Partnership Dissolution – it is the Austria, Capital 150,000

change in the relation of the partners

Tamayo, Capital 300,000
caused by any partner ceasing to be
associated in the carrying on as Required:
distinguished from the winding up of the
business of the partnership. Prepare the entries to record Miranda’s
admission to the partnership under of
On dissolution, the partnership is not each of the following:
terminated. Most change in the
ownership of a partnership are
accomplished without interruption of its a. Miranda paid Diala P125,000 for
normal operations. 20% of Diala’s interest in the
partnership.

Causes of Dissolution b. Miranda invested P200,000 cash

in the partnership and received
1. Admission of a Partner
an interest equal to her
2. Withdrawal or Retirement of a
investment.
partner
3. Death of a partner
c. Miranda invested P300,000 cash
4. Incorporation of the Partnership
in the partnership for 20% interest
Admission of a Partner in the business. A bonus is to be
recorded for the original partners
1. Purchase of Interest from Existing
on the basis of their capital
Partner/s
balances.
2. Investment of Assets in a
Partnership
d. Miranda invested P300,000 cash
in the partnership for 40% interest
in the business. The original
Agreed Capital (AC) - total capital of the partners gave Miranda a bonus
partnership after considering the capital according to the ratio of their
credits given to each partners. capital balances on July 31,
Contributed Capital (CC)– sum of the 2021.
capital balance of old partners and
actual investment of new partner.
AC CC Bonus/AR
start
Old xxx xxx xxx
New xxx xxx xxx
Total xxx xxx xxx

Asset Revaluation – Old Partners

AC ≠ CC (asset revaluation)
AC = CC (-0-/ bonus)
Bonus (positive in new partner) – New
Partner
Partnership Dissolution – Admission
Diala, Austria, and Tamayo are partners
in Lavander Company. Their capital
balances as at July 31,2021, are as
follows:
Diala, Capital 450,000
 Partnership Dissolution – Admission

Parcadilla and Tan are partners in

Nayon Partnership with capital
balances of P550,000 and P350,000,
respectively; they share income and loss
in the ratio 1:3, respectively. The
partners are considering the admission
of Conde.

Required:
Prepare the entries to record the
admission of Conde under each of the
following independent situations:

1. Conde invested P100,000 cash in the

partnership for a one-tenth interest. The
net assets of the partnership are fairly
valued.

2. Conde invested P140,000 cash in

partnership for a one-eight interest. Assets
of the partnership are fairly valued except
for equipment, which is undervalued by
P80,000. Net assets of the partnership are
to be revalued and Conde is to be
admitted.

3. Conde is to receive a one-tenth interest in

the partnership upon investing P180,000
cash. Net assets of the partnership are
fairly valued.

4. Conde is to receive a 20% interest in the

partnership upon investing P200,000 cash.
Net assets of the partnership are fairly
valued.