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CHAPTER 2
Partnership Dissolution
EXERCISES
Exercise 2 1
1.
2.

Sales, Capital
Rosales, Capital

140,000
140,000

P280,000 + P320,000 + P200,000 = P800,000

Exercise 2 2
1.

Total capital (P3,000,000 / 80%)


Capital interest of Fidel
Cash to be contributed by Fidel

2.

Cash
Fidel, Capital

P3,750,000
x 20%
P 750,000
750,000
750,000

Exercise 2 3

1.
Centeno, Capital
Corales, Capital

40,000

Other Assets
Cortes, Capital
Centeno, Capital
Claudio, Capital
P140,000/ = P560,000 (P200,000 + P 160,000 +
P120,000)

80,000

Cortes, Capital P200,000 + P50,000 x 1/4


Centeno, Capital P160,000 + P20,000 x 1/4
Claudio, Capital P120,000 + P10,000 x 1/4
Corales, Capital

62,500
45,000
32,500

40,000

2.
50,000
20,000
10,000

140,000

3.
Cash

230,000
Cortez, Capital
Centeno, Capital
Claudio, Capital
Corales, Capital
old (3/4)
new (1/4)

32,812
13,125
6,563
177,500
AC
P532,500
177500
P710,000

CC
P480,000
230,000
P710,000

Bonus_
P52,500
(52,500)
P---0---

AA 1 - Chapter 2 (2008 edition)

page 2

Exercise 2 4

1.
Conde, Capital
Cuenco, Capital
Catral, Capital

90,000
60,000
150,000

2.
Other Assets
Conde, Capital
Cuenco, Capital

360,000

Conde, Capital P270,000 + 270,000 x 1/3


Cuenco, Capital P180,000 + P90,000 x 1/3
Catral, Capital

180,000
90,000

Cash

270,000

270,000
90,000

270,000

3.
Conde, Capital
Cuenco, Capital
Catral, Capital
old (3/4)
new (1/4)

67,500
22,500
180,000
AC
P540,000
180,000
P720,000

CC
P450,000
270,000
P720,000

Bonus_
P90,000
(90,000)
P---0---

4.
Cash
Other Assets
Conde, Capital
Cuenco, Capital
Catral, Capital
old (3/4)
new (1/4)

270,000
360,000
270,000
90,000
270,000
AC
P 810,000
270,000
P1,080,000

CC
P450,000
270,000
P720,000

Asset Re
P360,000
P360,000

5.
Cash
Conde, Capital
Cuenco, Capital
Catral, Capital

270,000
67,500
22,500
360,000

Exercise 2-5
1a. Bonus Method
Cash
Alba, Capital
Medel, Capital
Almeda, Capital
old (3/4)
new (1/4)
1b.

180,000
6,000
9,000
195,000
AC
P585,000
195,000
P780,000

CC
P600,000
180,000
P780,000

Bonus_
P(15,000)
15,000
P---0---

Revaluation of Assets Method (AC = P180,000 1/4 = P720,000)

AA 1 - Chapter 2 (2008 edition)

page 3

Alba, Capital (P60,000 x 40%)


Medel, Capital (P60,000 x 60%)
Other Assets (P780,000 - P720,000)
To record revaluation of assets

24,000
36,000
60,000

Cash
Almeda, Capital
2.

180,000
180,000

Balances under the bonus method

Alba
P194,000

Medel
P391,000

Almeda
P195,000

Balances under the asset rev. method


Additional depreciation
Balances after depreciation

P200,000
(
6,666)
P193,334

P400,000
(
6,667)
P393,333

P200,000
(
6,667)
P193,333

Net advantage to Medel using the asset revaluation method

2,333

Exercise 2 - 6
1.

2.

Garces, Capital
Kalaw, Capital
P120,000 x 1/2 = P60,000

60,000

Cash
Other Assets (P400,000 P320,000)
Kalaw, Capital
Garces, Capital (P100,000 x 3/8)
Hilario, Capital (P100,000 x 3/8)
Juan, Capital (P100,000 x 2/8)
Total agreed capital
Total capital contribution
Asset revaluation

60,000
80,000

60,000

40,000
37,500
37,500
25,000
P400,000
320,000
P 80,000

Interest acquired from Garces


Cash invested in the partnership
Total
Capital credit of Kalaw
Bonus to old partners

P 60,000
60,000
P 120,000
100,000
P 20,000

Exercise 2 7
Bonus method
Capital before admission of Estacio
Contribution of Estacio
Bonus to old partners
Capital after admission of Estacio

Sabado
P1,000,000

Galman
P800,000

24,000
P1,024,000

16,000
P816,000

Sabado
P1,000,000

Galman
P800,000

120,000

80,000

Estacio
P500,000
( 40,000)
P460,000

Total
P1,800,000
500,000
P2,300,000

Asset Revaluation method


Capital before admission of Estacio
Contribution of Estacio
Adjustment of fixed assets to fair value

Estacio
P500,000

Total
P1,800,000
500,000
200,000

AA 1 - Chapter 2 (2008 edition)

page 4

Capital after admission of Estacio

P1,120,000

P880,000

P500,000

P2,500,000

Exercise 2 8
1. Bonus method
Capital balances before admission
of new partners
Contributions of new partners
Bonus to old partners
Capital balances after admission
of new partners

Noble

Calma

P64,000

P136,000

10,950

25,550

P74,950

P161,550

Reyes

Naval

P110,000
( 24,000)

P120,000
( 12,500)

P86,000

P107,500

Cash
Equipment
Noble, Capital
Calma, Capital
Reyes, Capital
Naval, Capital

Total
P200,000
230,000
P430,000

130,000
100,000
10,950
25,550
86,000
107,500

2. Asset Revaluation method


Capital balances before admission
of new partners
Adjustment of assets to FV
Contributions of new partners
Capital balances after admission
of new partners

Noble

Calma

P64,000
9,000

P136,000
21,000

P73,000

P157,000

Reyes

Naval

Total

P110,000

P120,000

P200,000
30,000
230,000

P110,000

P120,000

P460,000

Cash
Equipment
Inventory
Land
Building
Noble, Capital
Calma, Capital
Reyes, Capital
Naval, Capital
Exercise 2 - 9
1a.
Bonus Method
Songco, Capital
Bueno, Capital
Manzano, Capital
Cash/Payable to Songco
1b.
Asset Revaluation Method
Songco, Capital
Other Assets (P10,000 1/6)
Bueno, Capital (P50,000 x 3/5)
Manzano, Capital
(P50,000 x 2/5)
Cash/ Payable to Songco
2. The bonus method will be preferred by Manzano

130,000
84,000
14,000
80,000
48,000
9,000
21,000
110,000
120,000
200,000
60,000
40,000
300,000
200,000
600,000
300,000
200,000
300,000

AA 1 - Chapter 2 (2008 edition)

page 5

Capital of Manzano after retirement


Additional depreciation
Capital of Manzano after additional depreciation
Net advantage to Manzano with the use of the bonus
method

Bonus Method
P260,000
P260,000

Asset Rev
P500,000
300,000
P200,000

P60,000

Exercise 2 10

1.
Delfin, Capital
Damian, Capital
Dencio, Capital

400,000

Delfin, Capital
Cash
Damian, Capital
Dencio, Capital

400,000

Other Assets
Delfin, Capital
Cash
Damian, Capital
Dencio, Capital
P460,000 P400,000 = P60,000/ 1/3 = P180,000

180,000
400,000

200,000
200,000

2.
320,000
40,000
40,000

3.
460,000
60,000
60,000

Exercise 2 11

1.

Guzman, Capital January 1


Drawing
Share in net profit
Interest of Guzman upon retirement

P100,000
(16,000)
24,000
P108,000

Other Assets
Guzman, Capital
Cash
Jorge, Capital
Lopez, Capital
P120,000 P108,000 = P12,000/ 30% = P40,000

40,000
108,000

Guzman, Capital
Jorge, Capital
Lopez, Capital
Cash

108,000
5,143
6,857

120,000
12,000
16,000

2.

120,000

Exercise 2 12
1.

Building
Villa, Capital
Belen, Capital

200,000
60,000
40,000

AA 1 - Chapter 2 (2008 edition)

page 6

Marcos, Capital
Cordero, Capital

2.

80,000
20,000

Belen, Capital
Cash

140,000

Villa, Capital
Belen, Capital
Marcos, Capital
Cordero, Capital
Cash

15,000
100,000
20,000
5,000

140,000

140,000

Exercise 2 - 13
1.

2.
3.

4.

5.

6.

Galang, Capital
Henio, Capital
Israel, Capital
Cash

12,000
8,000
140,000

Israel, Capital
Galang, Capital

140,000

Israel, Capital
Cash
Galang, Capital
Henio, Capital

140,000

Other Assets
Israel, Capital
Cash
Galang, Capital
Henio, Capital

48,000
140,000

Israel, Capital
Galang, Capital
Henio, Capital
Cash
Other Assets
Israel, Capital
Henio, Capital

140 000
60,000
40,000

160,000
140,000
130,000
6,000
4,000

148,000
24,000
16,000

120,000
120,000
140,000
140,000
PROBLEMS

Problem 2 - 1
1.

2.

Locsin, Capital (P240,000 x 1/4)


Montes, Capital (P120,000 x 1/4)
Nava, Capital

60,000
30,000

Locsin, Capital (P240,000 x 1/3)


Montes, Capital (P120,000 x 1/3)
Nava, Capital

80,000
40,000

90,000

120,000

AA 1 - Chapter 2 (2008 edition)

3.

4.

5.

6.

7.

8.

9.

10

page 7

Other Assets
Locsin, Capital (P180,000 x 3/4)
Montes, Capital (P180,000 x 1/4)
P540,000 P360,000 = P180,000

180,000

Locsin, Capital [(P240,000 + P135,000) 1/3]


Montes, Capital [(P120,000 + P45,000) 1/3]
Nava, Capital

125,000
55,000

Cash
Locsin, Capital (P90,000 x 3/4)
Montes, Capital (P90,000 x 1/4)
Nava, Capital
AC
old (1/2)
270,000
new (1/2)
270,000
540,000

180,000
67,500
22,500

135,000
45,000

180,000

270,000
CC
360,000
180,000
540,000

Cash
Other Assets
Nava, Capital
Locsin, Capital
(P60,000 x 3/4)
Montes, Capital (P60,000 x 1/4)
AC
CC
old (3/4)
540,000
360,000
new (1/4)
180,000
180,000
720,000*
540,000
*180,000 1/4 = 720,000

Bonus
(90,000)
90,000
----180,000
180,000
180,000
135,000
45,000
Asset Rev
180,000
----180,000

Cash
Nava, Capital
Locsin, Capital (P60,000 x 3/4)
Montes, Capital (P60,000 x 1/4)

240,000

Cash
Locsin, Capital
Montes, Capital
Nava, Capital

240,000
54,000
18,000

Cash
Locsin, Capital (P22,500 x 3/4)
Montes, Capital (P22,500 x 1/4)
Nava, Capital
(P510,000 x 1/4)

150,000

Cash
Other Assetsl (P660,000 P525,000)
Locsin, Capital (P135,000 x 3/4)
Montes, Capital (P135,000 x 1/4)
Nava, Capital
(P660,000 x 1/4)

165,000
135,000

Cash

144,000

180,000
45,000
15,000

312,000
16,875
5,625
127,500

101,250
33,750
165,000

AA 1 - Chapter 2 (2008 edition)

page 8

Locsin, Capital (P24,000 x 3/4)


Montes, Capital (P24,000 x 1/4)
Nava, Capital (P504,000 x 1/3)

18,000
6,000
168,000

Problem 2 - 2
1.
a. Ponce, Capital (P300,000 x )
Anton, Capital
b.

c.

b.

c.

150,000

Ponce, Capital (P300,000 x )


Salva, Capital (P200,000 x )
Victa, Capital (P100,000 x )
Anton, Capital

75,000
50,000
25,000
150,000

Cash
Ponce, Capital
Salva, Capital
Victa, Capital
Anton, Capital
Ponce
Salva
Victa
Anton

2.
a.

150,000

220,000
7,500
4,500
3,000
205,000
AC
P307,500
204,500
103,000
205,000
P820,000

CC
P300,000
200,000
100,000
220,000
P820,000

Bonus
P 7,500
4,500
3,000
( 15,000)
------

Other Assets
Ponce, Capital
Salva, Capital
Victa, Capital
P960,000 P600,000 = P360,000

360,000

Ponce, Capital
Anton, Capital

240,000

Other Assets
Ponce, Capital
Salva, Capital
Victa, Capital
P180,000/ 25% = P720,000 P600,000 = P120,000

120,000

180,000
108,000
72,000

240,000
60,000
36,000
24,000

Ponce, Capital
Salva, Capital
Victa, Capital
Anton, Capital

90,000
59,000
31,000

Other Assets
Ponce, Capital
Salva, Capital
Victa, Capital
P220,000/ 25% = P880,000 P820,000 = P60,000

60,000

180,000
30,000
18,000
12,000

AA 1 - Chapter 2 (2008 edition)

page 9

Cash
Anton, Capital

220,000
220,000

Problem 2-3
1.a
Cash
Cabral, Capital
Corpus, Capital
Carlos, Capital
Other Assets
Camus, Capital
old (3/4)
new (1/4)
b.

90,000
22,500
18,000
4,500
45,000
90,000
AC
630,000
90,000
720,000*

CC
675,000
90,000
765,000

Asset Rev
(45,000)
----(45,000)

Cash
Cabral, Capital
Corpus, Capital
Carlos, Capital
Camus, Capital
old (1/2)
new (1/2)

2.a

b.

90,000
2,813
2,250
562
95,625
AC
669,375
95,625
765,000

CC
675,000
90,000
765,000

Cabral, Capital
Corpus, Capital
Carlos, Capital
Camus, Capital
Other Assets
Cabral, Capital
Corpus, Capital
Carlos, Capital
P90,000/ 1/8 = P720,000 P675,000 = P45,000

40,500
27,000
16,875

Cabral, Capital
Corpus, Capital
Carlos, Capital
Camus, Capital

43,312
29,250
17,438

Problem 2 - 4
1. a.
Inventories
Accumulated Depreciation Equipment
Allowance for Doubtful Accounts
Accrued Liabilities
Roces, Capital (P6,750 x 60/100)
Lapuz, Capital (P6,750 x 40/100)
b.
c.

Bonus
(5,625)
5,625
-----

Cash
Doria, Capital
P187,500/80% = P234,375 x 20% = P46,875
Lapuz, Capital

84,375
45,000
22,500
18,000
4,500

90,000
5,625
7,500
3,450
2,925
4,050
2,700
46,875
46,875
13,388

AA 1 - Chapter 2 (2008 edition)

page 10

Roces, Capital
Roces = (P234,375 x 50%) P103,800 = P13,388
Lapuz = (P234,375 x 30%) - P83,400 = (P13,388)

13,388

2.
Roces, Lapuz and Doria
Statement of Financial Position
April 1, 2008
ASSETS
Cash
Receivables
Less Allow. for DA
Inventories
Equipment
Less Acc. Depr.
TOTAL ASSETS

P 82,875
P69,000
3,450
P52,500
26,250

65,550
129,375
26,250
P304,050

LIABILITIES and PARTNERS CAPITAL


Payables
P66,750
Accrued Liabilities
2,925
Roces, Capital
P117,188
Lapuz, Capital
70,312
Doria, Capital
46,875
234,375
________
TOTAL LIABILITIES and
PARTNERS CAPITAL
P304,050

Problem 2 -5
Roldan
P150,000

Angeles
P180,000
(30,000)

Bal.before admission of Moreno


Transfer of 1/6 int. to Moreno
Investment of Moreno
Asset revaluation
6,000
6,000
Bonus to old partners
6,000
6,000
Capital balances after admission
of Moreno
P162,000
P162,000
2.
Roldan 30% x 75%
=
22.5%
Angeles 30% x 75%
=
22.5%
Lazaro 40% x 75%
=
30%
Moreno
25%

Lazaro
P300,000

Moreno

Total
P630,000

P 30,000
150,000
8,000
8,000
P316,000

150,000
20,000

(20,000)
P160,000

P800,000

Problem 2 6
1.

Lazo, Capital
Madrid, Capital
Buildings
Allowance for Doubtful Accounts
Allowance for Valuation of Investments

19,000
19.000

Lazo, Capital
Madrid, Capital
Nuguid, Capital
(P200,000 P19,000 + P19,000 P20,000) 1/3 = P60,000
(P150,000 P19,000 + P19,000 P14,000) 1/3 = P45,333

60,000
45,333

2.
Capital balances before admission of Nuguid
Revaluation of assets
Capital balances after revaluation
Fraction of interest transferred to Nuguid
Interest transferred to Nuguid

8,000
20,000
10,000

Lazo
P199,000
( 19,000)
P180,000
x 1/3
P 60,000

Madrid
P155,000
( 19,000)
P136,000
x 1/3
P 45,333

105,333

Total
P354,000
( 39,000)
P316,000
x 1/3
P105,333

AA 1 - Chapter 2 (2008 edition)

page 11

Gain on transfer
Cash distribution to partners

31,138
P 91,138

23,529
P 68,862

Capital balances before admission of Nuguid


Revaluation of assets
Interest transferred to Nuguid
Balances
Share in net profit
Drawings
Capital balances, December 31, 2008

Lazo
P199,000
( 19,000)
( 60,000)
P120,000
18,000
( 15,000)
P123,000

Madrid
P155,000
( 19,000)
( 45,333)
P 90,667
18,000
( 12,000)
P 96,667

3.

4.

Cash
Accounts Receivable
Investments
Accounts Payable
Osorio, Capital

54,667
P160,000
Nuguid
105,333
P105,333
18,000
( 28,000)
P 95,333

66,000
40,000
20,000
41,000
85,000

Lazo, Capital
Madrid, Capital
Nuguid, Capital
Osorio, Capital

5,000
5,000
5,000
15,000

P315,000 + P85,000 = P400,000 x 1/4 P100,000 P85,000 =


P15,000

Problem 2 - 7
1.

2.

3.

4.

Montero, Capital
Concio, Capital (P8,000 x 3/5)
Domino, Capital (P8,000 x 2/5)
Cash

100,000
4,800
3,200

Montero, Capital
Concio, Capital (P10,000 x 3/5)
Domino, Capital (P10,000 x 2/5)
Cash

100,000

Montero, Capital
Concio, Capital
(P60,000 x 3/6)
Domino, Capital (P60,000 x 2/6)
Cash
Other Assets (P10,000 1/6)

100,000
30,000
20,000

Montero, Capital (P6,000 x 1/6)


Concio, Capital (P6,000 x 3/6)
Domino, Capital (P6,000 x 2/6)
Equipment
[(P60,000 x 40%) P18,000]
Montero, Capital
Equipment
Cash

(P100,000 P1,000)

108,000
6,000
4,000
90,000

90,000
60,000
1,000
3,000
2,000
6,000
99,000
18,000
81,000

AA 1 - Chapter 2 (2008 edition)

page 12

Problem 2-8
1.

Damaso
P120,000
( 9,600)
( 24,000)
P 86,400

Capital, January 1, 2008


Share in net loss
Drawings
Capital balances, December 31, 2008
2.

3. a

Dangwa
P 70,000
( 6,400)
( 24,000)
P 39,600

Dangwa, Capital
Dmaso, Capital
Datu, Capital
Cash
Inventory
P39,600 P30,000 = P9,600 / 20% = P48,000

Datu
P 80,000
( 16,000)
( 24,000)
P 40,000

39,600
14,400
24,000
30,000
48,000

Other Assets
Dangwa, Capital
Cash
Damaso, Capital
Datu, Capital
P48,000 P39,600 = P8,400/ 20% = P42,000
Dangwa, Capital
Damaso, Capital
Datu, Capital
Cash

42,000
39,600
48,000
12,600
21,000
39,600
3,150
5,250
48,000

Problem 2 - 9
1.

Cash
Luna, Capital
Matias, Capital
Noble, Capital
Guzman, Capital
Old
New

2.

126,000
AC
P294,000
126,000
P420,000

CC
P300,000
120,000
P420,000

Bonus
P( 6,000)
6,000
----

Cash
Luna, Capital
Matias, Capital
Noble, Capital
Other Assets
Guzman, Capital
Old
New

3.

120,000
2,000
2,000
2,000

Matias, Capital
Guzman, Capital

60,000
20,000
20,000
20,000
60,000
60,000
AC
P240,000
60,000
P300,000

CC
P300,000
60,000
P360,000

Asset Rev
(P60,000)
(P60,000)
36,000
36,000

AA 1 - Chapter 2 (2008 edition)

page 13

P120,000 x 30% = P36,000


4.

5.

6.

Luna, Capital
Matias, Capital
Noble, Capital
Cash

80,000
8,000
8,000

Luna, Capital
David, Capital

80,000

Luna, Capital
Matias, Capital
Noble, Capital

80,000

96,000
80,000

40,000
40,000

Problem 2 -10
Canda, Pardo and Andres
Statement of Changes in Partners Equity
For the Period January 1, 2006 to January 1, 2009
Original capital, January 1, 2006
Corrected 2006 net profit
Drawings
Capital, January 1, 2007
Corrected 2007 net profit
Drawings
Capital, January 1, 2008
Corrected 2008 net loss
Drawings
Capital, January 1, 2009

Canda
P 62,500
26,375
(15,000)
P 73,875
10,875
(15,000)
P 69,750
( 6,750)
(10,000)
P 53,000

Pardo
P 25,000
10,550
( 7,800)
P 27,750
4,350
( 7,800)
P 24,300
( 2,700)
( 5,200)
P 16,400

Andres
P 12,500
5,275
( 5,200)
P 12,575
2,175
( 5,200)
P 9,550
( 1,350)
( 5,200)
P 3,000

Total
P 100,000
42,200
( 28,000)
P 114,200
17,400
( 28,000)
P 103,600
( 10,800)
( 20,400)
P 72,400

Schedule of computation of corrected net profit


Reported net profit (loss)
Understatement of accrued expenses
Understatement of accrued revenues
Overstatement of inventories
Understatement of depreciation exp.
Corrected net profit (loss)
2.

a.

Revenue Receivable

2006
2007
2008
2006
2007
2008
2006
2007
2008

2006
P 44,000
( 400 )

2007
P 18,500
400
( 500 )

2008
P (10,500 )
(

250
( 1,500 )
( 150 )
P 42,200

250 )
100

1,500
( 2,000 )
( 350 )
P 17,400
150

500
650 )
100 )
150

2,000
( 2,000 )
( 200 )
P (10,800 )

AA 1 - Chapter 2 (2008 edition)

b.

page 14

Canda, Capital
Pardo, Capital
Andres, Capital
Expenses Payable
Merchandise Inventory
Accumulated Depreciation

2,000
800
400

Canda, Capital (P3,000 x 625/1000)


Pardo, Capital (P3,000 x 250/1000)
Andres, Capital
(P3,000 x 125/1000)
Furniture (P4,500 - P1,500)

1,875
750
375

650
2,000
700

3,000

c.

Andres, Capital
Furniture
Cash
Problem 2 -11

2,625
1,500
1,125
Abelar and Berces
Statement of Changes in Partners Equity
For the Period January 1, 2007 to January 15, 2009

Capital balances before closing the


books, December 31, 2007
Net profit for 2007 (Sch 1)
Drawing
Capital, December 31, 2007
Admission of Custodio (Sch. 2)
Net loss for 2008
Drawings
Capital, December 31, 2008
Loss on realization on Jan. 15, 2009
Final cash distribution

Abelar

Berces

Custodio

Total

P 50,000
6,600
(8,200)
P 48,400
(7,800)
(5,250)
(7,500)
P 27,850
(16,520)
P 11,330

P 30,000
7,400
(6,800)
P 30,600
(5,200)
(3,750)
(5,000)
P 16,650
(11,800)`
P 4,850

P 33,000
(6,000)
(6,800)
P 20,200
(18,880)
P 1,320

P 80,000
14,000
(15,000)
P 79,000
20,000
(15,000)
(19,300)
P 64,700
(47,200)
P 17,500

Abelar_
P 9,000
(2,400)
P 6,600

Berces
P 9,000
(1,600)
P 7,400

Total
P 18,000
( 4,000)
P 14,000

Schedule 1 - Distribution of 2007 net profit


Salaries
Balance - 60%, 40%
Total
Schedule 2 - Admission of Custodio
Total capital contribution (P79,000 + P20,000)
Interest to be credited to Custodio
Capital credit of Custodio
Capital contribution of Custodio
Bonus to Custodio from Abelar and Berces

P 99,000
1/3__
P 33,000
20,000
P 13,000

AA 1 - Chapter 2 (2008 edition)

page 15

MULTIPLE CHOICE
1.
2.
3.

B
A
B

4.

Lima
Mitra

5.

Asset revaluationP60,000/20% = P300,000 - P150,000


Lima
= [P100,000 + (P150,000 x 75%)] x 80%
Mitra
= [P 50,000 + (P150,000 x 25%)] x 80%
Nova

6.

P264,000 [(P278,000 + P418,000 + P192,000) x 1/5] = P86,400


=
=

P100,000 x 80% = P80,000


P 50,000 x 80% = P40,000

Original investment
Net profit
Drawings
Capital bal . before transfer to Desta
Required capital based on orig. capital
ratio after transfer to Desta of 1/4 int.
Capital to be transferred to Desta
Excess cash to be dist. based on orig.
capital ratio (P30,000 - P18,810)
Distribution of cash to Felix and Elias
7.
8.
9.
10.

D
C
C
A

11.

D
A

14.

Felix
P 24,000
5,430
( 5,050)
P 24,380

Elias
P 48,000
10,860
( 8,000)
P 50,860

Total
P 72,000
16,290
( 13,050)
P 75,240

18,810
5,570

37,620
P 13,240

56,430
P 18,810

3,730
P 9,300

7,460
P 20,700

11,190
P 30,000

P90,000 P75,000 = P15,000


Capital of Mison prior to admission of Zamora
Share in the bonus from Zamora [(P90,000 P75,000) 1/2)
Capital of Mison in the new partnership
Voltaire
Asuncion
Leonor

12.
13.

P150,000
P170,000
P 70,000
P 60,000

AC
P180,000
210,000
195,000
P585,000

P105,000
7,500
P112,500
CC
P150,000
180,000
195,000
P525,000

P195,000 (P525,000 x 1/3 = P175,000) = P20,000


Old partners capital contribution
Percentage of interest of old partners
Total agreed capital of the new partnership
Percentage of interest of Sison
Capital credit of Sison
Bonus to Sison
Cash to be contributed by Sison
Capital balances before adm. of Vidal
Asset revaluation
(P180,000/20% ) P840,000 = P60,000

Asset Rev
P30,000
30,000
P60,000
P600,000
75%
P800,000
x 25%
P200,000
70,000
P130,000

Rivera
P504,000

Sanchez
P252,000

Torres
P 84,000

36,000

18,000

6,000

AA 1 - Chapter 2 (2008 edition)

page 16

Adjusted capital balances


Percentage of unsold interest
Capital balances after adm. of Vidal

P540,000
x 80%
P432,000

P270,000
x 80%
P216,000

P 90,000
x 80%
P 72,000

15.

Total capital of the new partnership (P840,000/75%)


Percentage of interest
Amount to be invested by Vidal in the partnership

16.

P330,000
315,000
P 15,000

17.

Agreed capital
Capital contribution = P95,000 + P80,000 + P60,000 + P80,000 =
Asset revaluation
P80,000 + P12,000 P70,000 = P22,000

18.

Capital balance before admission of Manalo


Interest sold to Manalo (P80,000 x 15%)
Share in the recorded asset revaluation (P15,000 x 3/10)
Share in the bonus from Manalo
[(P80,000 + P12,000) - P70,000] x 3/10
Capital balance after admission of Manalo

P 80,000
(12,000)
4,500

19.

B
Capital balances, April 30, 2008
1/6 Interest transferred to Magno
Balances
Cash
transfers
to
equalize
investment
Balances
Distribution of net profit -equally
Withdrawals
Capital, June 30, 2008

20.

21.

6,600
P 79,100

Juan
P 360,000
( 60,000)
P 300,000
( 100,000)

Cosme
P 225,000
( 37,500)
P 187,500
12,500

Luna
P 135,000
( 22,500)
P 112,500
87,500

P 200,000
3,150
( 1,500)
P 201,650

P 200,000
3,150
( 2,000)
P 201,150

P 200,000
3,150
( 1,500)
P 201,650

Agreed capital = (P201,650 + P201,150 + P201,650) 3/4 =


Interest of Magno
Required capital credit of Magno
Capital balance of Magno before investing cash
Cash to be invested by Magno
Asset revaluation method:
Capital contributions of partners
Asset revaluation
Additional depreciation
Capital balances
Bonus method:
Capital contributions of partners
Bonus to old partners from new partner
Capital balances
Net advantage of bonus method to Isleta

22.

P1,120,000
x 25%
P 280,000

A
Capital balance
Uncollectible accounts
Worthless inventories

Magno
P 120,000
P 120,000
P 120,000
3,150
( 2,000)
P121,150

P805,933
1/4___
P201,483
121,150
P 80,333

Galang

Hizon

Isleta

P600,000
252,000
( 140,000)
P712,000

P480,000
168,000
( 140,000)
P508,000

P500,000

P600,000
63,000
P663,000

P480,000
42,000
P522,000

P500,000
( 105,000)
P395,000
P 35,000

Campos
P641,976
( 20,000)
( 5,500)

Centeno
P728,352
( 35,000)
( 6,700)

( 140,000)
P360,000

AA 1 - Chapter 2 (2008 edition)

Other assets written off


Adjusted capital

page 17

( 2,000)
P614,476

( 3,600)
P683,052

23.

Total capital P614,476 +P683,052


Total liabilities

24.

Total capital P1,297,528 / 80%


Interest of Coronel
Contribution of Coronel

P1,621,910
x 20%
P 324,382

25.

D
Capital balances
Required capital P1,297,528/2
Cash paid (received)

Campos
P614,476
648,764
P 34,288

Centeno
P683,052
648,764
(P34,288)

Campos
P614,476
34,288
130,000
(50,000)
P728,764

Centeno
P683,052
(34,288)
130,000
(65,000)
P713,764

26.

B
Capital balances
Cash paid (received)
Net profit
Drawings

27.
28.
29.
30.
31.
32.

C
C
D
D
D
A

33.

65,000
(28,000)
P361,382

P4,000 x 2/5 = P1,600


P3,000 / 40% = P7,500
P12,000/3 = P4,000

Retirement of Yumul
Capital balance of Ylagan
A

Coronel
P324,382

The capital balances would be the same as the balances prior to sale of interest.

Interest before retirement


Adjustment of assets to FMV

34.

P1,297,528
967,590
P2,265,118

Amount paid to retiring partner


Capital of retiring partner
Total capital before retirement
Total capital after retirement
Asset revaluation to retiring partner
Fraction of interest of retiring partner
Total asset revaluation

Yumul
P103,000
12,000
P115,000
(115,000)

Yason
P 77,000
12,000
P 89,000
( 2,000)

Ylagan
P180,000
24,000
P204,000
( 4,000)
P200,000
P28,000

P110,000
90,000

20,000
P 8,000
2/10
P40,000

AA 1 - Chapter 2 (2008 edition)

page 18