PARTNERSHIP DISSOLUTION

Question 1 Answer: B
Capital Balance of B before the admission of D 800,000.00
Less: Capital to be transferred to D -320,000.00
Capital Balance of B after the admission of D 480,000.00

Question 2 Answer: A
Capital Balance of C before the admission of D 900,000.00
Add: Share of C in bonus given by D 60,000.00
Capital Balance of C after the admission of D 960,000.00

Capital:
A 1,400,000.00
B 700,000.00
C 900,000.00
D 1,000,000.00
4,000,000.00

Contribution of D 1,000,000.00
Interest of D 800,000.00
Bonus given by D 200,000.00

Question 3 Answer: B
Capital credit of D to the new partnership 300,000.00

Question 4 Answer: A
Capital Balance of C before the admission of D 700,000.00
Less: C’s share in asset impairment -200,000.00
Add: C’s share in bonus given by D 80,000.00
Capital Balance of C after the admission of D 580,000.00

Contributed capital by D to the new partnership 500,000.00

Less: Capital credit to D in the new partnership 300,000.00
Bonus given by D to the existing partners 200,000.00

Question 5 Answer: D
Capital Balance of A before the retirement of C 500,000.00
Add: Share of A in asset revaluation 25,000.00
Capital Balance of A after the retirement of C 525,000.00

Cash received by C upon retirement 300,000.00

Capital of C before retirement 200,000.00
Share of C asset revaluation 150,000.00

Total asset revaluation 250,000.00

Question 6 Answer:
Capital Balance of B before the retirement of C 300,000.00
Add: Share of B from Bonus given by C 16,000.00
Capital Balance of B after the retirement of C 316,000.00

Capital balance of C before retirement 100,000.00

Cash received by C upon retirement 80,000.00
Bonus given by C 20,000.00

Question 7 Answer: D 20%

U
Unadjusted Capital 10,000,000.00
Loss in net income -1,000,000.00
Total 9,000,000.00
Asset Revaluation Surplus 3,000,000.00
Adjusted Capital 12,000,000.00

Upon Retirement of U U
Capital, adjusted 12,000,000.00
3,000,000.00
Retirement Pay of U 15,000,000.00

3/8
F
Capital, Adjusted 23,000,000.00
Capital reallocation to U to be shared by F and C -1,125,000.00
Capital Balances after Retirement of U 21,875,000.00

Question 8 Answer: D
Capital Balances
S- 1/2 784,000.00
A- 1/3 2,730,000.00
T- 1/6 1,190,000.00
Total 4,704,000.00

Less: Bonus upon admission

Total Capital Balances of Old Partners
Divided by 75%
Total Capital Balance of New Partnership
Multiply by 25%
Total Capital balance of D
Less: Bonus given to D
Cash to be contributed by D

Question 9 Answer: C

Total Capital Balances of New Partnership 215,000.00

E
55%
M
20% R
25% L
Adjusted Capital balance of L after bonus is given to old partner
Add back
Capital Contribution by L
Less: Cash contributed
Value of equipment contributed by L

Question 10 Answer: C
Juliet
0.60 Kilo
0.40 Lima
Total

Question 11 Answer: A
Interest in Profit or Losses 40%
Capital Balances 179,000.00
Net Income 52,000.00
Capital Balances 231,000.00

Question 12 Answer: B
Total capital balance of Lima 180,000.00
Divided by new interest in new partnership 0.40
total capital contribution 450,000.00
Multiplied by 60% 0.60
270,000.00
Less: Total capital balance of oldpartners before admission 420,000.00
Undervaluation of asset -150,000.00

Question 13 Answer: D
Juliet
0.60
Kilo
0.40 Limo
Total

Juliet
Interest in Profits or Losses 40%
Capital Balances 147,500.00
Net Income 52,000.00
Capital Balances,end 199,500.00
Total contributed capital of all partners
Less: Total agreed capitalization of new partnership
Asset impairment to be shared by old partners only
 30% 50%
F C
20,000,000.00 30,000,000.00
-1,500,000.00 -2,500,000.00
18,500,000.00 27,500,000.00
4,500,000.00 7,500,000.00
23,000,000.00 35,000,000.00

5/8
C Total
35,000,000.00 58,000,000.00
-1,875,000.00 -3,000,000.00
33,125,000.00 55,000,000.00

Bonus given to D Capital balances of old partners

-367,500.00 416,500.00
-245,000.00 2,485,000.00
-122,500.00 1,067,500.00
-735,000.00 3,969,000.00

4,704,000.00
735,000.00
3,969,000.00
0.75
5,292,000.00
0.25
1,323,000.00
735,000.00
588,000.00

Capital Contribution Bonus

30,000.00
18,250.00
70,000.00
55,000.00 -12,000.00
10,000 + equipment -6,250.00
 53,750.00
6,250.00
60,000.00
-100,000.00
50,000.00

Capital Contribution
200,000.00 -21,000.00
220,000.00 -39,000.00
180,000.00 60,000.00
600,000.00

40% 20%
181,000.00 240,000.00
52,000.00 26,000.00
233,000.00 266,000.00

Capital Contribution Allocation of Asset Undervaluation

200,000.00 -52,500.00
220,000.00 -97,500.00
180,000.00
600,000.00 -150,000.00

Kilo Lima
40% 40%
122,500.00 180,000.00
52,000.00 26,000.00
174,500.00 206,000.00
3,500,000.00
3,000,000.00
500,000.00
 100%
Total
60,000,000.00
-5,000,000.00
55,000,000.00
15,000,000.00
70,000,000.00

Total
118,250.00

43,000.00
53,750.00
 215,000.00

New Capital Balance

179,000.00
181,000.00
240,000.00
600,000.00

100%
600,000.00
130,000.00
730,000.00

New Capital Balances

147,500.00
122,500.00
180,000.00
450,000.00

Total

450,000.00
130,000.00
580,000.00