Problems:

Exercise 1 (Admission of New Partner under Various Assumption)

Camus and Cuenco are partners who have capital balances of P90,000 and P60,000 and who share
profits 60% and 40% respectively. They agree to admit Cerda as a partner upon his payment of P90,000.

Answers:
1. Camus, Capital (P90,000 x 1/3) 30,000
Cuenco, Capital (P60,000 x 1/3) 20,000
Cerda, Capital 50,000

2. Other Assets 120,000

Camus, Capital (P120,000 x 75%) 90,000
Cuenco, Capital (P120,000 x 25%) 30,000

Camus, Capital [(P90,000 + P90,000) x 1/3] 60,000

Cuenco, Capital [(P60,000 + P30,000) x 1/3] 30,000
Cerda, Capital 90,000

3. Cash 90,000
Cerda, Capital 60,000
Camus, Capital (P30,000 x 60%) 18,000
Cuenco, Capital (P30,000 x 40%) 12,000

4. Cash 90,000
Other Assets 120,000
Camus, Capital (P120,000 x 60%) 72,000
Cuenco, Capital (P120,000 x 40%) 48,000
Cerda, Capital 90,000

AC CC Asset Rev
Old P270,000 P150,000 P120,000
New 90,000 90,000 ---------
P360,000 P240,000 P120,000
Exercise 2 (Admission of a New Partner; Bonus and Asset Revaluation)
At the end of the fiscal year 2014, the capital accounts and the profit and loss sharing ratio for the
partners of C3 Co. are presented below. At this date, it is agreed that a new partner, Canda is to be
admitted to the firm.

Capital P & L Ratio

Capco P100,000 50%
Cular 80,000 30%
Cruz 60,000 20%

Answer:
a. Cular, Capital 20,000
Canda, Capital 20,000

b. Other Assets 40,000

Capco, Capital 20,000
Cular, Capital 12,000
Cruz, Capital 8,000
P70,000  1/4 = P280,000 – (P100,000 + P80,000 + P60,000) = P40,000

Capco, Capital (P100,000 + P20,000) x 1/4 30,000

Cular, Capital (P80,000 + P12,000) x 1/4 23,000
Cruz, Capital (60,000 + 8,000) x 1/4 17,000
Canda, Capital 70,000

c. Cash 115,000
Canda, Capital 88,750.00
Capco, Capital (P26,250 x 50%) 13,125
Cular, Capital (P26,250 x 30%) 7,000
Cruz, Capital (P26,250 x 20%) 5,250

AC CC Bonus
Old P266,250 P240,000 P26,250
New 88,750 115,000 (26,250)
P355,000 P355,000 P -------
Exercise 3 (Admission of a New Partner by Purchse and by Investment)
Carlos and Cruz partners have capital balances of P200,000 and P300,000 respectively. They amidst
Caparas and Carpio into the partnership. Caparas purchases one -fourth of Carlos’ interest for P56,000
and one-third of Criz’s interest for 72,000. Carpio is admitted to the partnership with an investment of
P120,000 for which he is to receive an ownership of P120,000.

Answer:

1.)
a. Carlos, Capital (P200,000 x 1/4) 50,000
Cruz, Capital (P300,000 x 1/3) 100,000
Caparas, Capital 150,000
b. Cash 120,000
Carpio, Capital 120,000

2.)
Carlos (P200,000 – P50,000 = P150,000) 150,000
Cruz (P300,000 – P100,000 = P200,000) 200,000
Capras 150,000
Carpio 120,000

Exercise 4 (Admission of a NewPartner by Investment)

Cuenca and Claudio share profits equally and have equal investments in their partnership. The
partnership’s net asset are carried on the books at P500,000. Cabral is admitted into the partnership
with a one-fourh interest in profits and net assets. Cabral pays P200,000 cash into the partnership for his
interest.

Answer:

1. Bonus Method
Cash 200,000
Cuenca, Capital (P25,000 / 2) 12,500
Caludio, Capital (25,000 / 2) 12,500
Cabral, Capital 175,000

AC CC Bonus
Old P525,000 P500,000 P25,000
New 175,000 200,000 ( 25,000)
P700,000 P700,000 ---------
 2. Asset Revaluation Method
Cash 200,000
Other Assets 100,000
Cuenca, Capital (P100,000 / 2) 50,000
Claudio, Capital 50,000
Cabral, Capital 200,000

AC CC Asset Rev.
Old P600,000 P500,000 P100,000
New 200,000 200,000 ----------
P800,000 P700,000 P100,000
Exercise 5 (Admission of a New Partner by Investment)
The Capital balances and the income and loss sharing ratio of the partners Choy, Chua, and Cheng are as
follows
Capital P & L Ratio
Choy P150,000 3/7
Chua 125,000 2/7
Cheng 100,000 2/7
The partnership has been successful and the partners have decided to invite Chiu to join the. Chiu has
been admitted into the partnereship with a one-fifth capital interest for cash investment of P120,000.

Answer:
1. Cash 120,000
Choy, Capital (P21,000 x 3/7) 9,000
Chua, Capital (P21,000 x 2/7) 6,000
Cheng, Capital (21,000 x 2/7) 6,000
Chiu, Capital 99,000

AC CC Bonus
Old P396,000 P375,000 P21,000
New 120,000 120,000 ( 21,000)
P495,000 P495,000 --------

2. Other Assets 105,000

Choy, Capital (P105,000 x 3/9) 45,000
Chua, Capital 30,000
Cheng, Capital 30,000

Cash 120,000
Chiu, Capital 120,000
 AC CC Asset Rev.
Old P480,000 P375,000 P105,000
New 120,000 120,000 ----------
P600,000 P495,000 P105,000

Exercise 6 (Admission of a New Partner by Purchase)

Partners Catral and Clemente are considering the admission of Conti into the partnership. Catral and
Clemente share income and loss in the ratio 3:1, respectively. Catral’s capital balance is P48,000 and
Clemente’s capital balance is P360,000.
Answers:
1. Conti acquired one-third of the ineterest of Catral paying P160,000

Catral, Capital 160,000

Conti, Capital 160,000
(P480,000 x 1/3 = P160,000)

2. Conti acquired one-third of the interest of Catral paying P7,000

Clemente, Capital 120,000

Conti, Capital 12,000
(P360,000 x 1/3 = P120,000)

3. Conti acquired a one-fourth interest from the ol partners paying P126,000. Asset revaluation has
to be made prior to the admission of Conti
Catral, Capital (P336,000 x 3/4) 252,000
Clemente, Capital (336,000 x 1/4) 84,000
Other Assets 336,000
(P126,000  1/4 = P504,000 – P840,000 = P336,000)
Catral, Capital 57,000
Clemente, Capital 69,000
Conti, Capital 126,000
(P480,000 – P252,000) x 1/4 = P57,000
(P360,000 – P84,000) x 1/4 = P69,000
Exercise 7 (Retirement of a Partner; Sale of Interest to the Partnership; Payment More than Capital
Interest)
Dantes, Dunega and Dee are partners sharing profits in the ratio of 3:2:1, respectively. Capital accounts
are P50,000, P30,000 and P20,000 on December 31,2020, when Dee decides to withdraw. The
partnership paid Dee P25,000 for his interest. Profits after the retirement of Dee are to be shared
equally.

Answer:
1. Give two possible entries to record Dee’s retirement.
a.Bonus method
Dee, Capital 20,000
Dantes, Capital (P5,000 x 3/5) 3,000
Dunega, Capital (P5,000 x 2/5) 2,000
Cash 25,000
b.Asset Revaluation method
Other Asset (P5,000  1/6) 30,000
Dee, Capital 20,000
Cash 25,000
Dantes, Capital (P30,000 x 3/6) 15,000
Dunega, Capital (P30,000 x 2/6) 10,000

2. Which method is to be preferred by Dantes? What is the amount of gain to Dantes trough the
use of this method as compared with the other alternative?

Asset Rev. Dantes Dunega

Capital balances after retirement of
Dee under the bonus method P47,000 P28,000
Balances after retirement of Dee
Under asset revaluation method P30,000 P65,000 P40,000
Depreciation on asset rev. – equally 30,000 15,000 ( 15,000)
Balances after Depreciation -------- P50,000 P25,000
Dantes will prefer the asset revaluation method. The asset revaluation method has a gain of P3,000
compared with the bonus method.
Exercise 8 (Retirement of a Partner; Sale of Interest to the Partnership)
Dayrit, Dayag and Diesta are partners in the the Triple B Partnership. Their capital balances on October
1, 2020 are as follows: Dayrit – P100,000; Daya – P60,000; Diesta – P80,000. They sahre profits and
losses in the ratio of 3:1:1. Diesta is retiring from the partnership on this date.

Answer:
1. Diesta is paid P90,000 and no asset revaluation is recorded.
Diesta, Capital 80,000
Dayrit, Capital (P10,000 x 3/4) 7,500
Dayag, Capital (P10,000 x 1/4) 2,500
Cash 96,000
2.
Other Asset (P16,000  1/5) 80,000
Diesta, Capital 80,000
Dayrit, Capital (80,000 x 3/5) 48,000
Dayag, Capital (80,000 x 1/5) 16,000
Cash 96,000