Problem 1

1. Prepare journal entries to record the admission of F, assuming:

a. Purchase of interest from one partner. F paid P 28,800 directly to D in exchange for 1/3
interest.
D, Capital 24,000
F, Capital 24,000
b. Purchase of interest from all partners. This situation gives rise to three assumptions:
1. D, Capital 18,000
E, Capital 12,000
F, Capital 30,000
2. D, Capital 18,000
E, Capital 12,000
F, Capital 30,000
3. D, Capital 18,000
F, Capital 18,000
2. What are the capital balances of the partners immediately after admission?
b1. D, Capital 54,000
E, Capital 36,000
F, Capital 30,000
Total 120,000
b2. D, Capital 54,000
E, Capital 36,000
F, Capital 30,000
Total 120,000
b3. D, Capital 54,000
E, Capital 48,000
F, Capital 18,000
Total 120,000

Problem 2

1. Phoenix, Capital 22,500

Don, Capital 22,500
2. Phoenix, Capital 18,000
Tim, Capital 10,000
Don, Capital 28,000
3. Cash 60,000
Phoenix, Capital 10,000
Tim, Capital 10,000
Don, Capital 40,000

4. Cash 40,000
Goodwill 20,000
Phoenix, Capital 10,000
Tim, Capital 10,000
Don, Capital 40,000

Problem 3

1. Colter, Capital 150,000

Agler, Capital 50,000
Bates, Capital 30,000
Cash 230,000

Computation of Bonus:
Agler (50,000 ÷ 5/8) = 80,000
Less: Angler, Capital = 50,000
Bates, Capital = 30,000

Total Amount Paid to Colter:

Colter, Capital 150,000
Agler, Capital 50,000
Bates, Capital 30,000
Total 230,000

2. Goodwill 220,000
Agler, Capital 110,000
Bates, Capital 66,000
Colter, Capital 44,000

Total Amount Paid to Colter:

Colter, Capital 150,000
Share on Goodwill 44,000
Total 194,000

Problem 4

1. The noncash assets were realized at P 96,000.

QRS Partnership
Statement of Liquidation
November 1, 2020

Cash Non- Liabilities Q, Loans Q, R, S,

cash Capital Capital Capital
assets 30% 50% 20%
Balances 24,000 84,000 12,000 2,400 9,600 48,000 36,000
before
realizatio
n
Sale of 96,000 (84,000) 12,000 2,400 3,600 6,000 2,400
assets
and
division of
gain
Balances 120,000 - 12,000 2,400 13,200 54,000 38,400
after
realizatio
n
Payment (12,000) (12,000)
of
liabilities
Balances 108,000 - - 2,400 13,200 54,000 38,400
after
payment
of
liabilities
Payment (2,400) (2,400)
to
partners -
loan
Balances 105,600 - - - 13,200 54,000 38,400
after
payment
of
partners’
loans
Payment (105,600) - - - (13,200) (54,000) (38,400)
to
partners

2. The noncash assets were realized at P 48,000.

QRS Partnership
Statement of Liquidation
November 1, 2020

Cash Non- Liabilities Q, Loans Q, R, S,

cash Capital Capital Capital
assets 30% 50% 20%
Balances 24,000 84,000 12,000 2,400 9,600 48,000 36,000
before
realizatio
n
Sale of 48,000 (84,000) 12,000 2,400 (10,800) (18,000) (7,200)
assets
and
division of
gain
Balances 72,000 - 12,000 2,400 (1,200) 30,000 28,800
after
realizatio
n
Payment (12,000) (12,000)
of
liabilities
Balances 60,000 - - 2,400 (1,200) 30,000 28,800
after
payment
of
liabilities
Offset (1,200) 1,200
deficit
versus
loans
Payment (1,200) (1,200)
to
partners -
loan
Balances 58,800 - - - - 30,000 28,800
after
payment
of
partners’
loans
Payment (58,800) - - - - (30,000) (28,800)
to
partners

3. The noncash assets were realized at P 36,000. The personal assets and liabilities of the
partners on this date are as follows:
Personal Assets Partnership Liabilities
Q P 288,000 P 240,000
R P 216,000 P 228,000
S P 108,000 P 108,000
 QRS Partnership
Statement of Liquidation
November 1, 2020

Cash Non- Liabilities Q, Q, R, S,

cash Loans Capital Capital Capital
assets 30% 50% 20%
Balances 24,000 84,000 12,000 2,400 9,600 48,000 36,000
before
realization
Sale of 36,000 (84,000) 12,000 2,400 (14,400) (24,000) (9,600)
assets and
division of
gain
Balances 60,000 - 12,000 2,400 (4,800) 24,000 26,400
after
realization
Payment (12,000) (12,000)
of
liabilities
Balances 48,000 - - 2,400 (4,800) 24,000 26,400
after
payment
of
liabilities
Offset (2,400) 2,400
deficit
versus
loans
Balances 48,000 - - - (2,400) 24,000 26,400
after
offsetting
partners’
loans
Additional 2,400 2,400
investment
by Q
Balances 50,400 - - - - 24,000 26,400
after
payment
of
partners’
loans
Payment (50,400) - - - - (24,000) (26,400)
to partners

3. The noncash assets were realized at P 42,000.

QRS Partnership
Statement of Liquidation
November 1, 2020

Cash Non-cash Liabilities Q, Loans Q, R, S,

assets Capital Capital Capital
30% 50% 20%
Balances 24,000 84,000 12,000 2,400 9,600 48,000 36,000
before
realization
Sale of 42,000 (84,000) 12,000 2,400 (12,600) (21,000) (8,400)
assets
and
division of
gain
Balances 66,000 - 12,000 2,400 (3,000) 27,000 27,600
after
realization
Payment (12,000) (12,000)
of
liabilities
Balances 54,000 - - 2,400 (3,000) 27,000 27,600
after
payment
of
liabilities
Offset (2,400) 2,400
deficit
versus
loans
Balances 54,000 - - - (600) 27,000 27,600
after
offsetting
partners’
loans
Additional 600 (429) (171)
loss due
to
insolvenc
y of Q
Balances 54,000 - - - - 26,571 27,429
after
additional
loss
Payment (54,000) - - - - (26,571) (27,429)
to
partners

5. The noncash assets were realized at P 24,000. The personal assets and liabilities of the
partners on this date are as follows:
Personal Assets Partnership Liabilities
Q P 288,000 P 284,400
R P 216,000 P 228,000
S P 117,600 P 108,000

QRS Partnership
Statement of Liquidation
November 1, 2020

Cash Non- Liabilities Q, Q, R, S,

cash Loans Capital Capital Capital
assets 30% 50% 20%
Balances 24,000 84,000 12,000 2,400 9,600 48,000 36,000
before
realization
Sale of 24,000 (84,000) 12,000 2,400 (18,000) (30,000) (12,000)
assets and
division of
gain
Balances 48,000 - 12,000 2,400 (8,400) 18,000 24,000
after
realization
Payment (12,000) (12,000)
of
liabilities
Balances 36,000 - - 2,400 (8,400) 18,000 24,000
after
payment
of
liabilities
Offset (2,400) 2,400
deficit
versus
loans
Balances 36,000 - - - (6,000) 18,000 24,000
after
offsetting
partners’
loans
Additional 3,600 3,600
investment
by Q
Balances 39,600 - - - (2,400) 18,000 24,000
after
additional
investment
Additional 2,400 (1,714) (686)
loss due to
insolvency
of Q
Balances 39,600 - - - - 16,286 23,314
after
additional
loss
Payment (39,600) - - - - (16,286) (23,314)
to partners

6. The noncash assets includes goodwill of P 54,000 and prepaid expenses of P 18,000. The
partners agreed to write- off these accounts since they are valueless. The remaining noncash
assets were realized at P 1,200 with liquidation expenses paid amounting to P 14,400. The
personal assets and liabilities of the partners on this date are as follows:

Personal Assets Partnership Liabilities

Q P 240,000 P 204,000
R P 216,000 P 192,000
S P 108,000 P 112,800

QRS Partnership
Statement of Liquidation
November 1, 2020

Cash Non- Liabilities Q, Q, R, S,

cash Loans Capital Capital Capital
assets 30% 50% 20%
Balances 24,000 84,000 12,000 2,400 9,600 48,000 36,000
before
realization
Payment (14,400) (4,320) (7,200) (2,880)
of
liquidation
expenses
Balances 9,600 84,000 12,000 2,400 5,280 40,800 33,120
after
payment of
liquidation
expenses
Writeoff 72,000 (21,600) (36,000) (14,400)
goodwill
and
prepaid
expenses
Balances 9,600 12,000 12,000 2,400 (16,320) 4,800 18,720
after
writeoffs
Realizatio 1,200 (12,000) (3,240) (5,400) (2,160)
n and
distribution
of loss
Balances 10,800 - 12,000 2,400 (19,560) (600) 16,560
after
realization
Payment (10,800) (10,800)
of liabilities
Balances - - 1,200 2,400 (19,560) (600) 16,560
after
payment of
liabilities
Offset (2,400) 2,400
deficit
versus
loans
Balances - - 1,200 - (17,160) (600) 16,560
after
offsetting
partners’
loans
Additional 17,760 17,160 600
investment
by Q and
R
Balances 17,760 - 1,200 - - - 16,560
after
additional
investment
Payment (1,200) (1,200)
of liabilities
Balances 16,560 - - - - - 16,560
after
payment of
liabilities
Payment (16,560) - - - - - (16,560)
to partners