Professional Documents
Culture Documents
1. The assets and liabilities are fairly valued on the balance sheet. Alfa and Beda decide
to admit Capp as a new partner with 20% interest. No goodwill or bonus is to be
recorded. What amount should Capp contribute in cash or other assets?
Solution: 145,000
(348K + 232K) = 580K ÷ 80% = 725K capital after admission x 20% = 145,000
3. Eddy decided to retire from the partnership and by mutual agreement is to be paid
₱180,000 out of partnership funds for his interest. No goodwill is to be recorded. After
Eddy’s retirement, what are the capital balances of the other partners?
Solution: Fox 84,000 and Grim 56,000
Payment to Eddy 180,000
Capital balance of Eddy 160,000
Excess payment to Eddy 20,000
Fox Grim
Capital balances before retirement 96,000 64,000
Share in excess payment to Eddy (12,000) (8,000)
Capital balances after retirement 84,000 56,000
4. Assume instead that Eddy remains in the partnership and that Hamm is admitted as a
new partner with a 25% interest in the capital of the new partnership for a cash payment
of ₱140,000. The bonus method shall be used to record the admission of Hamm.
Immediately after admission of Hamm, Eddy’s capital account balance should be
Solution: 172,500
Eddy, capital 160,000
Fox, capital 96,000
Grimm, capital 64,000
Investment of Hamm 140,000
Total partnership capital after admission 460,000
Multiply by: Interest of Hamm 25%
Capital credit to Hamm 115,000
Investment of Hamm 140,000
Bonus to old partners (25,000)
5. A and B share in partnership profits and losses on a 40:60 ratio. During the year, A’s
capital account has a net increase of ₱50,000. Partner A made contributions of ₱10,000
and capital withdrawals of ₱60,000 during the year. How much was the share of B in the
partnership profit for the year?
Solution: 150,000
Step 1:
A, Capital
Withdrawals 60,000 - beg.
10,000 Additional Investment
? Share in profit
End. 50,000
Step 2:
A, Capital
Withdrawals 60,000 - beg.
10,000 Additional Investment
100,000 Share in profit (squeeze)
End. 50,000