(Admission by Purchase of an Interest – Overview of all possible cases)

Dally and Lily are partners with capital balances of P120,000 and P90,000,
respectively. Profits and losses are shared 75% to Dally and 25% to Lily.
On May 18 of the current year, they agreed to admit Chloe to the
partnership under each of the following independent cases.

Instructions: Prepare journal entries to record the admission of Chloe in

the partnership and compute for the new profit and loss ratio after her
admission.

Case 1 - Chloe purchases one-half of the interest of Dally for P60,000.

Case 2 - Chloe purchases one-third of the interest in the partnership for
P70,000.
Case 3 – Chloe purchases one-half of the interest of Dally for P65,000.
Case 4 - Chloe purchases one-third of the interest in the partnership for
P80,000.
Case 5 - Chloe purchases one-third of the interest in the partnership for
P80,000 and it is agreed that the net assets should be revalued.
Case 6 - Chloe purchases one-half of the interest of Dally for P55,000.
Case 7 - Chloe purchases one-third of the interest in the partnership for
P50,000.
Case 8 - Chloe purchases one-third of the interest in the partnership for
P50,000 and it is agreed that the net assets should be revalued
(Admission by Investment – Bonus Approach)
Porsche, Jaguar and Lexxus are partners of Cars Distributions, a used-car
distribution partnership. The partners needed additional funds and thus
decided to admit Pride, a new partner, by investing additional cash into
the partnership. The partners had the following adjusted capital balances
prior to the admission of Pride:

Capital balance Share in the P&L

Porsche P230,000 30%
Jaguar 350,000 50%
Lexxus 180,000 20%

Instructions: Give the entries to record the admission of Pride and

compute for the new profit and loss ratio under each of the following
independent cases.

Case 1 - Pride contributes P240,000 into the partnership at a total

agreed capital of P1M.
Case 2 - Pride invests sufficient cash for a 20% interest in the
partnership.
Case 3 - Pride invests P200,000 for a 25% interest in the partnership
where total agreed capital is at P960,000.
Case 4 - Pride invests P220,000 for 20% interest in total capital of
P980,000.
(Admission by Investment – Revaluation Approach)
Porsche, Jaguar and Lexxus are partners of Cars Distributions, a used-car
distribution partnership. The partners needed additional funds and thus
decided to admit Pride, a new partner, by investing additional cash into
the partnership. The partners had the following adjusted capital balances
prior to the admission of Pride:
Capital balance Share in the P&L
Porsche P230,000 30%
Jaguar 350,000 50%
Lexxus 180,000 20%

Instructions: Give the entries to record the admission of Pride and

compute for the new profit and loss ratio under each of the following
independent cases.

Case 1 - Pride invests P200,000 for a 24% (20%) interest in the

partnership where total agreed capital is at P1,000,000.
Case 2 - Pride invests P300,000 for a 20% interest in the partnership
where Pride is credited an agreed capital of P250,000.
Case 3 - Pride invests P140,000 for a 25% interest in the partnership
where Pride is credited P250,000.
Case 4 - Pride invests P220,000 for a 25% interest in the partnership
where total agreed capital is at P1,200,000.