FA#7

Admission of a Partner in an Existing Partnership

Test 1: True or False Test 1: Multiple Choice
1. T 11. T 21. T 1. D 11. C
2. F 12. F 22. F 2. A
3. T 13. T 23. T 3. A
4. T 14. T 24. T 4. D
5. T 15. T 25. T 5. A
6. T 16. T 26. T 6. A
7. T 17. T 27. F 7. A
8. T 18. T 28. F 8. D
9. T 19. T 29. T 9. C
10. F 20. T 10. A

Withdrawal or Retirement/Death, Bankruptcy or Incapacity of a Partner

Test 1: True or False Test 1: Multiple Choice
1. F 11. T 1. A
2. T 2. D
3. T 3. D
4. F 4. C
5. T 5. D
6. F
7. F
8. F
9. T
10. T
4-8 (#7-10)
7. Sarno invests P300,000 for a 1/3 interest of the new firm.
 Cash ₱300,000
Sarno, Capital ₱300,000
To record Sarno investment for 1/3 interest.
Sarno, Capital ₱33,333.33
Beceira, Capital (3/8) ₱12,500.0
Ytac, Capital (5/8) ₱20,833.33
To provide bonus to old partners.
Computation:
Beceira 240,000
Ytac 260,000
Sarno 300,000 800,000 x 1/3 = 266,666.67
800,000 300,000 - 266,666.67 = 33,333.33 – Profit

Contribute
  d Bonus Agreed
  Capital   Capital
Beceira 240,000 12,500 252,500
Ytac 260,000 20,833 280,833
Total 500,000 33,333 533,333
Sarno 300,000 -33,333.33 266,667
Total 800,000 0 800,000

8. Sarno invests P300,000 for a 1/4 interest in the new firm, with agreed capitalization equal
to contributed capital.
Cash ₱300,000
Sarno, Capital ₱300,000
To record Sarno investment.
Sarno, Capital ₱100,000
Beceira, Capital (3/8) ₱37,500
Ytac, Capital (5/8) ₱62,500
To provide bonus to old partners.
Computation:
Beceira 240,000
 Ytac 260,000
Sarno 300,000 800,000 x 1/4 = 200,000
800,000 300,000 – 200,000= 100,000 – Profit
Contribute
  d Bonus Agreed
  Capital   Capital
Beceira 240,000 37,500 277,500
Ytac 260,000 62,500 322,500
Total 500,000 100,000 600,000
Sarno 300,000 -100,000 200,000
Total 800,000 0 800,000

9. Sarno invests P300,000 for a 40% interest in the new partnership.

Cash ₱300,000
Sarno, Capital ₱300,000
To record Sarno investment.
Beceira, Capital (3/8) ₱7,500
Ytac, Capital (5/8) ₱12,500
Sarno, Capital ₱20,000
To provide bonus to Sarno.
Computation: Beceira 240,000
Ytac 260,000
Sarno 300,000 800,000 x 40% = 320,000
800,000 300,000 – 320,000= -20,000 – Loss

Contribute
  d Bonus Agreed
  Capital   Capital
Beceira 240,000 -7,500 232,500
Ytac 260,000 -12,500 247,500
Total 500,000 -20,000 480,000
Sarno 300,000 20,000 320,000
Total 800,000 0 800,000

10. Sarno invests P300,000 for a 30% interest in the new firm.
 Cash ₱300,000
Sarno, Capital ₱300,000
To record Sarno investment.
Sarno, Capital ₱95,000
Beceira, Capital (3/8) ₱35,625
Ytac, Capital (5/8) ₱59,375
To provide bonus to old partners.
Computation:
Beceira 240,000
Ytac 260,000
Sarno 300,000 800,000 x 30% = 255,000
800,000 350,000 – 255,000= 95,000 - Profit

Contribute
  d Bonus Agreed
  Capital   Capital
Beceira 240,000 35,625 275,625
Ytac 260,000 59,375 319,375
Total 500,000 -95,000 405,000
Sarno 350,000 95,000 445,000
Total 850,000 0 850,000

4-9
Antonio Nemenzo III and Julito Kwan are partners of San Juan Carlos Industries with respective
capital balance of ₱200,000 and ₱100,000 and share profits and losses in the ratio of 60%-40%.
Antonio Gimena is admitted in the partnership.
Required:
Give the journal entries for the admission of Gimena into the firm under the following cases:
Case 1 – Gimena invest ₱100,000 for a ¼ interest in the new firm’s capital of ₱400,000.
Cash ₱100,000
Gimena, Capital ₱100,000
To record the investment of Gimena.
Computation:
400,000 x ¼ = 100,000
Case 2 – Gimena invest ₱120,000 for a ¼ interest in the agreed capital of ₱420,000.
Cash ₱120,000
Gemina, Capital ₱120,000
To record the investment of Gimena.
Gimena, Capital ₱15,000
Nemenzo, Capital (60%) ₱9,000
Kwan, Capital (40%) 6,000
To record the bonus to old partners.
Computation:
420,000 x ¼ = 105,000
120,000 – 105,000 = 15,000

Case 3 – Gimena invest ₱100,000 for a 30% interest on the new agreed capitalization of
₱400,000.
Cash ₱100,000
Gimena, Capital ₱100,000
To record the investment of Gimena.
Nemenzo, Capital ₱12,000
 Kwan, Capital 8,000
Gimena, Capital ₱20,000
To record the bonus to Gimena.
Computation:
400,000 x ¼ = 120,000
100,000 – 120,000 = (20,000)
Case 4 – Gimena purchases 25% of Nemenzo’s interest for ₱60,000 and 25% of Kwan’s
investment for ₱30,000.
Nemenzo, Capital ₱50,000
Kwan, Capital 25,000
Gimena, Capital ₱75,000
To transfer the 25% interest of Nemenzo and Kwan to Gimena.
Computation:
Nemenzo: 200,000 x 25% = 50,000
Kwan: 100,000 x 25% = 25,000
Total interest transferred: ₱75,000
Case 5 – Gimena purchases ½ interest of the partnership for ₱150,000.
Nemenzo, Capital ₱100,000
Kwan, Capital 50,000
Gimena, Capital ₱150,000
To transfer ½ interest of Nemenzo and Kwan to Gimena.
Computation:
Nemenzo: 200,000 x ½ = 100,000
Kwan: 100,000 x ½ = 50,000
Total interest transferred: ₱150,000

4-12
Olivia Jadulco, Edgar Mabad and Diona Anghag were partners in a business engage in printing
and publishing. The Statement of Financial Position reveals that their business has no obligation
to outside creditors.
ASSETS PARTNER’S EQUITY
Cash ₱ 120,000 Jadulco, Capital (30%) ₱400,000
Accounts Receivable 150,000 Mabad, Capital (20%) 280,000
Inventories 260,000 Anghag, Capital (50%) 150,000
Equipment 300,000 Total 830,000
Total 830,000

On January 1, 20A, the partners agree to admit Mayla Canete as a new partner after considering
the following revaluation and adjustments:
1. Allowance for doubtful accounts of ₱20,000 is to be established for possible
uncollectible accounts.
2. Inventories should be recorded at their net realization value of ₱240,000.
3. The net book value of the equipment should be adjusted at ₱250,000.
4. Accrued expenses should be recognized, ₱10,000.
Instruction:
1. Prepare necessaries adjusting journal entries.
1. Capital Adjustment ₱20,000
Allowance for Doubtful Accounts ₱20,000
2. Capital Adjustments 20,000
Inventories 20,000
3. Capital Adjustment 50,000
Accumulated Depreciation 50,000
4. Accrued Expense 10,000
Capital Adjustment 10,000

2. Record the admission of Canete assuming:

a. She purchase 1/3 of the partnership’s interest.
Jadulco, Capital ₱125,333
Mabad, Capital, 88,000
Anghag, Capital 36,667
Canete, Capital ₱250,000
To transfer 1/3 of the partnership interest.
Computation:
Jadulco: 376,000 x 1/3 = 125,333
Mabad: 264,000 x 1/3 = 88,000
Anghag: 110,000 x 1/3 = 36,667
Total interst transferred: ₱250,000
b. She invest ₱200,000 for a ¼ interest on agreed capitalization of ₱930,000.
Cash ₱200,000
Canete, Capital ₱200,000
To record Canete investment.
Jadulco, Capital (30%) ₱9,750
Mabad, Capital (20%) 6,500
Anghag, Capital (50%) 16,250
Canete, Capital ₱32,500
Computation:
930,000 x ¼ = 232,500
200,000 – 232,500 = (₱32,500)
c. She invest ₱200,000 for a 1/5 interest in the new firm’s capital of ₱930,000.
Cash ₱200,000
Canete, Capital ₱200,000
To record the investment of Canete.

Canete, Capital ₱14,000

 Jadulco, Capital (30%) ₱4,200
Mabad, Capital (20%) 2,800
Anghag, Capital (50%) 7,000
Computation:
930,000 x 1/5 = 186,000
200,000 – 186,000 = 14,000

4-19
Prepare journal entry or entries to record the admission of new partner in each the following
independent cases.
Case 1 – Noel Lopez and Susan Baya partners od Sarangani Sida Fountain with
capitalization of ₱800,000 and ₱1,200,000 respectively admits Norodin Maguid into the
partnership by allowing him to invest ₱500,000 cash for a 20% interest in the agreed
capital of ₱2,500,000. Lopez and Baya divided profit and loss in the ratio of 40%-60%.
Cash ₱500,000
Maguid, Capital ₱500,000
To record the investment of Maguid.
Computation:
2,500,000 x 20% = ₱500,000

Case 2 – Flordeliza Solis and Ronald Orbita are partners who shared profits and losses
equally. Josephine Tangaro is admitted in the partnership by allowing her to invest
₱25,000 for a 1/5 interest in the agreed capital of ₱115,000. Prior to the admission of
Josephine Tangaro, their capital balances were ₱40,000 and ₱50,000 respectively.
Cash ₱25,000
Tangaro, Capital ₱25,000
To record the investment of Tangaro.
Tangaro, Capital ₱2,000
Solis, Capital (50%) ₱1,000
Orbita, Capital (50%) 1,000
To record the bonus to old partners.
 Computation:
115,000 x 1/5 = 23,000
25,000 – 23,000 = 2,000

Case 3 – Alejandra Sison and Perla Laranjo are partners with capital balances of ₱45,000
and ₱40,000 respectively. They shared profit and loss of 3:2. Tarhata Morales is admitted
in the partnership by contributing ₱35,000 for a 30% interest in new capitalization of
₱120,000.
Cash ₱35,000
Morales, Capital ₱35,000
To record the investment of Morales.
Sison, Capital (3/5) ₱600
Laranjo, Capital (2/5) 400
Morales, Capital ₱1,000
To record the bonus provided to the new partner.
Computation:
120,000 x 30% = 36,000
35,000 – 36,000 = (1,000)