Chapter 2 Sol Man

1
CHAPTER 2
Partnership Dissolution
EXERCISES
Exercise 2 1
1.
2.
Sales, Capital
Rosales, Capital
140,000
140,000
P280,000 + P320,000 + P200,000 = P800,000
Exercise 2 2
1.
Total capital (P3,000,000 / 80%)

Capital interest of Fidel
Cash to be contributed by Fidel
2.
Cash
Fidel, Capital
P3,750,000
x 20%
P 750,000
750,000
750,000
Exercise 2 3
1.
Centeno, Capital
Corales, Capital
40,000
Other Assets
Cortes, Capital
Centeno, Capital
Claudio, Capital
P140,000/ = P560,000 (P200,000 + P 160,000 +
P120,000)
80,000
Cortes, Capital P200,000 + P50,000 x 1/4

Centeno, Capital P160,000 + P20,000 x 1/4
Claudio, Capital P120,000 + P10,000 x 1/4
Corales, Capital
62,500
45,000
32,500
40,000
2.
50,000
20,000
10,000
140,000
3.
Cash
230,000
Cortez, Capital
Centeno, Capital
Claudio, Capital
Corales, Capital
old (3/4)
new (1/4)
32,812
13,125
6,563
177,500
AC
P532,500
177500
P710,000
CC
P480,000
230,000
P710,000
Bonus_
P52,500
(52,500)
P---0---
AA 1 - Chapter 2 (2008 edition)
page 2
Exercise 2 4
1.
Conde, Capital
Cuenco, Capital
Catral, Capital
90,000
60,000
150,000
2.
Other Assets
Conde, Capital
Cuenco, Capital
360,000
Conde, Capital P270,000 + 270,000 x 1/3

Cuenco, Capital P180,000 + P90,000 x 1/3
Catral, Capital
180,000
90,000
Cash
270,000
270,000
90,000
270,000
3.
Conde, Capital
Cuenco, Capital
Catral, Capital
old (3/4)
new (1/4)
67,500
22,500
180,000
AC
P540,000
180,000
P720,000
CC
P450,000
270,000
P720,000
Bonus_
P90,000
(90,000)
P---0---
4.
Cash
Other Assets
Conde, Capital
Cuenco, Capital
Catral, Capital
old (3/4)
new (1/4)
270,000
360,000
270,000
90,000
270,000
AC
P 810,000
270,000
P1,080,000
CC
P450,000
270,000
P720,000
Asset Re
P360,000
P360,000
5.
Cash
Conde, Capital
Cuenco, Capital
Catral, Capital
270,000
67,500
22,500
360,000
Exercise 2-5
1a. Bonus Method
Cash
Alba, Capital
Medel, Capital
Almeda, Capital
old (3/4)
new (1/4)
1b.
180,000
6,000
9,000
195,000
AC
P585,000
195,000
P780,000
CC
P600,000
180,000
P780,000
Bonus_
P(15,000)
15,000
P---0---
Revaluation of Assets Method (AC = P180,000 1/4 = P720,000)
page 3
Alba, Capital (P60,000 x 40%)

Medel, Capital (P60,000 x 60%)
Other Assets (P780,000 - P720,000)
To record revaluation of assets
24,000
36,000
60,000
Cash
Almeda, Capital
2.
180,000
180,000
Balances under the bonus method
Alba
P194,000
Medel
P391,000
Almeda
P195,000
Balances under the asset rev. method

Additional depreciation
Balances after depreciation
P200,000
(
6,666)
P193,334
P400,000
(
6,667)
P393,333
P200,000
(
6,667)
P193,333
Net advantage to Medel using the asset revaluation method
2,333
Exercise 2 - 6
1.
2.
Garces, Capital
Kalaw, Capital
P120,000 x 1/2 = P60,000
60,000
Cash
Other Assets (P400,000 P320,000)
Kalaw, Capital
Garces, Capital (P100,000 x 3/8)
Hilario, Capital (P100,000 x 3/8)
Juan, Capital (P100,000 x 2/8)
Total agreed capital
Total capital contribution
Asset revaluation
60,000
80,000
60,000
40,000
37,500
37,500
25,000
P400,000
320,000
P 80,000
Interest acquired from Garces

Cash invested in the partnership
Total
Capital credit of Kalaw
Bonus to old partners
P 60,000
60,000
P 120,000
100,000
P 20,000
Exercise 2 7
Bonus method
Capital before admission of Estacio
Contribution of Estacio
Capital after admission of Estacio
Sabado
P1,000,000
Galman
P800,000
24,000
P1,024,000
16,000
P816,000
Sabado
P1,000,000
Galman
P800,000
120,000
80,000
Estacio
P500,000
( 40,000)
P460,000
Total
P1,800,000
500,000
P2,300,000
Asset Revaluation method

Capital before admission of Estacio
Contribution of Estacio
Adjustment of fixed assets to fair value
Estacio
P500,000
Total
P1,800,000
500,000
200,000
page 4
Capital after admission of Estacio
P1,120,000
P880,000
P500,000
P2,500,000
Exercise 2 8
1. Bonus method
Capital balances before admission
of new partners
Contributions of new partners
Capital balances after admission
of new partners
Noble
Calma
P64,000
P136,000
10,950
25,550
P74,950
P161,550
Reyes
Naval
P110,000
( 24,000)
P120,000
( 12,500)
P86,000
P107,500
Cash
Equipment
Noble, Capital
Calma, Capital
Reyes, Capital
Naval, Capital
Total
P200,000
230,000
P430,000
130,000
100,000
10,950
25,550
86,000
107,500
2. Asset Revaluation method

Capital balances before admission
of new partners
Adjustment of assets to FV
Contributions of new partners
of new partners
Noble
Calma
P64,000
9,000
P136,000
21,000
P73,000
P157,000
Reyes
Naval
Total
P110,000
P120,000
P200,000
30,000
230,000
P110,000
P120,000
P460,000
Cash
Equipment
Inventory
Land
Building
Noble, Capital
Calma, Capital
Reyes, Capital
Naval, Capital
Exercise 2 - 9
1a.
Bonus Method
Songco, Capital
Bueno, Capital
Manzano, Capital
Cash/Payable to Songco
1b.
Asset Revaluation Method
Songco, Capital
Other Assets (P10,000 1/6)
Bueno, Capital (P50,000 x 3/5)
Manzano, Capital
(P50,000 x 2/5)
Cash/ Payable to Songco
2. The bonus method will be preferred by Manzano
130,000
84,000
14,000
80,000
48,000
9,000
21,000
110,000
120,000
200,000
60,000
40,000
300,000
200,000
600,000
300,000
200,000
300,000
page 5
Capital of Manzano after retirement

Capital of Manzano after additional depreciation
Net advantage to Manzano with the use of the bonus
method
Bonus Method
P260,000
P260,000
Asset Rev
P500,000
300,000
P200,000
P60,000
Exercise 2 10
1.
Delfin, Capital
Damian, Capital
Dencio, Capital
400,000
Delfin, Capital
Cash
Damian, Capital
Dencio, Capital
400,000
Other Assets
Delfin, Capital
Cash
Damian, Capital
Dencio, Capital
P460,000 P400,000 = P60,000/ 1/3 = P180,000
180,000
400,000
200,000
200,000
2.
320,000
40,000
40,000
3.
460,000
60,000
60,000
Exercise 2 11
1.
Guzman, Capital January 1

Drawing
Share in net profit
Interest of Guzman upon retirement
P100,000
(16,000)
24,000
P108,000
Other Assets
Guzman, Capital
Cash
Jorge, Capital
Lopez, Capital
P120,000 P108,000 = P12,000/ 30% = P40,000
40,000
108,000
Guzman, Capital
Jorge, Capital
Lopez, Capital
Cash
108,000
5,143
6,857
120,000
12,000
16,000
2.
120,000
Exercise 2 12
1.
Building
Villa, Capital
Belen, Capital
200,000
60,000
40,000
page 6
Marcos, Capital
Cordero, Capital
2.
80,000
20,000
Belen, Capital
Cash
140,000
Villa, Capital
Belen, Capital
Marcos, Capital
Cordero, Capital
Cash
15,000
100,000
20,000
5,000
140,000
140,000
Exercise 2 - 13
1.
2.
3.
4.
5.
6.
Galang, Capital
Henio, Capital
Israel, Capital
Cash
12,000
8,000
140,000
Israel, Capital
Galang, Capital
140,000
Israel, Capital
Cash
Galang, Capital
Henio, Capital
140,000
Other Assets
Israel, Capital
Cash
Galang, Capital
Henio, Capital
48,000
140,000
Israel, Capital
Galang, Capital
Henio, Capital
Cash
Other Assets
Israel, Capital
Henio, Capital
140 000
60,000
40,000
160,000
140,000
130,000
6,000
4,000
148,000
24,000
16,000
120,000
120,000
140,000
140,000
PROBLEMS
Problem 2 - 1
1.
2.
Locsin, Capital (P240,000 x 1/4)

Montes, Capital (P120,000 x 1/4)
Nava, Capital
60,000
30,000

Nava, Capital
80,000
40,000
90,000
120,000
3.
4.
5.
6.
7.
8.
9.
10
page 7
Other Assets
P540,000 P360,000 = P180,000
180,000
Locsin, Capital [(P240,000 + P135,000) 1/3]

Montes, Capital [(P120,000 + P45,000) 1/3]
Nava, Capital
125,000
55,000
Cash
Nava, Capital
AC
old (1/2)
270,000
new (1/2)
270,000
540,000
180,000
67,500
22,500
135,000
45,000
180,000
270,000
CC
360,000
180,000
540,000
Cash
Other Assets
Nava, Capital
Locsin, Capital
(P60,000 x 3/4)
AC
CC
old (3/4)
540,000
360,000
new (1/4)
180,000
180,000
720,000*
540,000
*180,000 1/4 = 720,000
Bonus
(90,000)
90,000
----180,000
180,000
180,000
135,000
45,000
Asset Rev
180,000
----180,000
Cash
Nava, Capital
240,000
Cash
Locsin, Capital
Montes, Capital
Nava, Capital
240,000
54,000
18,000
Cash
Nava, Capital
(P510,000 x 1/4)
150,000
Cash
Other Assetsl (P660,000 P525,000)
Nava, Capital
(P660,000 x 1/4)
165,000
135,000
Cash
144,000
180,000
45,000
15,000
312,000
16,875
5,625
127,500
101,250
33,750
165,000
page 8

Nava, Capital (P504,000 x 1/3)
18,000
6,000
168,000
Problem 2 - 2
1.
a. Ponce, Capital (P300,000 x )
Anton, Capital
b.
c.
b.
c.
150,000
Ponce, Capital (P300,000 x )

Salva, Capital (P200,000 x )
Victa, Capital (P100,000 x )
Anton, Capital
75,000
50,000
25,000
150,000
Cash
Ponce, Capital
Salva, Capital
Victa, Capital
Anton, Capital
Ponce
Salva
Victa
Anton
2.
a.
150,000
220,000
7,500
4,500
3,000
205,000
AC
P307,500
204,500
103,000
205,000
P820,000
CC
P300,000
200,000
100,000
220,000
P820,000
Bonus
P 7,500
4,500
3,000
( 15,000)
------
Other Assets
Ponce, Capital
Salva, Capital
Victa, Capital
P960,000 P600,000 = P360,000
360,000
Ponce, Capital
Anton, Capital
240,000
Other Assets
Ponce, Capital
Salva, Capital
Victa, Capital
P180,000/ 25% = P720,000 P600,000 = P120,000
120,000
180,000
108,000
72,000
240,000
60,000
36,000
24,000
Ponce, Capital
Salva, Capital
Victa, Capital
Anton, Capital
90,000
59,000
31,000
Other Assets
Ponce, Capital
Salva, Capital
Victa, Capital
P220,000/ 25% = P880,000 P820,000 = P60,000
60,000
180,000
30,000
18,000
12,000
page 9
Cash
Anton, Capital
220,000
220,000
Problem 2-3
1.a
Cash
Cabral, Capital
Corpus, Capital
Carlos, Capital
Other Assets
Camus, Capital
old (3/4)
new (1/4)
b.
90,000
22,500
18,000
4,500
45,000
90,000
AC
630,000
90,000
720,000*
CC
675,000
90,000
765,000
Asset Rev
(45,000)
----(45,000)
Cash
Cabral, Capital
Corpus, Capital
Carlos, Capital
Camus, Capital
old (1/2)
new (1/2)
2.a
b.
90,000
2,813
2,250
562
95,625
AC
669,375
95,625
765,000
CC
675,000
90,000
765,000
Cabral, Capital
Corpus, Capital
Carlos, Capital
Camus, Capital
Other Assets
Cabral, Capital
Corpus, Capital
Carlos, Capital
P90,000/ 1/8 = P720,000 P675,000 = P45,000
40,500
27,000
16,875
Cabral, Capital
Corpus, Capital
Carlos, Capital
Camus, Capital
43,312
29,250
17,438
Problem 2 - 4
1. a.
Inventories
Accumulated Depreciation Equipment
Allowance for Doubtful Accounts
Accrued Liabilities
Roces, Capital (P6,750 x 60/100)
Lapuz, Capital (P6,750 x 40/100)
b.
c.
Bonus
(5,625)
5,625
-----
Cash
Doria, Capital
P187,500/80% = P234,375 x 20% = P46,875
Lapuz, Capital
84,375
45,000
22,500
18,000
4,500
90,000
5,625
7,500
3,450
2,925
4,050
2,700
46,875
46,875
13,388
page 10
Roces, Capital
Roces = (P234,375 x 50%) P103,800 = P13,388
Lapuz = (P234,375 x 30%) - P83,400 = (P13,388)
13,388
2.
Roces, Lapuz and Doria
Statement of Financial Position
April 1, 2008
ASSETS
Cash
Receivables
Less Allow. for DA
Inventories
Equipment
Less Acc. Depr.
TOTAL ASSETS
P 82,875
P69,000
3,450
P52,500
26,250
65,550
129,375
26,250
P304,050
LIABILITIES and PARTNERS CAPITAL

Payables
P66,750
Accrued Liabilities
2,925
Roces, Capital
P117,188
Lapuz, Capital
70,312
Doria, Capital
46,875
234,375
________
TOTAL LIABILITIES and
PARTNERS CAPITAL
P304,050
Problem 2 -5
Roldan
P150,000
Angeles
P180,000
(30,000)
Bal.before admission of Moreno

Transfer of 1/6 int. to Moreno
Investment of Moreno
Asset revaluation
6,000
6,000
6,000
6,000
of Moreno
P162,000
P162,000
2.
Roldan 30% x 75%
=
22.5%
Angeles 30% x 75%
=
22.5%
Lazaro 40% x 75%
=
30%
Moreno
25%
Lazaro
P300,000
Moreno
Total
P630,000
P 30,000
150,000
8,000
8,000
P316,000
150,000
20,000
(20,000)
P160,000
P800,000
Problem 2 6
1.
Lazo, Capital
Madrid, Capital
Buildings
Allowance for Doubtful Accounts
Allowance for Valuation of Investments
19,000
19.000
Lazo, Capital
Madrid, Capital
Nuguid, Capital
(P200,000 P19,000 + P19,000 P20,000) 1/3 = P60,000
(P150,000 P19,000 + P19,000 P14,000) 1/3 = P45,333
60,000
45,333
2.
Capital balances before admission of Nuguid
Revaluation of assets
Capital balances after revaluation
Fraction of interest transferred to Nuguid
Interest transferred to Nuguid
8,000
20,000
10,000
Lazo
P199,000
( 19,000)
P180,000
x 1/3
P 60,000
Madrid
P155,000
( 19,000)
P136,000
x 1/3
P 45,333
105,333
Total
P354,000
( 39,000)
P316,000
x 1/3
P105,333
page 11
Gain on transfer
Cash distribution to partners
31,138
P 91,138
23,529
P 68,862
Capital balances before admission of Nuguid

Revaluation of assets
Interest transferred to Nuguid
Balances
Share in net profit
Drawings
Capital balances, December 31, 2008
Lazo
P199,000
( 19,000)
( 60,000)
P120,000
18,000
( 15,000)
P123,000
Madrid
P155,000
( 19,000)
( 45,333)
P 90,667
18,000
( 12,000)
P 96,667
3.
4.
Cash
Accounts Receivable
Investments
Accounts Payable
Osorio, Capital
54,667
P160,000
Nuguid
105,333
P105,333
18,000
( 28,000)
P 95,333
66,000
40,000
20,000
41,000
85,000
Lazo, Capital
Madrid, Capital
Nuguid, Capital
Osorio, Capital
5,000
5,000
5,000
15,000
P315,000 + P85,000 = P400,000 x 1/4 P100,000 P85,000 =

P15,000
Problem 2 - 7
1.
2.
3.
4.
Montero, Capital
Concio, Capital (P8,000 x 3/5)
Domino, Capital (P8,000 x 2/5)
Cash
100,000
4,800
3,200
Montero, Capital
Cash
100,000
Montero, Capital
Concio, Capital
(P60,000 x 3/6)
Cash
Other Assets (P10,000 1/6)
100,000
30,000
20,000
Montero, Capital (P6,000 x 1/6)

Equipment
[(P60,000 x 40%) P18,000]
Montero, Capital
Equipment
Cash
(P100,000 P1,000)
108,000
6,000
4,000
90,000
90,000
60,000
1,000
3,000
2,000
6,000
99,000
18,000
81,000
page 12
Problem 2-8
1.
Damaso
P120,000
( 9,600)
( 24,000)
P 86,400
Capital, January 1, 2008

Share in net loss
Drawings
Capital balances, December 31, 2008
2.
3. a
Dangwa
P 70,000
( 6,400)
( 24,000)
P 39,600
Dangwa, Capital
Dmaso, Capital
Datu, Capital
Cash
Inventory
P39,600 P30,000 = P9,600 / 20% = P48,000
Datu
P 80,000
( 16,000)
( 24,000)
P 40,000
39,600
14,400
24,000
30,000
48,000
Other Assets
Dangwa, Capital
Cash
Damaso, Capital
Datu, Capital
P48,000 P39,600 = P8,400/ 20% = P42,000
Dangwa, Capital
Damaso, Capital
Datu, Capital
Cash
42,000
39,600
48,000
12,600
21,000
39,600
3,150
5,250
48,000
Problem 2 - 9
1.
Cash
Luna, Capital
Matias, Capital
Noble, Capital
Guzman, Capital
Old
New
2.
126,000
AC
P294,000
126,000
P420,000
CC
P300,000
120,000
P420,000
Bonus
P( 6,000)
6,000
----
Cash
Luna, Capital
Matias, Capital
Noble, Capital
Other Assets
Guzman, Capital
Old
New
3.
120,000
2,000
2,000
2,000
Matias, Capital
Guzman, Capital
60,000
20,000
20,000
20,000
60,000
60,000
AC
P240,000
60,000
P300,000
CC
P300,000
60,000
P360,000
Asset Rev
(P60,000)
(P60,000)
36,000
36,000
page 13
P120,000 x 30% = P36,000

4.
5.
6.
Luna, Capital
Matias, Capital
Noble, Capital
Cash
80,000
8,000
8,000
Luna, Capital
David, Capital
80,000
Luna, Capital
Matias, Capital
Noble, Capital
80,000
96,000
80,000
40,000
40,000
Problem 2 -10
Canda, Pardo and Andres
Statement of Changes in Partners Equity
For the Period January 1, 2006 to January 1, 2009
Original capital, January 1, 2006
Corrected 2006 net profit
Drawings
Corrected 2007 net profit
Drawings
Corrected 2008 net loss
Drawings
Canda
P 62,500
26,375
(15,000)
P 73,875
10,875
(15,000)
P 69,750
( 6,750)
(10,000)
P 53,000
Pardo
P 25,000
10,550
( 7,800)
P 27,750
4,350
( 7,800)
P 24,300
( 2,700)
( 5,200)
P 16,400
Andres
P 12,500
5,275
( 5,200)
P 12,575
2,175
( 5,200)
P 9,550
( 1,350)
( 5,200)
P 3,000
Total
P 100,000
42,200
( 28,000)
P 114,200
17,400
( 28,000)
P 103,600
( 10,800)
( 20,400)
P 72,400
Schedule of computation of corrected net profit

Reported net profit (loss)
Understatement of accrued expenses
Understatement of accrued revenues
Overstatement of inventories
Understatement of depreciation exp.
Corrected net profit (loss)
2.
a.
Revenue Receivable
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
P 44,000
( 400 )
2007
P 18,500
400
( 500 )
2008
P (10,500 )
(
250
( 1,500 )
( 150 )
P 42,200
250 )
100
1,500
( 2,000 )
( 350 )
P 17,400
150
500
650 )
100 )
150
2,000
( 2,000 )
( 200 )
P (10,800 )
b.
page 14
Canda, Capital
Pardo, Capital
Andres, Capital
Expenses Payable
Merchandise Inventory
Accumulated Depreciation
2,000
800
400
Canda, Capital (P3,000 x 625/1000)

Pardo, Capital (P3,000 x 250/1000)
Andres, Capital
(P3,000 x 125/1000)
Furniture (P4,500 - P1,500)
1,875
750
375
650
2,000
700
3,000
c.
Andres, Capital
Furniture
Cash
Problem 2 -11
2,625
1,500
1,125
Abelar and Berces
Statement of Changes in Partners Equity
For the Period January 1, 2007 to January 15, 2009
Capital balances before closing the

books, December 31, 2007
Net profit for 2007 (Sch 1)
Drawing
Capital, December 31, 2007
Admission of Custodio (Sch. 2)
Net loss for 2008
Drawings
Capital, December 31, 2008
Loss on realization on Jan. 15, 2009
Final cash distribution
Abelar
Berces
Custodio
Total
P 50,000
6,600
(8,200)
P 48,400
(7,800)
(5,250)
(7,500)
P 27,850
(16,520)
P 11,330
P 30,000
7,400
(6,800)
P 30,600
(5,200)
(3,750)
(5,000)
P 16,650
(11,800)`
P 4,850
P 33,000
(6,000)
(6,800)
P 20,200
(18,880)
P 1,320
P 80,000
14,000
(15,000)
P 79,000
20,000
(15,000)
(19,300)
P 64,700
(47,200)
P 17,500
Abelar_
P 9,000
(2,400)
P 6,600
Berces
P 9,000
(1,600)
P 7,400
Total
P 18,000
( 4,000)
P 14,000
Schedule 1 - Distribution of 2007 net profit

Salaries
Balance - 60%, 40%
Total
Schedule 2 - Admission of Custodio
Total capital contribution (P79,000 + P20,000)
Interest to be credited to Custodio
Capital credit of Custodio
Capital contribution of Custodio
Bonus to Custodio from Abelar and Berces
P 99,000
1/3__
P 33,000
20,000
P 13,000
page 15
MULTIPLE CHOICE
1.
2.
3.
B
A
B
4.
Lima
Mitra
5.
Asset revaluationP60,000/20% = P300,000 - P150,000

Lima
= [P100,000 + (P150,000 x 75%)] x 80%
Mitra
= [P 50,000 + (P150,000 x 25%)] x 80%
Nova
6.
P264,000 [(P278,000 + P418,000 + P192,000) x 1/5] = P86,400

=
=
P100,000 x 80% = P80,000

P 50,000 x 80% = P40,000
Original investment
Net profit
Drawings
Capital bal . before transfer to Desta
Required capital based on orig. capital
ratio after transfer to Desta of 1/4 int.
Capital to be transferred to Desta
Excess cash to be dist. based on orig.
capital ratio (P30,000 - P18,810)
Distribution of cash to Felix and Elias
7.
8.
9.
10.
D
C
C
A
11.
D
A
14.
Felix
P 24,000
5,430
( 5,050)
P 24,380
Elias
P 48,000
10,860
( 8,000)
P 50,860
Total
P 72,000
16,290
( 13,050)
P 75,240
18,810
5,570
37,620
P 13,240
56,430
P 18,810
3,730
P 9,300
7,460
P 20,700
11,190
P 30,000
P90,000 P75,000 = P15,000

Capital of Mison prior to admission of Zamora
Share in the bonus from Zamora [(P90,000 P75,000) 1/2)
Capital of Mison in the new partnership
Voltaire
Asuncion
Leonor
12.
13.
P150,000
P170,000
P 70,000
P 60,000
AC
P180,000
210,000
195,000
P585,000
P105,000
7,500
P112,500
CC
P150,000
180,000
195,000
P525,000
P195,000 (P525,000 x 1/3 = P175,000) = P20,000

Old partners capital contribution
Percentage of interest of old partners
Total agreed capital of the new partnership
Percentage of interest of Sison
Capital credit of Sison
Bonus to Sison
Cash to be contributed by Sison
Capital balances before adm. of Vidal
Asset revaluation
(P180,000/20% ) P840,000 = P60,000
Asset Rev
P30,000
30,000
P60,000
P600,000
75%
P800,000
x 25%
P200,000
70,000
P130,000
Rivera
P504,000
Sanchez
P252,000
Torres
P 84,000
36,000
18,000
6,000
page 16
Adjusted capital balances

Percentage of unsold interest
Capital balances after adm. of Vidal
P540,000
x 80%
P432,000
P270,000
x 80%
P216,000
P 90,000
x 80%
P 72,000
15.
Total capital of the new partnership (P840,000/75%)

Percentage of interest
Amount to be invested by Vidal in the partnership
16.
P330,000
315,000
P 15,000
17.
Agreed capital
Capital contribution = P95,000 + P80,000 + P60,000 + P80,000 =
Asset revaluation
P80,000 + P12,000 P70,000 = P22,000
18.
Capital balance before admission of Manalo

Interest sold to Manalo (P80,000 x 15%)
Share in the recorded asset revaluation (P15,000 x 3/10)
Share in the bonus from Manalo
[(P80,000 + P12,000) - P70,000] x 3/10
Capital balance after admission of Manalo
P 80,000
(12,000)
4,500
19.
B
Capital balances, April 30, 2008
1/6 Interest transferred to Magno
Balances
Cash
transfers
to
equalize
investment
Balances
Distribution of net profit -equally
Withdrawals
Capital, June 30, 2008
20.
21.
6,600
P 79,100
Juan
P 360,000
( 60,000)
P 300,000
( 100,000)
Cosme
P 225,000
( 37,500)
P 187,500
12,500
Luna
P 135,000
( 22,500)
P 112,500
87,500
P 200,000
3,150
( 1,500)
P 201,650
P 200,000
3,150
( 2,000)
P 201,150
P 200,000
3,150
( 1,500)
P 201,650
Agreed capital = (P201,650 + P201,150 + P201,650) 3/4 =

Interest of Magno
Required capital credit of Magno
Capital balance of Magno before investing cash
Cash to be invested by Magno
Asset revaluation method:
Capital contributions of partners
Asset revaluation
Capital balances
Bonus method:
Capital contributions of partners
Bonus to old partners from new partner
Capital balances
Net advantage of bonus method to Isleta
22.
P1,120,000
x 25%
P 280,000
A
Capital balance
Uncollectible accounts
Worthless inventories
Magno
P 120,000
P 120,000
P 120,000
3,150
( 2,000)
P121,150
P805,933
1/4___
P201,483
121,150
P 80,333
Galang
Hizon
Isleta
P600,000
252,000
( 140,000)
P712,000
P480,000
168,000
( 140,000)
P508,000
P500,000
P600,000
63,000
P663,000
P480,000
42,000
P522,000
P500,000
( 105,000)
P395,000
P 35,000
Campos
P641,976
( 20,000)
( 5,500)
Centeno
P728,352
( 35,000)
( 6,700)
( 140,000)
P360,000
Other assets written off

Adjusted capital
page 17
( 2,000)
P614,476
( 3,600)
P683,052
23.
Total capital P614,476 +P683,052

Total liabilities
24.
Total capital P1,297,528 / 80%

Interest of Coronel
Contribution of Coronel
P1,621,910
x 20%
P 324,382
25.
D
Capital balances
Required capital P1,297,528/2
Cash paid (received)
Campos
P614,476
648,764
P 34,288
Centeno
P683,052
648,764
(P34,288)
Campos
P614,476
34,288
130,000
(50,000)
P728,764
Centeno
P683,052
(34,288)
130,000
(65,000)
P713,764
26.
B
Capital balances
Cash paid (received)
Net profit
Drawings
27.
28.
29.
30.
31.
32.
C
C
D
D
D
A
33.
65,000
(28,000)
P361,382
P4,000 x 2/5 = P1,600

P3,000 / 40% = P7,500
P12,000/3 = P4,000
Retirement of Yumul
Capital balance of Ylagan
A
Coronel
P324,382
The capital balances would be the same as the balances prior to sale of interest.
Interest before retirement

Adjustment of assets to FMV
34.
P1,297,528
967,590
P2,265,118
Amount paid to retiring partner

Capital of retiring partner
Total capital before retirement
Total capital after retirement
Asset revaluation to retiring partner
Fraction of interest of retiring partner
Total asset revaluation
Yumul
P103,000
12,000
P115,000
(115,000)
Yason
P 77,000
12,000
P 89,000
( 2,000)
Ylagan
P180,000
24,000
P204,000
( 4,000)
P200,000
P28,000
P110,000
90,000
20,000
P 8,000
2/10
P40,000
page 18

Chapter 2 Sol Man

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1

P280,000 + P320,000 + P200,000 = P800,000

Total capital (P3,000,000 / 80%)

Cortes, Capital P200,000 + P50,000 x 1/4

AA 1 - Chapter 2 (2008 edition)

Conde, Capital P270,000 + 270,000 x 1/3

Revaluation of Assets Method (AC = P180,000 1/4 = P720,000)

AA 1 - Chapter 2 (2008 edition)

Alba, Capital (P60,000 x 40%)

Balances under the bonus method

Balances under the asset rev. method

Net advantage to Medel using the asset revaluation method

Interest acquired from Garces

Asset Revaluation method

AA 1 - Chapter 2 (2008 edition)

Capital after admission of Estacio

2. Asset Revaluation method

AA 1 - Chapter 2 (2008 edition)

Capital of Manzano after retirement

Guzman, Capital January 1

AA 1 - Chapter 2 (2008 edition)

Locsin, Capital (P240,000 x 1/4)

Locsin, Capital (P240,000 x 1/3)

AA 1 - Chapter 2 (2008 edition)

Locsin, Capital [(P240,000 + P135,000) 1/3]

AA 1 - Chapter 2 (2008 edition)

Locsin, Capital (P24,000 x 3/4)

Ponce, Capital (P300,000 x )

AA 1 - Chapter 2 (2008 edition)

AA 1 - Chapter 2 (2008 edition)

LIABILITIES and PARTNERS CAPITAL

Bal.before admission of Moreno

AA 1 - Chapter 2 (2008 edition)

Capital balances before admission of Nuguid

P315,000 + P85,000 = P400,000 x 1/4 P100,000 P85,000 =

Montero, Capital (P6,000 x 1/6)

AA 1 - Chapter 2 (2008 edition)

Capital, January 1, 2008

AA 1 - Chapter 2 (2008 edition)

P120,000 x 30% = P36,000

Schedule of computation of corrected net profit

AA 1 - Chapter 2 (2008 edition)

Canda, Capital (P3,000 x 625/1000)

Capital balances before closing the

Schedule 1 - Distribution of 2007 net profit

AA 1 - Chapter 2 (2008 edition)

Asset revaluationP60,000/20% = P300,000 - P150,000

P264,000 [(P278,000 + P418,000 + P192,000) x 1/5] = P86,400

P100,000 x 80% = P80,000

P90,000 P75,000 = P15,000

P195,000 (P525,000 x 1/3 = P175,000) = P20,000

AA 1 - Chapter 2 (2008 edition)

Adjusted capital balances

Total capital of the new partnership (P840,000/75%)

Capital balance before admission of Manalo

Agreed capital = (P201,650 + P201,150 + P201,650) 3/4 =

AA 1 - Chapter 2 (2008 edition)

Other assets written off

Total capital P614,476 +P683,052

Total capital P1,297,528 / 80%

P4,000 x 2/5 = P1,600

Interest before retirement

Amount paid to retiring partner