Excercise 4-1

1. T
2. F
3. T
4. T
5. T
6. T
7. F

8. F
9. F
10. T

Exercise 4-2
1. Partnership Dissolution
2. Partnership Liquidation
3. Capital Adjustment
4. Contributed Capital
5. Fraction of Interest
6. Total Agreed Capital
7. Bonus
8. Legal Heir/s or representative
9. Total Contributed Capital
10. Percentage of Interest

Exercise 4-3
1. D
2. C
3. C
4. B
5. B
6. D
7. C
8. C
9. A
10. B
 [notes]

Dissolution!

Capital Adjustment
Capital Transfer (transferring capital investment from one to another);
bonus to remaining/continuing partners instead of withdrawing partner
2 kinds of admission: by purchase of interest (personal) and by investment

side note: mind only the fraction or percentage of capital interest transferred

Partnership Dissolution
Partnership Liquidation
Capital Adjustment
Contributed Capital
Fraction of Interest
Total Agreed Capital
Bonus
Legal Heir/s or representative
Total Contributed Capital
Percentage of Interest

all of the above

Additional investment made by the partner
original profit and loss ratio
increase partnership assets and partners’ equity
the new partner will have the same capital balance as the old partner
there is no bonus involved in the admission of the incoming partner
Bonus was allowed to the old partners
Retirement of a Partner
Dissolution
capital credit of the retiring partner is greater than the amount paid
 Montecasino General Services Company
Benedict, Capital 1,260,000 70 %
Scholastica, Capital 540,000 30 %
Total 1,800,000 100 %

Journalizing independent cases of admitting Odilo into the

a Benedict, Capital 630,000

Odilo, Capital 630,000
Purchased 1/2 1/2

b Scholastica, Capital 108,000

Odilo, Capital 108,000
Purchased 20%

c Benedict, Capital 378,000

Scholastica, Capital 162,000 1/3
Odilo, Capital 540,000 1/3
Purchased 30%

d Benedict, Capital 315,000

Scholastica, Capital 135,000 1/4
Odilo, Capital 450,000 1/4
Purchased 25%

e Office Supplies 10,000

Capital Adjustment 10,000
Increase in the value of Office Supplies
Benedict, Capital 7,000
Scholastica, Capital 3,000
Capital Adjustment 10,000
To close DEBIT balance in the capital
adjustment account.

Benedict, Capital 316,750

Scholastica, Capital 135,750 1/4
Odilo, Capital 452,500 1/4
Purchased 25%
mitting Odilo into the partnership:

1,260,000 Benedict's capital interest

630,000 Purchased capital interest

150,000 amount Odilo paid Scholastica

108,000 20% of Scholastica's actual capital
42,000 personal transaction income for Scholastica

620,000 amount Odilo paid Scholastica and Benedict

378,000 30% of Benedict's actual capital
162,000 30% of Scholastica's actual capital
80,000 personal transaction Income

500,000 amount Odilo paid Scholastica and Benedict

315,000 25% of Benedict's actual capital
135,000 25% of Scholastica's actual capital
50,000 personal transaction Income
316,750 25% of Benedict's new capital
135,750 25% of Scholastica's new capital
 Original Profit
and Loss Contributed
Sharing Capital
Michael 2 400,000
Rafael 1 200,000
Gabriel - 200,000

Journalizing independent cases of admitting Gabriel into the partner

a Michael, Capital 100,000

Rafael, Capital 50,000
Gabriel, Capital 150,000
Purchased 25%

Original Profit
and Loss Contributed Agreed
b Ratio Capital Capital
Michael 2 400,000 400,000
Rafael 1 200,000 200,000
Gabriel 200,000 200,000
Total 800,000 800,000

Cash 200,000
Gabriel, Capital 200,000
Investment of new partner

Original Profit
and Loss Contributed Agreed
c Ratio Capital Capital
Michael 2 400,000 400,000
Rafael 1 200,000 200,000
Gabriel 150,000 150,000
 Total 750,000 750,000

Cash 150,000
Gabriel, Capital 150,000
Investment of new partner

d Michael, Capital 133,333

Rafael, Capital 66,667
Gabriel, Capital 200,000
Purchased 1/3

Original Profit
and Loss Contributed Agreed
Ratio Capital Capital
Michael 2 266,667 266,667
Rafael 1 133,333 133,333
Gabriel 200,000 200,000
Total 600,000 600,000
tting Gabriel into the partnership:

New Profit
and Loss
Ratio no bonus
0.5
0.25
0.25 25%
1 0 TCC = TAC

New Profit
and Loss
Ratio no bonus
53
27
20
 100 0

New Profit
and Loss
Ratio no bonus
0.44
0.22
0.33
1 0
 FC Law Office
Original
Profit and Contributed Agreed
Loss Ratio Capital Capital
Francis 2 800,000 850,000
Charles 1 400,000 425,000
Philip 500,000 425,000
Total 1,700,000 1,700,000

a Cash 500,000
Francis, Capital 50,000
Charles, Capital 25,000
Philip, Capital 425,000
To record admission of partner Philip.

b Philip's Agreed Capital

Total Contributed Capital 1,700,000
New Profit and Loss Ratio x 0.25
425,000
Francis' Agreed Capital
Contributed Capital 800,000
Bonus to Old Partner + 50,000
850,000
Charles' Agreed Capital
Contributed Capital 400,000
Bonus to Old Partner + 25,000
425,000
c Philip's Ratio 0.25
Remaining Ratio to be distributed 0.75

New Profit and Loss Ratio

Francis 2/3*0.75 0.5
Charles 1/3*0.75 0.25
New Profit Bonus to
and Loss Old
Ratio Partners
0.5 50,000
0.25 25,000
0.25 (75,000)
1 - TCC=TAC
 Original Profit
and Loss Contributed Agreed
Ratio Capital Capital
Maffy 70% 700,000 630,000
Luz 30% 300,000 270,000
Rose 500,000 600,000
Total 100% 1,500,000 1,500,000

a Cash 500,000
Maffy, Capital 70,000
Luz, Capital 30,000
Rose, Capital 600,000
To record admission of new partner.

b Agreed Capital of Rose

Total Contributed Capital 1,500,000
New Profit and Loss Ratio x 0.4
600,000
Agreed Capital of Maffy
Contributed Capital 700,000
Bonus - 70,000
630,000
Agreed Capital of Luz
Contributed Capital 300,000
Bonus - 30,000
270,000

c Ratio of Rose 0.40

Remaining Ratio to be distributed 0.60

New Profit and Loss Ratio

Francis 0.7*0.6 0.42
Charles 0.3*0.6 0.18
New Profit
and Loss Bonus to
Ratio New Partner
0.42 (70,000)
0.18 (30,000)
0.40 100,000 Bonus=AC-CC
1 - AC= New P&L*TCC
 Original New Profit
Profit and Contributed Agreed and Loss
Loss Ratio Capital Capital Ratio
Ignatius 50% 300,000 300,000 40%
Francis 20% 100,000 120,000 16%
Peter 30% 200,000 180,000 24%
Martin 150,000 150,000 20%
Total 100% 750,000 750,000 100%

Cash 150,000
Martin, Capital 150,000
Investment of new partner

80% of Total Contributed Capital P 600,000

Divided by 0.8
Total Contributed Capital 750,000
Multiplied by 0.2
Martin, Capital P 150,000
No Bonus

-
 New Profit
Original Profit and Loss Contributed Agreed
and Loss
Ratio Capital Capital
Ratio
Jude 3 600,000 552,000 48%
Isidore 2 200,000 168,000 32%
Anthony 100,000 180,000 20%
Total 5 900,000 900,000 100%

Office Equipment 100,000

Jude, Capital 48,000
Isidore, Capital 32,000
Anthony, Capital 180,000
Investment of new partner
Bonus to
New
Partner
(48,000)
(32,000)
80,000
-
 New Profit Bonus to
Original Profit and Loss Contribute Agreed
and Loss Old
Ratio d Capital Capital
Ratio Partner
Joe 5 500,000 520,000 40% 20,000
Efren 2 200,000 208,000 16% 8,000
Rene 3 300,000 312,000 24% 12,000
Milet 300,000 260,000 20% (40,000)
Total 10 1,300,000 1,300,000 100% -

Cash 300,000
Joe, Capital 20,000
Efren, Capital 8,000
Rene, Capital 12,000
Milet, Capital 260,000
Admission of new partner
by investment of asset.
 Assisi General Merchandising
New Profit
Original Profit and Loss Contributed Agreed
and Loss
Ratio Capital Capital
Ratio
Clare 50 195,000 228,500 0.4
Agnes 50 170,000 203,500 0.4
Bernadette 175,000 108,000 0.2
Total 100 540,000 540,000 100%

Cash 175,000
Clare, Capital 33,500
Agnes, Capital 33,500
Bernadette, Capital 108,000
Admission of partner Bernadette.
Bonus to
Old
Partner
33,500
33,500
(67,000)
-
 Contribute Agreed
Original Profit and Loss Ratio
d Capital Capital

Timothy 60 800,000 800,000

Paul 40 400,000 400,000
Luke 400,000 400,000
Total 100 1,600,000 1,600,000

80% of Total Contributed Capital P 1,200,000

Divided by 0.75
Total Contributed Capital 1,600,000
Multiplied by 0.25
Luke's additional cash
investment P 400,000
New Profit
and Loss No Bonus
Ratio
45%
30%
25%
100% -
 Bonus to
Actual Retiring
Original Profit and Loss Ratio Capital Partner
Mary 4 800,000 (80,000)
Therese 3 600,000 (60,000)
Catherine 3 400,000 180,000
Anne 2 100,000 (40,000)
Total 12 1,900,000 -

Catherine, Capital 400,000

Mary, Capital 80,000
Therese, Capital 60,000
Anne, Capital 40,000
Cash 580,000
To record withdrawal of Catherine.
Amount Paid to Catherine 580,000
Subtracted by her Capital 400,000
Catherine's Bonus 180,000
 Original Bonus to
Actual
Profit and Remaining
Capital
Loss Ratio Partners

Hazel 50 55,000 (5,000)

Pia 20 82,000 2,000
Yza 30 90,000 3,000
Total 100 227,000 -

Hazel, Capital 55,000

Cash 50,000
Pia, Capital 2,000
Yza, Capital 3,000
To record withdrawal of Hazel.
 JJJ, Ltd.
Actual
Original Profit and Loss Ratio
Capital
Joachim 3 200,000
John 2 140,000
Joseph 1 70,000
Total 6 410,000

Amount Paid to John 200,000

Less: John, Capital 140,000
Upward Revaluation of Land attributed
to John 60,000
Divide by equivalent ration of John 2/6
Total Asset Revaluation 180,000

Land 180,000
Joachim, Capital 90,000
John, Capital 60,000
Joseph, Capital 30,000
To record upward revaluation of asset

John, Capital 200,000

Cash 200,000
To record withdrawal of John
 Original Profit and Loss Ratio Capital
Mark 1 400,000
Matthew 1 400,000
James 1 400,000
Total 3 1,200,000

Mark, Capital 400,000

Less: Amount Paid to Mark 340,000
Downward Revaluation of Property and
Equipment attributed to Mark 60,000
Divide by equivalent ration of Mark 1/3
Total Asset Revaluation 180,000

Mark, Capital 60,000

Matthew, Capital 60,000
James, Capital 60,000
Property and Equipment 180,000
To record upward revaluation of asset

Mark, Capital 340,000

Cash 340,000
To record withdrawal of Mark