OSIAS COLLEGES, INC.

F. Tanedo St., Tarlac City Philippines 2300

(045)9820245, e-mail:osiastrc@pldtdsl.net
http:/www.osiascolleges.edu.ph

Name: Danica T. Magbag Date: 2/21/2022

Subject: ACCTNG 2 Year: 1st Year Score:

ACTIVITY #3B

The capital balances of George Alban and Hugo Brand are 120,000 and 180,000 and share income in
the ratio of 40% and 60% respectively on January 1, 2020. Paul Gomez and John Howard are to be
admitted to the partnership. Gomez purchases one-fourth of Alban’s interest for 40,000 and one-fifth
of Brand’s interest for 45,000. After admitting Gomez, Howard contributes 150,000 cash to the
partnership for a one-fourth interest in the partnership.
Required:
1. Journal entry to record admission of Paul Gomez and determine the new profit and loss ratios.
(4 pts.)

George Alban, capital 30,000

Hugo Brand, capital 36,000
Paul Gomez, capital 66,000

Computation
George Alban - 120,000 x 1/4 30,000
Hugo Brand - 180,000 x 1/4 36,000

New P/L ratio:

George Alban 40% x 1/4 = 10%
Hugo Brand 60% x 1/5 = 12%
Paul Gomez 78%
100%

2. Journal entry to record admission of John Howard and determine the new profit and loss
ratios. (11 pts.)

TAC (150,000 / 25%) 600,000

TCC (120,000 + 180,000 + 150,000) 450,000
Goodwill to New Partner 150,000
AC (600,000 x 1/4) 150,000
CC 150,000
No Bonus 0

New P/L ratio:

Alban - 40% x 75% = 30%
Brand - 60% x 75% = 45%
Howard - 1/4 x 100% = 25%
100%

Journal Entry:
a. Cash 150,000
John Howard 150,000
b. Goodwill 150,000
John Howard 150,000