Solution for Q1:

• Tan buys 1/5 of Tobita's interest for 70,000.

✓ Partner’s Capital Balances: Tobita – 300,000; Valdez – 220,000
✓ Computation for Tan’s purchased interest:
o 300,000 x 1/5 = 60,000

• Tan buys 1/4 of Valdez interest for 50,000.

✓ Partner’s Capital Balances: Tobita – 300,000; Valdez – 220,000
✓ Computation for Tan’s purchased interest:
o 220,000 x 1/4 = 55,000

Journal Entry
Tobita, Capital 60,000
Valdez, Capital 55,000
Tan, Capital 115,000

• Salvador contributes 140,000 cash to the partnership, for which he is to receive an

ownership equity of 140,000.

Journal Entry
Cash 140,000
Salvador Capital 140,000

• What are the percentage of interest of each partner after the admission of the new partners?
(round up to the nearest whole number)
✓ Tobita
o 240,000/660,000 = 36.36 = 36
✓ Valdez
o 165,000/660,000 = 25
✓ Tan
o 115,000/660,000 = 17.42 = 17
✓ Salvador
o 140,000/660,000 = 21.21 = 21
Solution for Q2:

Peralta Valix Total

Unadjusted balance 96,000 48,000 144,000
Add: Share in Profit 2:1 21,720 10,860 32,580
Less: Drawings 16,000 10,100 (26,100)
Adjusted balance 101,720 48,760 150,480

Partners Capital Balance Interest acquired by

At the start of the following year Aris
Peralta 2/3 101,720 25,430
Valix 1/3 48,760 12,190
Total 150,480 37,620

Journal Entry
Peralta, Capital 25,430
Valix, Capital 12,190
Aris, Capital 37,620

How should the P60,000 paid by Aris be divided between Valix and Peralta, respectively?

Peralta (2/3) (Valix 1/3) Total

Interest acquired By Aris 25,430 12,190 37,620
Excess to P/L 14,920 7,460 22,380
40,350 19,650 60,000
Solution for Q3:

The capital accounts of Parfum Partnership on March 31, 2022.

Jo Malone 120,000
Dolce Gabbana 155,000
Perry Ellis 115,000
Malone Gabbana Ellis Total
Unadjusted balance 120,000 155,000 115,000 390,000
Share in Loss (2:5:1) (3,500) (8,750) (1,750) (14,000)
Inventory 24,250 60,625 12,125 97,000
Adjusted balance 140,750 206,875 125,375 473,000

Jo Malone, Capital 3,500

Dolce Gabbana, Capital 8,750
Perry Ellis, Capital 1,750
Partnership Generated Net Loss 14,000

Jo Malone: 14,000 x 2/8 = 3,500

Dolce Gabbana: 14,000 x 5/8 = 8,750
Perry Ellis: 14,000 x 1/8 = 1,750
14,000

Jo Malone, Capital 24,250

Dolce Gabbana, Capital 60,625
Perry Ellis, Capital 12,125
Inventory 97,000

Jo Malone: 97,000 x 2/8 = 24,250

Dolce Gabbana: 97,000 x 5/8 = 60,625
Perry Ellis: 97,000 x 1/8 = 12,125
97,000
 Malone Gabbana Ellis Total
Adj. bal. before retirement 140,750 206,875 125,375 473,000
Payment to C (70,000) (70,000)
Bonus to Remaining Partners (2:5) 15821.43 39553.57 (55,375) -
Bal. after retirement 156,571 246,429 - 403,000

Computation:

Ellis, Capital 115,000

Less: Share in Net Loss 1,750

Total 113,250

Inventory (1/8 x 97,000) 12,125

Ellis, Capital 125,375

Less: Settlement to Ellis 70,000

Bonus from Ellis 55,375

Ellis, Capital 55,375

Malone, Capital 15821
Gabbana, Capital 39554
Ellis, Capital 70,000
Cash 70,000