PARTNERSHIP

DISSOLUTION
 Contribution of
Division
money,
Agreement
property
of profits
Does
or industry
dissolution
refer to the
termination of
Mr. White
business Mr. Black

activities?
Admission of a new partner

Mr. Black Mr. White

Ms. Gray Mr. Black Mr. White
Withdrawal of an old partner

Ms. Gray Mr. Black Mr. White

Agreement
Bankruptcy
 Does
Change in the
dissolution
original
refer to the
relationship
termination of
of the
business Mr. White
Mr. Black
partners.
activities?
 Admission
of a
New Partner
Admission of a New Partner

Purchase of Investment of
Interest Assets
 Purchase of Interest

2/4
2/4
1/4 1/4

Ms. Gray Mr. Black Mr. White

Admission of a New Partner

Fuentes and Garcia are partners with

profit and loss ratio of 70:30 and capital
balances of P80,000 and P20,000,
respectively. Hizon is to be admitted into
the partnership by purchasing a 15%
interest in the capital, profits and and
losses for P15,000.
SW1: PE L on page 110

Oliver and Patrick are partners with a profit and loss ratio
of 3:1 and capital balances of P1,000,000 and P500,000,
respectively. Nick is to be admitted into the partnership
by purchasing a 20% interest in the capital, profits and
losses for P500,000.

19. What would be the capital balances of Oliver and

Patrick after the admission of Nick?
SW1: PE L on page 110

Partner P&L Before Adj. After

Oliver 3 1,000,000 (200,000) 800,000
Patrick 1 500,000 (100,000) 400,000
Nick 20% 300,000 300,000
Total 1,500,000 0 1,500,000
SW2: PE L on page 110

Oliver and Patrick are partners with a profit and loss ratio
of 3:1 and capital balances of P1,000,000 and P500,000,
respectively. Nick is to be admitted into the partnership
by purchasing a 20% interest in the capital, profits and
losses for P200,000.

19. What would be the capital balances of Oliver and

Patrick after the admission of Nick?
SW2: PE L on page 110

Partner P&L Before Adj. After

Oliver 3 1,000,000 (200,000) 800,000
Patrick 1 500,000 (100,000) 400,000
Nick 20% 300,000 300,000
Total 1,500,000 0 1,500,000
SW3: PE J on page 110

Arthur, Bernie and Carlo are partners who share profits

and losses in the ratio of 5:3:2, respectively. They agree to
sell 25% of their respective capital and profit loss ratio to
Dwight for a total payment directly to the partners in the
amount of P130,000. The condensed statement of
financial position of the ABC Partnership is as follows:
SW3: PE J on page 110

Cash P 60,000 Liabilities P 100,000

Non-cash assets 540,000 Arthur, Capital 250,000
Bernie, Capital 150,000
Carlo, Capital 100,000
Total P 600,000 Total P 600,000

17. What would be the capital balances of Arthur, Bernie

and Carlo after the admission of Dwight?
SW3: PE J on page 110

Partner P&L Before Adj. After

Arthur 5 250,000 (62,500) 187,500
Bernie 3 150,000 (37,500) 112,500
Carlo 2 100,000 (25,000) 75,000
Dwight 25% 125,000 125,000
Total 500,000 0 500,000
AS: PE-C on page 107

Daisy wishes to purchase one-fourth interest in the capital and

profits in the partnership of Mickey, Minnie and Donald. The three
partners agreed to sell one-fourth of their respective capital and
profit and loss interest for a total payment of P400,000. the capital
accounts and the respective percentage interests in the profits and
losses immediately before the sale to Daisy follow:

Capital P/L Ratio

Mickey P 800,000 40%
Minnie 400,000 30%
Donald 200,000 30%
AS: PE-C on page 107

All assets and liabilities of the partnership are fairly

valued.

7. What should be the capital balances of Mickey, Minnie,

Donald and Daisy, immediately after Daisy’s
admission?
AS: PE-C on page 107

Partner P&L Before Adj. After

Mickey 40% 800,000 (200,000) 600,000
Minnie 30% 400,000 (100,000) 300,000
Donald 30% 200,000 (50,000) 150,000
Daisy 1/4 350,000 350,000
Total 1,400,000 0 1,400,000
AS: PE-C on page 107

All assets and liabilities of the partnership are fairly

valued.

8. What is the new profit and loss ratio between Mickey,

Minnie, Daisy and Donald, respectively?
AS: PE-C on page 107

Partner P&L New P&L

Mickey 40% 30.00%
Minnie 30% 22.50%
Donald 30% 22.50%
Daisy 1/4 25.00%
Reminders

1. The price paid is not recorded in the

partnership books.
2. The admission is recorded by merely
transferring the interest purchased from the
selling (old) partner to the buying (new)
partner.
 Investment of Assets

2/4 2/4
2/6
2 2/6 2/6
Ms. Gray Mr. Black Mr. White
Investment of Assets

Fuentes and Garcia are partners with

profit and loss ratio of 70:30 and capital
balances of P80,000 and P22,000,
respectively, Hizon is to be admitted into
the partnership by investing cash for the
15% interest in the capital, profits and
losses amounting to P18,000.
SW4: PE L on page 110

Oliver and Patrick are partners with a profit and loss ratio
of 3:1 and capital balances of P1,000,000 and P500,000,
respectively. Nick is to be admitted into the partnership
by investing for the 20% interest in the capital, profits
and losses for P375,000.

19. What would be the capital balances of Oliver and

Patrick after the admission of Nick?
SW4: PE L on page 110

Partner P&L Before Adj. After

Oliver 3 1,000,000 1,000,000
Patrick 1 500,000 500,000
Nick 20% 375,000 375,000
Total 1,875,000 - 1,875,000
Investment of Assets

Fuentes and Garcia are partners with

profit and loss ratio of 70:30 and capital
balances of P80,000 and P22,000,
respectively, Hizon is to be admitted into
the partnership by investing cash for the
15% interest in the capital, profits and
losses amounting to P14,000.
SW5: PE H on page 109

R. Romero and S. Sandoval are partners who share profits

and losses in the ratio of 7:3, respectively. On May 1,
2013, their respective capital balances were as follows:

R. Romero P 900,000
S. Sandoval 800,000
Total P 1,700,000
SW5: PE H on page 109

On that date, they agree to admit Q. Quizon as partner for

a 40% interest in the capital and profits upon his
investment of P800,000. All assets and liabilities of the
partnership are fairly valued.

15. Immediately after Q. Quizon’s admission, what

amount would be the capital balance of R. Romero, S.
Sandoval and Q. Quizon, respectively?
SW5: PE H on page 109

Partner P&L Before Adj. After

R. Romero 7 900,000 (140,000) 760,000
S. Sandoval 3 800,000 (60,000) 740,000
Q. Quizon 40% 800,000 200,000 1,000,000
Total 2,500,000 0 2,500,000
SW6: PE E on page 108

Jack and Poy are partners who share profits and losses in the
ratio of 60:40, respectively. On December 31, 2013, the capital
balances of Jack and Poy were P800,000 and P700,000,
respectively. On that date, they agreed to admit Hoy as a
partner with a 30% capital interest.

10. If Hoy invests P500,000 in the partnership, what is the

capital balance immediately after the admission of Hoy?
11. If Hoy invests P800,000 in the partnership, how much is
Poy’s capital balance immediately after Hoy’s admission?
SW6: PE E on page 108

Invests P 500,000
Partner P&L Before Adj. After
Jack 60 800,000 (60,000) 740,000
Poy 40 700,000 (40,000) 660,000
Hoy 30% 500,000 100,000 600,000
Total 2,000,000 0 2,000,000
SW6: PE E on page 108

Invests P 800,000
Partner P&L Before Adj. After
Jack 60 800,000 66,000 866,000
Poy 40 700,000 44,000 744,000
Hoy 30% 800,000 (110,000) 690,000
Total 2,300,000 0 2,300,000
Reminders: Investment of an Asset

Invested amount = Agreed Capital No revaluation or bonus.

Revalue assets up
Invested amount > Agreed Capital or
Bonus to old partners

Revalue assets down

Invested amount < Agreed Capital or
Bonus to new partner
SW7: PE G on page 108

Reyes and Santiago are partners who share profits and losses
in the ratio of 7:3, respectively. On January 1, 2014, their
capital accounts are:

Reyes P 1,200,000
Santiago 800,000
Total P 2,000,000
SW7: PE G on page 108

During the first three months of 2014, the partnership earned

profit of P500,000. On April 1, 2014, Torres is to be admitted
for a 30% interest in the partnership by direct purchase from
the partners for P800,000.

14. What would be the capital balances of Reyes and Santiago

after the admission of Torres?
SW7: PE G on page 108

Reyes Santiago Total

Capital balances 1,200,000 800,000 2,000,000
Share in profit 350,000 150,000 500,000
Total 1,550,000 950,000 2,500,000
SW7: PE G on page 108

Partner P&L Before Adj. After

Reyes 7 1,550,000 (465,000) 1,085,000
Santiago 3 950,000 (285,000) 665,000
Torres 30% 750,000 750,000
Total 2,500,000 0 2,500,000
SW8: PE B on page 107

Red and White are partners who share profits and losses in
the ratio of 7:3, respectively. On June 30, 2013, their capital
accounts were as follows: Red, P700,000; White, P600,000. On
that day, they agreed to admit Blue as a partner with one-
third interest in the capital and profits upon his investment of
P500,000. All partnership assets and liabilities are fairly
valued.

6. Immediately after Blue’s admission, what are the capital

balances of Red, White and Blue, respectively?
SW8: PE B on page 107

Partner P&L Before Adj. After

Red 7 700,000 (70,000) 630,000
White 3 600,000 (30,000) 570,000
Blue 1/3 500,000 100,000 600,000
Total 1,800,000 0 1,800,000
Withdrawal
of a Partner
Withdrawal of a Partner

Fuentes, Garcia and Hizon are partners

with a profit and loss ratio of 80:10:10
and capital balances of P320,000,
P200,000 and P240,000 respectively. On
December 31, Fuentes decides to
withdraw from the partnership. It is
agreed that Fuentes should be paid for his
interest the amount of P320,000.
SW9: PE S on page 113

Sy, Tan and GoKong are partners with capital balances of

P500,000, P400,000 and P300,000, respectively. Profits and
losses have been shared equally. GoKong wishes to retire from
the firm.

GoKong receives P300,000 of partnership funds for his interest.

The capital balances of Sy and Tan after the retirement of
GoKong are _____________________.
SW9: PE S on page 113

Partner P&L Before Withdrawal Adj. After

Sy 1/3 500,000 0 500,000
Tan 1/3 400,000 0 400,000
GoKong 1/3 300,000 (300,000) 0 0
Total 1,200,000 (300,000) 0 900,000
Withdrawal of a Partner

Fuentes, Garcia and Hizon are partners

with a profit and loss ratio of 80:10:10
and capital balances of P320,000,
P200,000 and P240,000 respectively. On
December 31, Fuentes decides to
withdraw from the partnership. It is
agreed that Fuentes should be paid for his
interest the amount of P340,000.
SW10: PE S on page 113

Sy, Tan and GoKong are partners with capital balances of

P500,000, P400,000 and P300,000, respectively. Profits and
losses have been shared equally. GoKong wishes to retire from
the firm.

29. GoKong receives P380,000 of partnership funds. The

remaining partners agree to absorb the excess payment to
GoKong. How much is the firm’s total capital after the
retirement of GoKong?
SW10: PE S on page 113

Partner P&L Before Withdrawal Adj. After

Sy 1/3 500,000 (40,000) 460,000
Tan 1/3 400,000 (40,000) 360,000
GoKong 1/3 300,000 (380,000) 80,000 0
Total 1,200,000 (380,000) 0 820,000
SW11: PE S on page 113

Sy, Tan and GoKong are partners with capital balances of

P500,000, P400,000 and P300,000, respectively. Profits and
losses have been shared equally. GoKong wishes to retire from
the firm.

30. GoKong receives P240,000 of partnership funds for his

interest, bonus being credited to the remaining partners’
accounts. How much is the capital of Sy after the
retirement of GoKong?
SW11: PE S on page 113

Partner P&L Before Withdrawal Adj. After

Sy 1/3 500,000 30,000 530,000
Tan 1/3 400,000 30,000 430,000
GoKong 1/3 300,000 (240,000) (60,000) 0
Total 1,200,000 (240,000) 0 960,000
SW12: PE S on page 113

Sy, Tan and GoKong are partners with capital balances of

P500,000, P400,000 and P300,000, respectively. Profits and
losses have been shared equally. GoKong wishes to retire from
the firm.

28. GoKong receives P340,000 of partnership funds for his

interest. The excess payment is attributable to an
undervaluation of the firm’s land. All other assets are fairly
valued. How much is Sy’s capital after retirement of
GoKong?
SW12: PE S on page 113

Sy Tan GoKong Total

Capital balances 500,000 400,000 300,000 1,200,000
Revaluation of
40,000 40,000 40,000 120,000
the land
Total 540,000 440,000 340,000 1,320,000
SW12: PE S on page 113

Partner P&L Before Withdrawal Adj. After

Sy 1/3 540,000 0 540,000
Tan 1/3 440,000 0 440,000
GoKong 1/3 340,000 (340,000) 0 0
Total 1,320,000 (340,000) 0 980,000
SW13: PE S on page 113

Sy, Tan and GoKong are partners with capital balances of

P500,000, P400,000 and P300,000, respectively. Profits and
losses have been shared equally. GoKong wishes to retire from
the firm.

26. GoKong’s interest is sold to Consunji, a new partner, for

P360,000. How much is the total partnership capital after
GoKong’s retirement from the firm?
SW13: PE S on page 113

Partner P&L Before Withdrawal Adj. After

Sy 1/3 500,000 500,000
Tan 1/3 400,000 400,000
GoKong 300,000 (300,000) 0
Consunji 1/3 300,000 300,000
Total 1,200,000 0 0 1,200,000
SW14: PE S on page 113

Sy, Tan and GoKong are partners with capital balances of

P500,000, P400,000 and P300,000, respectively. Profits and
losses have been shared equally. GoKong wishes to retire from
the firm.

27. GoKong’s interest is sold to the remaining partners, each

partner paying P180,000. How much is the capital of Tan
after GoKong’s retirement from the firm?
SW14: PE S on page 113

Partner P&L Before Withdrawal Adj. After

Sy 1/3 500,000 150,000 650,000
Tan 1/3 400,000 150,000 550,000
GoKong 1/3 300,000 (300,000) 0
Total 1,200,000 0 0 1,200,000
SW15: PE F on page 108

B, C and D are partners sharing profits and losses in the ratio

of 3:2:1, respectively. On December 31, B decides to withdraw
from the partnership. The capital balances on this date after
dividing profit for the year are B, P346,0000; C, P213,000; and
D, P133,000. It is agreed the B should be paid P400,000 for his
interest.

12. Assume that the excess amount shall be treated as bonus

to B, what would be the capital balances of C and D after
B’s retirement?
SW15: PE F on page 108

Partner P&L Before Withdrawal Adj. After

B 3 346,000 (400,000) 54,000 0
C 2 213,000 (36,000) 177,000
D 1 133,000 (18,000) 115,000
Total 692,000 (400,000) 0 292,000
SW16: PE F on page 108

B, C and D are partners sharing profits and losses in the ratio

of 3:2:1, respectively. On December 31, B decides to withdraw
from the partnership. The capital balances on this date after
dividing profit for the year are B, P346,0000; C, P213,000; and
D, P133,000. It is agreed the B should be paid P400,000 for his
interest.

13. Assume that instead that B is to be paid P310,000 and the

assets are faily valued. What would be the balances of C
and D immediately after B’s retirement?
SW16: PE F on page 108

Partner P&L Before Withdrawal Adj. After

B 3 346,000 (310,000) (36,000) 0
C 2 213,000 24,000 237,000
D 1 133,000 12,000 145,000
Total 692,000 (310,000) 0 382,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

a. Wendy purchases ¼ of the equity of Candy for P80,000.

AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 300,000 (75,000) 225,000
Carol 2 200,000 (50,000) 150,000
Wendy 1/4 125,000 125,000
Total 500,000 0 500,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

b. Wendy invests P100,000 for 1/6 interest.

AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 300,000 0 300,000
Carol 2 200,000 0 200,000
Wendy 1/6 100,000 0 100,000
Total 600,000 0 600,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

c. Wendy invests P200,000 for 1/3 interest in the agreed

capital of P750,000. Partnership inventories are
understated by P50,000.
AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 330,000 (30,000) 300,000
Carol 2 220,000 (20,000) 200,000
Wendy 1/3 200,000 50,000 250,000
Total 750,000 0 750,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

d. Wendy invests P200,000 for a ¼ interest. An item of

equipment of the partnership is overvalued by P40,000.
AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 276,000 21,000 297,000
Carol 2 184,000 14,000 198,000
Wendy 1/4 200,000 (35,000) 165,000
Total 660,000 0 660,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

e. Wendy invests P300,000 receiving a capital credit of

P200,000 which is ¼ of the new partnership capital.
AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 300,000 60,000 360,000
Carol 2 200,000 40,000 240,000
Wendy 1/4 300,000 (100,000) 200,000
Total 800,000 0 800,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

f. Wendy invests P300,000 for a 50% interest.

AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 300,000 (60,000) 240,000
Carol 2 200,000 (40,000) 160,000
Wendy 1/2 300,000 100,000 400,000
Total 800,000 0 800,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

g. Wendy invests P300,000 for a 30% interest.

AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 300,000 36,000 336,000
Carol 2 200,000 24,000 224,000
Wendy 30% 300,000 (60,000) 240,000
Total 800,000 0 800,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

h. Wendy invests P300,000 receiving a capital credit of

P450,000.
AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 300,000 (90,000) 210,000
Carol 2 200,000 (60,000) 140,000
Wendy 300,000 150,000 450,000
Total 800,000 0 800,000
AS: Problem 4 on page 103

Cindy and Candy are partners with capital balances of

P300,000 and P200,000, respectively. They share profits and
losses in the ratio of 3:2, respectively. Wendy wishes to be
admitted as a partner in the partnership.

i. Wendy invests P200,000 for a 20% interest in the firm’s total

capital.
AS: Problem 4 on page 103

Partner P&L Before Adj. After

Cindy 3 300,000 36,000 336,000
Carol 2 200,000 24,000 224,000
Wendy 20% 200,000 (60,000) 140,000
Total 700,000 0 700,000