CHAPTER 3 – Changes in Partnership Operations

Practice Exercises

A.

1. Alma, Capital 1,120,000

Aj, Capital 640,000
Alona, Capital 1,760,000

Total Capital Balances

Alma (2,240,000 – 1,120,000) 1,120,000 4.
Aj (1,280,000 – 640,000) 640,000 Capital Credit 2,960,000
Alona 1,760,000 Actual Inv 2,400,000
Total 3,520,000 Bonus to Alona 560,000

2. Cash 4,000,000 Cash 2,400,000

Alona, Capital 3,760,000 Alma, Capital 336,000
Alma, Capital 144,000 Aj, Capital 224,000
Aj, Capital 96,000 Alona, Capital 2,960,000

Total Capital Balances Total Capital Balances

Alma (2,240,000 + 144,000) 2,384,000 Alma (2,240,000 – 336,000) 1,904,000
Aj (1,280,000 + 96,000) 1,376,000 Aj (1,280,000 – 224,000) 1,056,000
Alona 3,760,000 Alona 2,960,000
Total 7,520,000 Total 5,920,000

Capital Credit: 3,760,000

Divide 50%
Net Asset 7,520,000
Alma 2,240,000
Aj 1,280,000
Alona 3,760,000
7,280,000
Undervaluation 240,000

3. PPE 240,000 5.
Alma, Capital 144,000 Capital Credit 3,200,000
Aj, Capital 96,000 Actual Inv 2,880,000
Bonus to Alona 320,000
Cash 4,000,000
Alona, Capital 3,760,000 Cash 2,880,000
Alma, Capital 144,000 Alma, Capital 192,000
Aj, Capital 96,000 Aj, Capital 128,000
Alona, Capital 3,200,000
Total Capital Balances
Alma (2,240,000 + 144,000 + 144,000) 2,528,000
Aj (1,280,000 + 96,000+ 96,000) 1,472,000
Alona 3,760,000
Total 7,760,000
Total Liabilities 1,280,000
Total Liabilities and Equity 9,040,000
Total Asset 9,040,000
B.

6.
Red (2,800,000 – 280,000) 2,520,000
White (2,400,000 – 120,000) 2,280,000
Blue 2,400,000
Total 7,200,000

The capital balance of Red, White and blue is 2,520,000, 2,280,000 and 2,400,000, respectively.
C.

7.
Mickey (3,200,000 – 800,000) 2,400,000
Minnie (1,600,000 – 400,000) 1,200,000
Donald (800,000 – 200,000) 600,000
Daisy 1,400,000
Total 5,600,000

The total capital balance of Mickey, Minnie, Donald and Daisy is 2,400,000, 1,200,000, 600,000, and
1,400,000, respectively.
8.
Mickey (40% x 75%) 30%
Minnie (30% x 75%) 22.5%
Donald (30% x 75%) 22.5%
Daisy 25%
Total 100%

The new profit and loss ratio between Mickey, Minnie, Donald and Daisy is 30%, 22.5%, 22.5%, 25%,
respectively.

D.

9.
Capital Credit 1,800,000
Actual Investment 1,600,000
Bonus to Bobot 200,000

The bonus of Bobot is 200,000

E.

10.
Jack (3,200,000 – 240,000) 2,960,000
Poy (2,800,000 – 160,000) 2,640,000
Hoy 2,400,000
Total 8,000,000
Jack’s capital balance is 2,960,000
11. Jack (3,200,000 + 264,000) 3,464,000
Poy (2,800,000 + 176,000) 2,976,000
Hoy 2,760,000
Total 9,200,000
Poy’s capital balance is 2,976,000
F

12.
Total Capital Balances
C (213,000 – 36,000) 177,000
D (133,000 – 18,000) 115,000
Total 232,000

The capital balance of C and D is 177,000 and 115,000 respectively after B’s retirement.
13.
Total Capital Balances
C (213,000 + 24,000) 237,000
D (133,000 + 12,000) 145,000
Total 382,000

The capital balances of C and D is 237,000 and 145,000 respectively after B’s retirement

G.

14.
Total Capital Balances
Howard (300,000 –97,500) 202,500
Ivan (250,000 –32,500) 217,500
Jasper 280,000
Total 700,000

The capital balances of Howard, Ivan and Jasper are 202,500, 217,500 and 280,000 respectively

H.

15.
Total Capital Balances
Cordova (90,000 + 7,500) 97,500
Decena (60,000 + 7,500) 67,500
Eleria 55,000
Total 220,000

16.
Total Capital Balances
Lester (390,000 + 72,000 – 57,500 – 22,500) 382,000
Miles (900,000 + 216,000 – 172,500 – 67,500) 876,000
Total 1,258,000

J
 17.
Total Capital Balances + Undervalued equipment
270,000 + 20,000 (6,000/30%)
= 290,000 – Before the withdrawal of Abad

290,000 – 86,000
=204,000 – Net asset after the withdrawal of Abad

18.
74,000 + 130,000 + 96,000 = 300,000
300,000 x 20%
=60,000

Santana should contribute 60,000

19.
Total Capital Balances
Sy 500,000
Tan 400,000
Consuji 300,000
Total 1,200,000

The total partnership capital balance is 1,200,000

20.
Total Capital Balances
Sy (500,000 + 150,000) 650,000
Tan (400,000 + 150,000) 550,000
Total 1,200,000

Tan’s total capital balance is 550,000

21.
Total Capital Balance + Undervalued Land
1,200,000 + 120,000 (40,000/33.33%)
=1,320,000 – Net asset before Go Kong’s retirement

1,320,000 – 340,000
=980,000

Total Capital Balances

Sy (500,000 + 40,000) 540,000
Tan (400,000 + 40,000) 440,000
Total 980,000

Sy’s Capital is 540,000

22.
Total Capital Balances
Sy (500,000 – 40,000) 460,000
Tan (400,000 – 40,000) 360,000
Total 820,000
Total capital balance is 820,000
23.
Total Capital Balances
Sy (500,000 + 30,000) 530,000
Tan (400,000 + 30,000) 430,000
Total 960,000

Sy’s capital is 530,000