Eric and Philip have been partners for several years.

During the time they have shared profits and losses

(60/40). They are currently revising the profit and loss ratios to (70/30). Eric and Philip decide to adjust
the capital accounts at the date of the change to reflect the difference between market value and book
value of assets and liabilities. At the date of the change, the partnership owns a building with a book
value of P350,000 and a market value of P600,000. How much will Eric’s capital account be adjusted at
the date of change in the profit and loss ratios?

Answer:

c.

P25,000 decrease

Capital balances and profit and loss sharing ratios of the partners in the BIG Entertainment Gallery are as
follows:

Betty, capital (50%) ……………………………………………. P140,000

Iggy, capital (30%) …………………………………………….. 160,000

Grabby, capital (20%) ………………………………………….. 100,000

Total …………………………………………………………… P400,000

Betty needs money and agrees to assign half of her interest in the partnership to yessir for P90,000 cash.
Yessir pays directly to betty. Yessir does not become a partner.

What is the total capital of the BIG Partnership immediately after the assignment of the interest to
Yessir?

Answer:

d.

P400,000
 Jenna is about to purchase same of Cynthia’s partnership interest. Cynthia currently has partnership
equity of P84,500. If Jenna pays Cynthia P30,000 for 30 percent of her capital, what amount will be
recorded in the partnership accounting records?

Answer:

b.

Jenna

Cynthia

P25,350 credit

P25,350 debit

Presented below is the condensed balance sheet of the partnership of KK, LL and MM who share profits
and losses in the ratio of 6:3:1, respectively:

Cash………………. P85,000 Liabilities……….. P80,000

Other assets………. 415,000 KK, capital……... 252,000

LL, capital……… 126,000

_________ MM, capital…….. 42,000

Total ……………… P500,000 Total …………… P500,000

The partner agree to sell NN 20% of their respective capital and profit and loss interests for a total
payment of P90,000. The payment by NN is to be made directly to the individual partners. The capital
balances of KK, LL and MM, respectively after admission of NN are:
Answer:

b.

P201,600

P100,800

P33,600

Using the same information in No. 58, assuming that implied goodwill for revolution of asset is to be
recorded prior to the acquisition by NN. The capitals of KK, LL, MM, respectively after admission of NN
are:

Answer:

c.

P216,000

P108,000

P36,000

XX, YY and ZZ are partners who share profits and losses in the ratio of 5:3:2, respectively. They agree to
sell a 25% of their respective capital and profits and losses ratio for a total payment directly to the
partners in the amount of P140,000.00. They agree that goodwill or revaluation of assets of P60,000 is
to be recorded prior to admission of AA. The condensed balance sheet of the XYZ partnership is as
follows:

Cash………………. P60,000 Liabilities……….. P100,000

Non-cash assets…… 540,000 XX, capital……... 250,000

YY, capital……… 150,000

_________ ZZ, capital…….. 100,000

Total ……………… P600,000 Total …………… P600,000

The capital of XX, YY and ZZ respectively after the payment and admission of AA are:

Answer:

b.

P210,000

P126,000

P84,000