PARTNERSHIP PROBLEMS

1. The existing capital balances of the partners below prior to retirement were as follows:
Partners Capital P and L ratio
BE P1,500,000 20%
CE 2,000,000 50%
DE 3,800,000 30%
BE retired from the partnership by selling his whole interest in the partnership to CE and DE for
P1,720,000.
What is the total capital of the partnership immediately after the retirement of BE? 7,300,000

2. EY, BEY, CIY capital balances are P306,000, P372,000, and P204,000, respectively. They split profits
equally. They are considering on what basis to admit DEY, a prospective new partner. Based on appraisal
analysis, the net assets of the partnership are worth P900,000. DEY is willing to put up cash of P130,000,
plus a computer with a fair value of P120,000 for a 25% interest in the partnership. What is the capital
balance of CIY immediately after the admission of DEY to the partnership? 197,500

3. On December 31, 2024, the partners of AMB partnership decided to liquidate their business.
Immediately before liquidation, the ff. condensed balance sheet was prepared:
Cash 75,000 Liabilities 200,000
Non cash assets 700,000 M, Loan 65,000
B, Loan 45,000 A, Capital (50%) 305,000
M, Capital (20%) 175,000
B, Capital (30%) 75,000
The noncash assets were sold for P200,000. B is the only solvent partner. What amount of cash will be
received by B upon liquidation? ZERO

4. AMBE, HYA, and JAS share net income and losses in a 5:3:2 ratio, respectively. At the end of unprofitable
year, they decided to liquidate the partnership. The partners' capital account balances on this date were
as follows:
AMBE 30,000 HYA 40,000 JAS 50,000
The liabilities in the balance sheet amounted to P50,000, including a loan of P20,000 from Ambe. The
cash balance was P16,000. All three partners are personally solvent.

If AMBE received a total of P35,000 as a result of the liquidation, what was the total amount realized by
the partnership on the sale of the non-cash assets? 124,000

5. AI, BI and EI were partners with capital balances on January 1,2024 of P200,000, P250,000, and
P300,000, respectively. Their profit and loss ratio is 5:3:2. On July 1,2024, AI retires from the partnership.
On the date of retirement, the partnership income is P180,000 and the partners agreed that inventories
are to be revalued at P80,000 from its original cost of P30,000. The partners agreed further to pay AI
P325,000 I n settlement of his interest. What is the capital balance of Partner BI after the retirement of
AI? 313,000
Items 6-7: The following balance sheet for the partnership of ANNE, JHONG and VHONG were taken from
the books at the end of the year 2022.
ASSETS LIABILITIES & CAPITAL
Cash 100,000 Liabilities 200,000
Other Assets 400,000 ANNE, Capital 120,000
JHONG, Capital 95,000
VHONG, Capital 85,000
The partners agreed to distribute profits as follows:
• Semi-Annual salaries to ANNE and JHONG of P2,500 each
• Annual interest of 5% on beginning capital
• Bonus of 15% to VHONG on income after salaries, interest and bonus
• Remaining profit: 5:7:8 to ANNE, to JHONG and to VHONG

The partnership net income as of December 31, 2022 is P69,500.

6. How much is the share of VHONG in the net income? 25,533

7. What is the capital balance of ANNE at December 31, 2022? 140,674

Items 8-9:, LUFFY and ZORO agreed to form a partnership from their two respective proprietorships,
Effective August 1, 2019 The balance sheets presented below reflect the financial position of both
proprietorships as of July 31, 2019:
LUFFY ZORO
Cash P12,000 P30,000
Accounts Receivable 72,000 42,000
Merchandise Inventory 198,000 252,000
Prepaid Rent 24,000
Building 600,000
Store Equipment 240,000 180,000
Accumulated (90,000) (108,000)
Depreciation 360,000
Land P1,392,000 P420,000
Totals
Accounts Payable P45,000 P18,000
Mortgage Payable 360,000
LUFFY, Capital 987,000
ZORO, Capital 402,000
Totals P1,392,000 P420,000

As of August 1, 2019, the fair value of LUFFY's assets was: merchandise inventory, P162,000; store
equipment, P90,000; building, P1,500,000; and land, P600,000. For ZORO, the fair value of the assets on
the same date were: merchandise inventory, P270,000; store equipment, P39,000; prepaid rent, P0. All
other items on the two balance sheets were stated at their fair values.
8. How much capital must be credited to LUFFY upon formation of partnership? 2,031,000
9. How much is the total assets of the partnership after formation? 2,817,000
 10. CHOPPER, NAMI, SANJI, & USSOP share profits in the ratio of 20%,20%,40%,20%, respectively. The
partnership decided to dissolve the partnership on 2024. A statement of financial position for the
partnership on this date shows balances as follows:
ASSETS LIABILITIES & EQUITY
Cash P65,000 Liabilities P280,000
Other Assets 875,000 CHOPPER, Capital 174,000
NAMI, Capital 181,000
SANJI, Capital 165,000
USSOP, Capital 140,000

• The liabilities include a P 40,000 loan from SANJI.

• The other assets of the partnership are sold and realized P450,000.
• The personal status of partners on this date is determined to be as follows:

Partners Cash and cash value of Personal

personal assets liabilities
CHOPPER P290,000 P150,000
NAMI 100,000 160,000
SANJI 150,000 120,000
USSOP 210,000 275,000

What will be the amount that will be received by NAMI from the distribution of cash? 96,000

11. On January 31, 2024, partners of BROOK, LUFFY & ROBIN, had the following loan and capital account
balances (after closing entries for January):

Loan receivable from BROOK P20,000 dr.

Loan payable to ROBIN 60,000 cr.
BROOK, capital 30,000 dr.
LUFFY, capital 120,000 cr.
ROBIN, capital 70,000 cr.

The partnership's income sharing ratio was 5:2:3 for BROOK ,LUFFY, and ROBIN. On January 31, 2024, ACE
was admitted to the partnership for a 20% interest in total capital of the partnership in exchange for an
investment of P40,000 cash. Prior to ACE's admission, the existing partners agreed to increase the carrying
amount of the partnership's inventories to current fair value by P60,000 increase.

What is the capital balance of ACE immediately after his admission to the partnership? 52,000
12. The partnership contract of A, B and C provides the following as to division of profits and losses:
• Annual salaries of P40,000, P20,000 and P45,000 to A, B and C.
• B will receive a bonus equal to 5% of sales in excess of P1,000,000.
• Interest of 10% in their beginning capital.
• Remaining profits will be allocated 35%, 25% and 40% to A, B and C.

Their capital accounts of the partners are summarized below:

A B C
Beginning P75,000 P125,000 P40,000
Additions 10,000 30,000
Withdrawals 45,000 35,000 45,000

The net income reported by the partners during the year was P200,000. Total sales for the year was
P1,200,000. What is the balance of the capital of B at the end of the year? 177,750

13. ROMEO and JULIET are partners with capital balances of P30,000 and P70,000, respectively. ROMEO
has a 30% interest in profits and losses. All assets of the partnership are at fair market value except
equipment with book value of P300,000 and fair market value of P320,000. At this time, the partnership
has decided to admit ATO and ETO as new partners. ATO contributes cash of P55,000 for 20% interest in
capital and 30% interest in profits and losses. ETO contributes cash of P10,000 and equipment with a fair
value of P50,000 for a 25% interest in capital and 35% interest in profits and losses. ETO is also bringing
special expertise and client contacts into the new partnership. What is the capital balance of ROMEO
immediately after the admission of the new partners? 38,775

14) LEBRON and JAMES enter into a partnership agreement in which LEBRON is to have a 60% interest in
capital and profits. LEBRON contributes the following:

Land P 500,000
Building P5,000,000 Fair value of which is 60% of its cost
Equipment P 1,000,000 Fair value of which is 75% of its cost

There is a P 1,000,000 mortgage on the building which the partners agree to assume. JAMES contributes
cash of P 2,500,000 and the partners agreed that this should be his capital credit. What is the capital of
LEBRON upon formation of partnership? 3,750,000
15. KEVIN and DURANT are partners. Their capital accounts during 2023 are as follows:

KEVIN
8/23 3,000 1/1 15,000 DURANT
4/3 4,000 3/5 4,500 1/1 25,000
10/31 3,000 4/3 3,500
10/31 2,500

• Partnership net income is P 25,000 for the year. The partnership agreement provides for the division
of net income as follows:
• Each partner is credited 10% interest on his/her average capital
• Because of prior work experience, KEVIN is entitled to an annual salary of P6,000 and DURANT is
credited with P4,000.
• Any remainder income or loss is to be allocated based on the beginning capital.

How much is the share of KEVIN in the partnership income for 2023? 11,808