balances of P270,000 and P180,000,
respectively. They share profits and losses in the ratio of 30:70. Carla is admitted
in the partnership by purchasing 20% interest of Bernie for P50,000. What is the
capital balance of Bernie after the admission of Carla?

b. Pinky, Ernie and Dominique opened an accounting firm on January 2, 2016 in


Makati City. The business was registered as a partnership for which Pinky serves
as the managing partner.

After its third year of operations, the partners decided to admit Krislyn as a new
partner. The capital balances of the partners before the admission of Krislyn were:
Pinky, P210,000; Ernie, P180,000 and Dominique, P110,000, while profits and
losses were shared by them in the ratio of 50:30:20, respectively.
How much should Krislyn invest in order to have a 20% interest in the
partnership?

c. The following accounts are presented for the partnership of Gabriel, Gwen and Grace,
who share profits and losses in the ratio of 4:3:3 respectively: Cash, P90,000; Other
Assets, P830,000; Receivable from Gabriel, P20,000; Accounts Payable, P210,000;
Gwen, Loan, P30,000; Gabriel, Capital P310,000; Gwen, Capital P200,000 and
Grace Capital, P190,000.
Assume that the assets and liabilities are fairly valued and that the partners decided
to admit Geline as a new partner with 1/4 interest. No bonus is to be recorded. How
much should Geline contribute in cash or other assets?

d. Daniel, Edwin and Farida are partners in a real estate business. The capital balances
of the partners are: Daniel, P550,000; Edwin, P500,000 and Farida P450,000. The
partners share profits and losses equally. Girlie was admitted in the partnership by
buying 20% interest of Daniel for P100,000; 25% interest of Edwin for P150,000 and
10% interest of Farida for P45,000. What is the capital credit of Girlie upon her
admission?

e. Hilda and Imee are partners who share profits and losses in the ratio of 3:2, respectively.
On June 30, 2019, the capital balances of Hilda, and Imee are P122,500 and P105,000
respectively. On the same date, they agree to admit Jesse as partner with a 1/4 interest
in the capital and profits and losses, for an investment of P20,000 cash and a piece of
land having a current value of P67,500. The new partnership will start with a total capital
of P315,000.
Under the bonus method, what is the capital balance of Hilda after the admission
of Jesse?

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